Registration No. 33-3076
File No. 811-4576
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 17 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / X /
Amendment No. 19 / X /
BOND FUND SERIES - OPPENHEIMER BOND FUND FOR GROWTH
- -----------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
350 Linden Oaks, Rochester, New York 14625
- -----------------------------------------------------------------
(Address of Principal Executive Offices)
800-552-1149
- -----------------------------------------------------------------
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
- -----------------------------------------------------------------
(Name and Address of Agent for Service)
With a copy to: Robert J. Zutz, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue NW, Washington, D.C. 20036
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On April 11, 1997, pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/ / On _______, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On _______, pursuant to paragraph (a)(2)
of Rule 485.
- -----------------------------------------------------------------
The Registrant has registered an indefinite number of its shares
under the Securities Act of 1933 pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940. A Rule
24f-2 Notice for the Registrant's fiscal year ended December 31,
1996 was filed on February 27, 1997.
FORM N-1A
OPPENHEIMER BOND FUND FOR GROWTH
CROSS REFERENCE SHEET
----------------------
Part A of
Form N-1A
Item No. Heading in Prospectus
- --------------------------
1 Front Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed -
Organization and
History; Investment Objective, Policies and
Considerations
5 About the Fund - Expenses; How the Fund is Managed;
Back Cover
5A *
6 How the Fund is Managed - Organization and History;
The Transfer Agent; Dividends, Capital Gains and
Taxes;
Investment Objective, Policies and Considerations
7 Shareholder Account Rules and Policies; How to Buy
Shares; How to Sell Shares; How to Exchange Shares;
Special Investor Services; Distribution and Service
Plan and Agreement for Class A Shares; Distribution
and Service Plan and Agreement for Class B Shares;
Distribution and Service Plan and Agreement for Class
C Shares; Distribution and Service Plan and Agreement
for Class M Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No.
Heading in Statement of Additional Information
- ---------------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objectives and Policies - Other Investment
Techniques and Strategies; Investment Objectives and
Policies - Investment Considerations/Risks
14 How the Fund is Managed - Trustees and Officers of the
Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed - The Adviser and its
Affiliates; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 About Your Account - Determination of Net Asset Value
Per Share; Dividends, Capital Gains and Taxes
19 Your Investment Account - How to Buy Shares; How to
Sell Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the
Fund
22 Performance of the Fund
23 Financial Statements
- ----------------
* Not applicable or negative answer.
OPPENHEIMER
Bond Fund for Growth
Prospectus Dated April 11, 1997
Oppenheimer Bond Fund for Growth is a mutual fund that seeks a
high level of total return on its assets through a combination of
current income and capital appreciation. The Fund intends to
seek its objective by investing primarily in convertible fixed
income securities. There can be no assurance that the Fund will
achieve its objective.
The Fund invests a substantial portion of its assets in
high-yield, lower rated bonds which are commonly referred to as
junk bonds. Investments of this type are subject to greater
risk of loss of principal and interest. Purchasers should
carefully assess the risks associated with an investment in the
Fund. Please refer to "Investment Objective and Policies" for
more information about the types of securities the Fund invests
in and refer to Investment Risks for a discussion of the risks
of investing in the Fund.
This Prospectus explains concisely what you should know
before investing in the Fund. Please read this Prospectus
carefully and keep it for future reference. You can find more
detailed information about the Fund in the April 11, 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 OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
Contents
A B O U T T H E F U N D
3 Expenses
6 A Brief Overview of the Fund
8 Financial Highlights
13 Investment Objective and Policies
14 Investment Risks
17 Investment Policies and Strategies
21 How the Fund Is Managed
23 Performance of the Fund
A B O U T Y O U R A C C O U N T
28 How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class M Shares
43 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
45 How to Sell Shares
By Mail
By Telephone
46 How to Exchange Shares
48 Shareholder Account Rules and Policies
50 Dividends, Capital Gains and Taxes
A-1 Appendix A: Description of Securities Ratings
B-1 Appendix B: Sales Charge Waivers on Purchases of Class
M Shares for Accounts Established Prior to
March 11, 1996
C-1 Appendix C: Special Sales Charge Arrangements for
Shareholders of the Fund Who Were
Shareholders of the Former Quest for Value
Funds
<PAGE>
A B O U T T H E F U N D
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund s
assets to calculate the Fund s net asset value per share. All
shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges
and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing
in the Fund and your share of the Fund s business operating
expenses that you will bear indirectly. The calculations for
Class A shares, Class B shares, Class C shares and Class M shares
are based on the Fund s expenses during its last fiscal year
which ended December 31, 1996. On March 11, 1996, the Fund
redesignated as Class M shares its Class A shares which had
been outstanding prior to that date and redesignated as Class A
shares its Class Y shares which had been outstanding prior to
that date.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to About Your
Account starting on page 28 for an explanation of how and when
these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C Class M
Shares Shares Shares Shares
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge on 5.75% None None 3.25%
Purchase (as a % of
offering price)
- -------------------------------------------------------------------------
Maximum Contingent Deferred None(1) 5% in the 1% if None
Sales Charge (as a % of the first year shares are
purchase price declining to redeemed
or redemption 1% in the within
proceeds) sixth year and12 months of
eliminated purchase(2)
thereafter(2)
- -------------------------------------------------------------------------
Maximum Sales Charge on None None None None
Dividends Reinvested
- -------------------------------------------------------------------------
Exchange Fee None None None None
- -------------------------------------------------------------------------
Redemption Fee None None None None
</TABLE>
[FN]
(1) If you invest $1 million or more ($500,000 or more for
purchases by Retirement Plans as described in Class A Contingent
Deferred Sales Charge on page 33) in Class A shares you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month in which you
purchased those shares. See How to Buy Shares - Buying Class A
Shares below.
(2) See How to Buy Shares - Buying Class B Shares and How to Buy
Shares - Buying Class C Shares below for more information on the
contingent deferred sales charges.
Annual Fund Operating Expenses are paid out of the Fund s
assets and represent the Fund s expenses in operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc. (which is referred to in this
Prospectus as the Manager ). The rates of the Manager s fees are
set forth in How the Fund is Managed below. The Fund has other
regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds the Fund s portfolio
securities, audit fees and legal expenses. Those expenses are
detailed in the Fund s Financial Statements in the Statement of
Additional Information.
Annual Fund Operating Expenses (As a Percentage of Average Net
Assets):
<TABLE>
<CAPTION>
Class A Class B Class C Class M
Shares Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.49% 0.49% 0.49% 0.49%
- ---------------------------------------------------------------
12b-1 Plan Fees 0.25% 1.00% 1.00% 0.75%
- ---------------------------------------------------------------
Other Expenses 0.24% 0.26% 0.19% 0.34%
- ---------------------------------------------------------------
Total Fund Operating
Expenses(1) 0.98% 1.75% 1.68% 1.58%
</TABLE>
(1) The amounts in the table reflect the Fund s interest expense
during the fiscal year ended December 31, 1996. Total Fund
Operating Expenses (excluding interest) for Class A shares, Class
B shares, Class C shares and Class M shares would have been 0.97%,
1.73%, 1.67% and 1.55% respectively, for the fiscal year ended
December 31, 1996. During fiscal 1996, the Fund s interest expense
was substantially offset by the incremental interest income
generated on bonds purchased with borrowed funds.
The numbers in the chart above with respect to Class A shares,
Class B shares and Class M shares are based on the Fund s expenses
in its last fiscal year. These amounts are shown as a percentage
of the average net assets of each class for that year. The Class
C shares were not offered before March 11, 1996. Therefore the
Class C Annual Fund Operating Expenses shown are estimates based on
expenses for the period from March 11, 1996 until December 31,
1996.
The 12b-1 Distribution Plan Fees for Class A shares consist
of service fees of 0.25% of average net assets of that class. For
Class B shares and Class C shares, the 12b-1 Distribution Plan Fees
consist of service fees and the asset-based sales charge; in each
instance the service fee is 0.25% of average net assets of the
class and the asset-based sales charge is 0.75% of average net
assets of the class. The Distribution Plan Fees for Class M shares
consist of service fees of 0.25% of average net assets and the
asset-based sales charge of 0.50% of average net assets. These
plans are described in greater detail in How to Buy Shares. The
actual expenses for each class of shares in future years may be
more or less than the numbers in the above chart, depending on a
number of factors, including the actual value of the Fund s assets
represented by each class of shares.
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each
class of shares of the Fund, and that the Fund s annual return is
5%, and that its operating expenses for each class are the ones
shown in the Annual Fund Operating Expenses table above. If you
were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of 1,
3, 5 and 10 years:
1 Year 3 Years 5 Years 10 Years*
------ ------- ------- --------
Class A Shares $67 $87 $109 $171
Class B Shares $68 $85 $115 $167
Class C Shares $27 $53 $91 $199
Class M Shares $48 $81 $116 $214
If you did not redeem your investment, it would incur the following
expenses:
1 Year 3 Years 5 Years 10 Years*
------ ------- ------- ---------
Class A Shares $67 $87 $109 $171
Class B Shares $18 $55 $95 $167
Class C Shares $17 $53 $91 $199
Class M Shares $48 $81 $116 $214
*In the first example, expenses include the Class A and Class
M initial sales charges and the applicable Class B or Class C
contingent deferred sales charges. In the second example, Class A
and Class M expenses include the initial sales charge, but Class B
and Class C expenses do not include contingent deferred sales
charges. The Class B expenses in years 7 through 10 are based on
Class A expenses shown above, because the Fund automatically
converts your Class B shares into Class A shares after 6 years.
Because of the effect of the asset-based sales charge on Class B,
Class C and Class M shares and the contingent deferred sales charge
on Class B and Class C shares, long-term Class B, Class C and Class
M shareholders could pay the economic equivalent of an amount
greater than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic
conversion of Class B shares to Class A shares is designed to
minimize the likelihood that this will occur. Please refer to How
to Buy Shares - Buying Class B Shares for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What is the Fund s Investment Objective? The Fund s
investment objective is to seek a high level of total return on its
assets through a combination of current income and capital
appreciation. The Fund intends to seek its objective by investing
primarily in convertible fixed income securities. There can be no
assurance that the Fund will achieve its objective.
What Does the Fund Invest In? The Fund invests primarily in
a portfolio that consists of a variety of convertible fixed income
securities which, in the opinion of the Manager, will assist the
Fund in achieving its investment objective. Convertible securities
include corporate bonds, notes and preferred stock which can be
converted into (exchanged for) common stock, and other securities,
such as warrants and options, which provide an opportunity for
equity participation.
Under normal market conditions, the Fund will invest at
least 65% of its total assets in convertible bonds. Many
convertible bonds are lower rated, speculative securities commonly
referred to as junk bonds. See Investment Risks for a more
detailed description of the risks of investing in lower rated
securities. The balance of up to 35% of the total assets
comprising the Fund s portfolio may be invested in other types of
convertible securities as well as common stocks, non-convertible
fixed income securities, cash and money market securities,
including repurchase agreements. No more than 15% of the total
assets of the Fund, however, may be invested in non-dividend paying
common stocks. If, at any time, the market value of the Fund s
investments in cash, common stocks and non-convertible securities
exceeds 35% of the market value of its total assets as a result of
market conditions or a call by an issuer of its convertible
securities, the Fund will (except when a temporary defensive
position is deemed advisable) thereafter invest only in convertible
bonds until the 65% standard is met. The Fund will not be required
to sell any of its securities to comply with the 65% standard.
These investments and investment methods are more fully described
in Investment Objective and Policies starting on page 13.
Who Manages the Fund? The Fund s investment adviser is
OppenheimerFunds, Inc. The Manager (including a subsidiary)
manages investment company portfolios having over $60 billion in
assets at March 31, 1997. The Manager is paid an advisory fee by
the Fund, based on its assets. The Fund s portfolio manager, who
is employed by the Manager and is primarily responsible for the
selection of the Fund s securities, is Michael S. Rosen. The
Fund s Board of Trustees, elected by shareholders, oversees the
investment adviser and the portfolio manager. Please refer to How
the Fund is Managed starting on page 21 for more information about
the Manager and its fees.
How Risky is the Fund? All investments carry risks to
some degree. The Fund may invest all or any portion of its assets
in high-yield, lower-rated fixed-income securities. The primary
advantage of high-yield securities is their relatively higher
investment return. However, such securities are considered
speculative and may be subject to greater market fluctuations and
risks of loss of income and principal and have less liquidity than
investments in higher-rated securities. Fixed-income securities
are also subject to interest rate risks and credit risks which can
negatively impact the value of the security and the Fund s net
asset value per share. There are certain risks associated with
investments in foreign securities, including those related to
changes in foreign currency rates, that are not present in domestic
securities. These changes affect the value of the Fund s
investments and its price per share. In addition, as a
non-diversified fund, the Fund may invest a greater portion of its
assets in the securities of a limited number of issuers than a
diversified fund.
In the Oppenheimer funds spectrum, the Fund is generally
more conservative than aggressive growth funds, but more aggressive
than investment grade bond funds. While the Manager tries to
reduce risks by structuring the Fund s portfolio to include a broad
spectrum of investments, by carefully researching securities before
they are purchased for the portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving
the Fund s objective and your shares may be worth more or less than
their original cost when you redeem them. Please refer to
Investment Risks starting on page 14 for a more complete
discussion of these risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to How to Buy Shares starting on page 28 for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
the individual investor four classes of shares. All classes have
the same investment portfolio, but different expenses. Class A
shares and Class M shares are offered with front-end sales charges,
starting at 5.75% and 3.25%, respectively, and reduced for larger
purchases. Class B shares and Class C shares are offered without
a front-end sales charge, but may be subject to a contingent
deferred sales charge if redeemed within 6 years (Class B) or 12
months (Class C) of purchase. There is also an annual asset-based
sales charge on Class B shares, Class C shares and Class M shares.
Please review How To Buy Shares starting on page 28 for more
details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to How to Sell Shares starting
on page 45. The Fund also offers exchange privileges to other
Oppenheimer funds, described in How To Exchange Shares starting
on page 46.
How Has the Fund Performed? The Fund measures its
performance by quoting its yield and total returns, which measure
historical performance. Those yields and returns can be compared
to the yields and returns (over similar periods) of other funds.
Of course, other funds may have different objectives, investments,
and levels of risk. The Fund s performance can also be compared to
broad-based market indices, which we have done on pages 26 and 27.
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 Price Waterhouse LLP, the Fund s
independent auditors, whose report on the Fund s financial
statements for the fiscal year ended December 31, 1996, is included
in the Statement of Additional Information. On March 11, 1996, the
Fund redesignated as Class M shares its Class A shares which had
been outstanding prior to that date and redesignated as Class A
shares its Class Y shares which had been outstanding prior to that
date. Class C shares were publicly offered during a portion of
the period shown commencing on March 11, 1996.
<PAGE>
<TABLE>
<CAPTION>
CLASS A
---------------------------
YEAR ENDED DECEMBER 31,
1996 1995(3)
=====================================================================
================
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.96 $13.11
------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .73 .54
Net realized and unrealized gain (loss) .65 1.48
------ ------
Total income (loss) from investment operations 1.38 2.02
------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.72) (.68)
Distributions from net realized gain (.35) (.49)
------ ------
Total dividends and distributions to shareholders (1.07) (1.17)
------------------------------------------------------------------------------
Net asset value, end of period $14.27 $13.96
======= ======
=====================================================================
=========
TOTAL RETURN, AT NET ASSET VALUE(4) 10.13% 15.42%
=====================================================================
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $93,578 $2,502
------------------------------------------------------------------------------
Average net assets (in thousands) $41,617 $1,799
------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.11% 5.63%(5)
Expenses(6) 0.98% 1.05%(5)
Expenses (excluding interest)(6)(7) 0.97% 1.01%(5)
------------------------------------------------------------------------------
Portfolio turnover rate(8) 52.67% 57.51%
</TABLE>
1. Net of fees and expenses waived or reimbursed by Fielding Management
Company, Inc. (the former manager) which amounted to $.01 per share.
Without reimbursement, the ratios would have been 6.50%, 2.06% and
2.04%, respectively.
2. For the period from March 11, 1996 (inception of offering) to
December 31, 1996.
3. For the period from May 1, 1995 (inception of offering) to
December 31, 1995.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
investment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods of
less than one full year.
5. Annualized.
18 Oppenheimer Bond Fund for Growth
<PAGE> 19
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS M
- -------------------------- ----------- --------------------------------------------------
YEAR
ENDED
YEAR ENDED DECEMBER 31, DEC. 31, YEAR ENDED DECEMBER 31,
1996 1995(3) 1996(2) 1996 1995 1994 1993 1992(1)
=====================================================================
====================================
<S> <C> <C> <C> <C> <C> <C> <C>
$13.98 $13.11 $14.03 $13.96 $12.20 $13.16 $11.43 $9.37
- ---------------------------------------------------------------------------------------------------------
.62 .45 .50 .65 .70 .68 .59 .69
.65 1.51 .59 .66 2.42 (.81) 1.79 2.15
------ ------ ------ -------- -------- ------ ------ -------
1.27 1.96 1.09 1.31 3.12 (.13) 2.38 2.84
- ---------------------------------------------------------------------------------------------------------
(.61) (.60) (.50) (.65) (.87) (.69) (.65) (.78)
(.35) (.49) (.35) (.35) (.49) (.14) -- --
------ ------ ------ -------- -------- ----- ---- ------
(.96) (1.09) (.85) (1.00) (1.36) (.83) (.65) (.78)
- ---------------------------------------------------------------------------------------------------------
$14.29 $13.98 $14.27 $14.27 $13.96 $12.20 $13.16 $11.43
====== ====== ====== ======== ======== ======= ======
======
=====================================================================
====================================
9.28% 15.09% 7.74% 9.58% 26.00% (1.12)% 21.23%
31.19%
=====================================================================
====================================
$211,176 $34,465 $38,312 $274,043 $239,341 $126,691 $69,375
$10,241
- ---------------------------------------------------------------------------------------------------------
$113,784 $15,184 $18,550 $264,936 $181,719 $106,829 $36,923 $
7,369
- ---------------------------------------------------------------------------------------------------------
4.31% 4.82%(5) 4.32%(5) 4.59% 5.12% 5.24% 4.70% 6.62%
1.75% 1.69%(5) 1.68%(5) 1.58% 1.58% 1.66% 1.78% 1.93%
1.73% 1.64%(5) 1.67%(5) 1.55% 1.56% 1.65% 1.75% 1.91%
- ---------------------------------------------------------------------------------------------------------
52.67% 57.51% 52.67% 52.67% 57.51% 52.82% 88.66%
80.09%
</TABLE>
6. Beginning in fiscal 1995, the expense ratios reflect the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. During the periods shown above, the Fund's interest expense was substantially
offset by the incremental interest income generated on bonds purchased with
borrowed funds.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases
and sales of investment securities (excluding short-term securities) for the
period ended December 31, 1996 were $501,201,833 and $222,718,231, respectively.
Per share information has been determined based on average shares outstanding
for the period.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks a high level of total return on its
assets through a combination of current income and capital
appreciation.
Investment Policies and Strategies. The Fund invests primarily
in a portfolio that consists of a variety of convertible fixed
income securities which, in the opinion of the Manager, will assist
the Fund in achieving its investment objective. Convertible
securities include corporate bonds, notes and preferred stock which
can be converted into (exchanged for) common stock and other
securities which provide an opportunity for equity participation
such as options and warrants.
Under normal market conditions, the Fund will invest at least
65% of its total assets in convertible bonds. Many convertible
bonds are lower rated, speculative securities commonly referred to
as junk bonds. See Investment Risks. The balance of up to 35%
of the total assets comprising the Fund s portfolio may be invested
in other types of convertible securities as well as common stocks,
non-convertible fixed income securities, cash and money market
securities, including repurchase agreements. No more than 15% of
the total assets of the Fund, however, may be invested in
non-dividend paying common stocks. If, at any time, the market
value of the Fund s investments in cash, common stocks and
non-convertible securities exceeds 35% of the market value of its
total assets as a result of market conditions or a call by an
issuer of its convertible securities, the Fund will (except when a
temporary defensive position is deemed advisable) thereafter invest
only in convertible bonds until the 65% standard is met. The Fund
will not be required to sell any of its securities to comply with
the 65% standard.
Can the Fund s Investment Objective and Policies Change?
The investment objective of the Fund is not a fundamental policy
and, as such, may be changed without shareholder approval. As a
matter of policy, however, the Fund will not change its objective
without the approval of the majority of the Board of Trustees.
Although the Fund will seek to make investments in accordance with
its investment objective, there is no assurance that the Fund will
achieve its objective and there can be no guarantee that the value
of an investment in Fund shares might not decline.
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 Board of Trustees of the Fund may change non-
fundamental policies without shareholder approval, although
significant changes will be described in amendments or supplements
to this Prospectus.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund may engage
frequently in short-term trading to try to achieve its objective.
As a result, the Fund's portfolio turnover may be higher than other
mutual funds. The "Financial Highlights," above, show the Fund's
portfolio turnover rate during past fiscal years. High turnover
and short-term trading may cause the Fund to have relatively larger
commission expenses and transaction costs than funds that do not
engage in short-term trading. Additionally, high portfolio
turnover may affect the ability of the Fund to qualify for tax
deductions for payments made to shareholders as a "regulated
investment company" under the Internal Revenue Code. The Fund
qualified in its last fiscal year and intends to do so in the
coming year, although it reserves the right not to qualify.
Investment Risks.
All investments carry risks to some degree, whether they are risks
that market prices of the investment will fluctuate (this is known
as "market risk") or that the underlying issuer will experience
financial difficulties and may default on its obligation under a
fixed-income investment to pay interest and repay principal (this
is referred to as "credit risk"). These general investment risks,
and the special risks of certain types of investments that the Fund
may hold are described below. They affect the value of the Fund's
investments, its investment performance, and the prices of its
shares. These risks collectively form the risk profile of the
Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
investments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes
in overall market prices can occur at any time, and because the
income earned on securities is subject to change, there is no
assurance that the Fund will achieve its investment objective.
When you redeem your shares, they may be worth more or less than
what you paid for them.
Credit Quality Considerations. The risks inherent in the
Fund depend to a larger degree upon the maturity and/or quality of
securities in the Fund s portfolio, as well as on market and
general economic conditions. The Fund is designed for investors
who seek a higher total return than that offered by other fixed
income securities and who can accept greater levels of credit and
other risks associated with lower quality securities. The Fund may
invest, without limit, in convertible bonds which are in the lower
rating categories of an NRSRO (such as those rated BB and below by
Standard & Poors or those rated Ba and below by Moody s Investor
Services, Inc.), often referred to as junk bonds, or in
convertible bonds which are unrated.
Certain risks are associated with applying credit ratings as a
method for evaluating high yield securities. Credit ratings
evaluate the safety of scheduled payments, not market value risk of
high yield securities. Since credit rating agencies may fail to
timely change the credit ratings to reflect subsequent events, the
Manager seeks to monitor the issuers of high yield securities in
its portfolio to seek to determine if the issuers will have
sufficient cash flow and profits to meet required payments, and to
attempt to assure the liquidity of the securities so the Fund can
meet redemption requests. If, after purchase by the Fund, the
rating of a portfolio security is lost or reduced, the Fund would
not be required to sell the security, but the Manager would
consider such a change in deciding whether the Fund should retain
the security in its portfolio. There is no guarantee that the Fund
will achieve its objective, nor can the Fund guarantee that
payments of interest and principal on portfolio securities will be
timely made (or made at all).
Special Risks of Lower Grade Securities. The Fund s
investments in high yield, lower rated securities and unrated
securities involve certain special risk factors. Medium to lower
rated and comparable unrated securities may offer yields which are
higher than higher rated securities with comparable maturities
because the historical and/or expected future financial condition
of the issuers of such securities may not be as strong as that of
other issuers. Since medium to lower rated and comparable unrated
securities generally involve greater risk of loss of income and
principal than that of higher rated securities, investors should
carefully consider the relative risks associated with investments
in securities which carry medium to lower ratings and in comparable
unrated securities.
The high yield fixed income securities markets are relatively
new, and their growth during the 1980s paralleled a long economic
expansion. The lower ratings of high yield securities reflect the
greater possibility that adverse changes in the economic
environment, the financial condition of their issuers or both could
impair the ability of their issuers to service payment obligations,
to meet projected business goals and/or to obtain additional
financing. Under such circumstances, the value of high yield
securities may be more volatile and the markets for such securities
may be less liquid than those for higher-rated securities. A real
or anticipated economic downturn is, therefore, likely to have a
negative effect on the high yield securities markets and on the
value of the high yield securities in the Fund s portfolio. If the
issuer of a fixed income security owned by the Fund defaults (or
threatens to default), the Fund may incur additional expenses
seeking recovery and protecting the interests of its shareholders.
Based upon the weighted average ratings of total Fund assets
during the twelve months ending December 31, 1996, the Fund s
portfolio included corporate bonds in the following S&P rating
categories or if unrated, determined by the Manager to be of
comparable quality to the category indicated. AAA 0.65%,AA 3.78%,
A 13.74%, BBB 10.21%, BB 9.92%, B 21.59%, CCC 1.60%, CC 0.02%, C
0.08% and D 0.02% for the Fund, and (2) all unrated bonds as a
group comprised 16.11% of the Fund s assets.
Marketability Considerations. Some issuers of
convertible fixed income securities do not seek ratings for their
securities. Such unrated securities may be considered for
investment by the Fund when, in the opinion of the Manager, the
financial condition of the issuer of such securities and/or the
protection afforded by the terms of the securities themselves seem
to limit the risk to the Fund to a comparable degree to that of
rated securities which are consistent with the Fund s objective and
policies. The market for these unrated securities is usually less
broad than the market for rated securities.
Some of the high yield securities owned by the Fund may be
held by relatively few institutional investors and may be thinly
traded. This may have a negative impact on the Fund s ability to
accurately value such securities and the Fund s assets, as well as
on the Fund s ability to dispose of the securities. Adverse
publicity and investor perceptions of the high yield securities
market or of specific issuers, whether or not based on fundamental
analysis, may decrease the values and liquidity of high yield
securities, especially in a thinly traded market.
Capitalization of Issuers. The Fund may invest in
convertible securities issued by companies which are in the small,
medium and large size categories. The Manager believes that
investments in small capitalization companies may, in many cases,
offer greater opportunities for high total return than investments
in larger, more established companies, although investments may
also be made in convertible fixed income securities of larger
companies which, in the opinion of the Manager, appear to have high
long-term total return potential. Investing in smaller, newer
issuers generally involves greater risks than investing in larger,
more established issuers. Companies in which the Fund is likely to
invest may have limited product lines, markets or financial
resources and may lack management depth. The securities issued by
such companies may have limited marketability and may be subject to
more abrupt or erratic market movements than securities of larger,
more established companies or the market in general. Investors
should consult with their financial consultants as to what, if any,
portion of their assets might be appropriate for an investment in
the Fund.
Interest Rate Risk. Like all fixed income securities,
the price of a convertible security will be affected by interest
rate fluctuations. A decline in prevailing levels of interest
rates generally increases the value of fixed income securities in
the Fund s portfolio, while an increase in interest rates usually
reduces the value of those securities. As a result, interest rate
fluctuations can be expected to affect the Fund s net asset value,
but not the actual income received by the Fund from its existing
portfolio securities. Because yields on convertible fixed income
securities available for purchase by the Fund vary over time,
however, no specific yield on shares of the Fund can be assured.
Non-Diversification. The Fund expects that it normally
will invest in a substantial number of issuers; however, as a
non-diversified investment company, the Fund may invest a greater
portion of its assets in the securities of a limited number of
issuers than a diversified fund. The Fund s ability to invest a
greater proportion of its assets in the securities of a smaller
number of issuers may enhance the Fund s ability to achieve capital
appreciation, but may also make the Fund more susceptible to any
single economic, political or regulatory occurrence. However, as
of the last day of each fiscal quarter, the Fund generally will be
required to meet certain tax-related diversification requirements,
which would restrict, to some degree, the amount of the securities
of any one issuer that the Fund could hold.
Foreign Securities. The Fund may invest up to 15% of its
net assets in securities of foreign issuers. There are special
risks in investing in foreign securities. Because the Fund may
purchase securities denominated in foreign currencies or traded
primarily in foreign markets, a change in the value of a foreign
currency against the U.S. dollar will result in a change in the
U.S. dollar value of those foreign securities. Foreign issuers are
not required to use generally-accepted accounting principals that
apply to U.S. issuers. If foreign securities are not registered
for sale in the U.S. under U.S. securities laws, the issuer does
not have to comply with disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected
by other factors, including exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental, economic or monetary policy in the U.S. or abroad, or
other political and economic factors.
In addition, it is generally more difficult to obtain court
judgments outside the U.S. if the Fund were to sue a foreign issuer
or broker. Additional costs may be incurred because foreign
brokerage commissions are generally higher than U.S. rates, and
there are additional custodial costs associated with holding
securities abroad.
Investment Policies and Strategies
The Fund may use the investment techniques and strategies
described below. These techniques involve certain risks. The
Statement of Additional Information contains more information about
these practices, including limitations on their use that are
designed to reduce some of the risks.
Convertible Securities. A convertible security is a bond,
debenture, note, preferred stock or other security that may be
converted into or exchanged for a prescribed amount of common stock
of the same or a different issue within a particular period of time
at a specified price or formula. A convertible security entitles
the holder to receive interest paid or accrued on debt or dividends
paid on preferred stock until the convertible security matures or
is redeemed, converted or exchanged. Convertible securities have
unique investment characteristics in that they generally (1) have
higher yields than common stocks, but lower yields than comparable
non-convertible securities, (2) are less subject to fluctuation in
value than the underlying stock because they have fixed income
characteristics, and (3) provide the potential for capital
appreciation if the market price of the underlying common stock
increases. See the Statement of Additional Information for a
further discussion of convertible securities.
The Fund may invest in various types of recently developed
derivative convertible securities, such as mandatory conversion
securities, equity-linked debt securities and convertible preferred
stock. Mandatory conversion securities, which provide a relatively
high level of current income, may be purchased as possible
alternatives to direct investments in either the related common
stocks or fixed income securities in order to seek the higher
returns which are consistent with the Fund s investment objective.
Such securities may combine some of the features of debt securities
and equity securities, including both common stock and preferred
stock. Unlike the more traditional convertible securities, these
securities are characterized by a mandatory conversion feature and
an adjustable conversion ratio. One type of mandatory conversion
security which may be purchased by the Fund is the equity-linked
debt security, a debt security whose principal amount at maturity
is dependent upon the performance of a specified equity security.
The performance of these securities is dependent upon the
performance of the linked equity security and may be influenced by
interest rate changes. Such securities also are subject to credit
risk with respect to the issuer of the debt security. Certain of
these convertible securities offer limited potential for capital
appreciation and, in some instances, may involve losses equal to
the value of the security. The Fund also may be exposed to
counterparty risk if the issuing firm of such a security
experiences financial or other difficulties that render it unable
to perform according to the terms of the security. The market for
such securities is relatively new and, therefore, it is not
possible to predict how they might trade in the secondary markets
or whether such markets will be liquid or illiquid. For a further
description of these securities and other risks associated with
them, see the Statement of Additional Information.
The Manager seeks to maximize total return by investing in
convertibles of companies of all market capitalizations. At one
time or another, the Fund may have a bias towards either small,
medium or large capitalization companies based on the Manager s
perception of where the best returns will come from. The potential
for higher returns sought by the Fund are, in the opinion of the
Manager, generally obtainable from investments in bonds which are
rated in the lower rating categories of nationally recognized
statistical rating organizations ( NRSROs ), including but not
limited to Standard & Poor s Ratings Group ( S&P or Standard &
Poor s ) Moody s Investors Service, Inc. ( Moody s ), Fitch
Investors Services, Inc. ( Fitch ) or Duff & Phelps, Inc. ( Duff &
Phelps ), or another NRSRO or in bonds which are unrated. Bonds
which are rated Ba and lower by Moody s, or rated BB and lower by
S&P, Fitch or Duff & Phelps are commonly referred to as junk
bonds . The Fund will not, however, invest in convertible fixed
income securities having a rating by an NRSRO of less than C or in
convertible securities which are in default at the time of
purchase. Convertible securities rated C by S&P are described as
having the highest degree of speculation with respect to the
capacity to pay interest and principal in accordance with the terms
of the obligation. Because investment in lower rated and unrated
fixed income securities involves greater investment risk,
achievement of the Fund s investment objective will be more
dependent on the Manager s credit analysis than would be the case
if the Fund were investing in higher quality debt securities.
Since the ratings of rating agencies are used only as preliminary
indicators of investment quality, the Manager employs its own
credit research and analyses from which it has developed a credit
rating system based upon comparative credit analyses of issuers
within the same industry. These analyses may take into
consideration, among other things, the issuer s financial
soundness, its anticipated cash flow, interest or dividend
coverage, asset coverage, sinking fund provisions, responsiveness
to changes in interest rates and business conditions and
liquidation value relative to the market price of the security.
Descriptions of the S&P, Moody s, Fitch and Duff & Phelps rating
categories are set forth in Appendix A to this Prospectus.
Other Investment Techniques and Strategies. The Fund may also use
the investment techniques and strategies described below. These
techniques involve certain risks. The Statement of Additional
Information contains more information about these practices,
including limitations on their use that may help to reduce some of
the risks.
Loans of Portfolio Securities. As a fundamental policy,
the Fund may lend a portion of its portfolio securities to brokers,
dealers, and other financial institutions as a means of earning
additional income on its portfolio assets. Any such loans will be
continuously secured by collateral consisting of cash, securities
of the U.S. Government and its agencies and instrumentalities or
approved bank letters of credit, or any combination thereof, which
will be equal to at least 102% of the market value of the
securities loaned at the time the loan is made and which will at
all times thereafter equal at least 100% of the market value of the
loaned securities. Such loans will not be made if, as a result
thereof, the aggregate amount of all outstanding loans of the
Fund s portfolio securities would exceed the maximum percentage of
its assets permitted by law or applicable guidelines of the
Securities and Exchange Commission ( SEC ) or such lower amount as
may be established by the Board of Trustees from time to time
(currently 10% of the Fund s net assets on the date prior to any
loan transaction). The Fund will receive interest on the
securities loaned and simultaneously earn either interest on the
investment of the cash collateral or fee income if the collateral
for the loan does not consist of cash. However, the Fund will
normally pay lending fees and related expenses from the interest
earned on invested collateral. If the borrower of the securities
fails financially, there could be a risk of delay in recovery of
the securities or loss of rights in the collateral. The Fund will
attempt to minimize such risks, however, by making loans to only
such borrowers which are believed by the Fund s Manager to be of
good financial standing.
Repurchase Agreements. Under a repurchase agreement, the
Fund may purchase U.S. Government securities and concurrently enter
into an agreement with the seller which agrees to repurchase such
securities at the Fund s cost plus an agreed rate of interest
within a specified time (normally seven days or less). Repurchase
agreements will be collateralized by the U.S. Government
securities, and the value of such collateral will be at least equal
to the repurchase price, including any such accrued interest. The
Fund will only enter into repurchase agreements where the custodian
of the Fund has acquired actual or constructive possession of the
collateral, including transfer of U.S. Government securities by
book-entry in the Federal Reserve book-entry system. In the event
of a default or bankruptcy by a seller, the Fund may incur a loss,
may have difficulty in perfecting ownership of the collateral, and
may incur expenses in selling the collateral.
Temporary Investments. Temporary investments may be made
without limitation in periods of unusual market conditions or when
the Manager determines that convertible securities may not best
achieve the Fund s investment objective and a temporary defensive
position may be warranted. Such investments may be made in money
market instruments consisting of obligations of, or guaranteed as
to principal and interest by, the U.S. Government or its agencies
or instrumentalities, certificates of deposit, bankers acceptances
and other obligations of domestic banks having total assets of at
least $500 million and which are regulated by the U.S. Government,
its agencies or instrumentalities, commercial paper rated in the
highest category by an NRSRO and repurchase agreements with banks
or broker-dealers in securities.
Illiquid and Restricted Securities. The Fund may invest
up to an aggregate of 15% of its net assets in illiquid securities
which may include, but are not limited to, securities which have
not been registered under the Securities Act of 1933, as amended
(the 1933 Act ), repurchase agreements with remaining maturities
of more than seven days, and securities for which market quotations
are not readily available. Securities which have not been
registered under the 1933 Act are deemed to be restricted
securities because they cannot be resold except in reliance upon
an available exemption from the registration requirements. Rule
144A under the 1933 Act permits certain resales of restricted
securities provided that such securities have been determined to be
eligible for resale under the provisions of Rule 144A ( Rule 144A
Securities ). Rule 144A Securities which are deemed to be liquid
by the Fund s Manager pursuant to certain guidelines and procedures
as discussed in the Statement of Additional Information are
excluded from the Fund s 15% limitation on investments in illiquid
securities. The Manager monitors holdings of illiquid securities
on an ongoing basis and at times the Fund may be required to sell
some holdings to maintain adequate liquidity. See the Statement of
Additional Information for further information. The Fund s policy
with respect to illiquid securities is non-fundamental and, as
such, may be changed without shareholder approval.
Eurodollar convertible securities are generally traded on the
European exchanges, are not registered under the 1933 Act and may
not be sold to U.S. investors except in reliance upon an available
exemption from the 1933 Act. However, there exists a liquid
institutional market for many of these Eurodollar convertible
securities which are convertible into securities which trade on a
U.S. exchange, and one or more U.S. broker-dealers may make a
market in the security. Eurodollar securities trade without
limitation and are not considered illiquid securities for purposes
of the Fund s non-fundamental policy of investing no more than an
aggregate of 15% of its net assets in such securities.
Foreign Securities. The Fund may invest up to 15% of its net
assets in securities of foreign issuers which are generally
denominated in foreign currencies. Investments in securities of
foreign issuers involve certain risks not ordinarily associated
with investments in the securities of domestic issuers. Please
refer to "Investment Risks" for a more detailed discussion of these
risks.
The Fund may purchase sponsored American Depository Receipts
( ADRs ) or U.S. dollar denominated securities of foreign issuers,
which are not subject to the 15% limitation on investments in
securities of foreign issuers. ADRs are receipts issued by U.S.
banks or trust companies in respect of securities of foreign
issuers held on deposit for use in the U.S. securities markets.
While ADRs may not necessarily be denominated in the same currency
as the securities into which they may be converted, many of the
risks associated with foreign securities may also apply to ADRs,
such as confiscatory taxation or nationalization, and less
comprehensive disclosure requirements for the underlying
securities.
Borrowing for Leverage. As a fundamental policy, the
Fund may borrow money, but only from banks, in amounts up to 5% of
its total assets for temporary or emergency purposes, or to
purchase additional portfolio securities. Leveraging, or the
purchase of securities with borrowed funds, will exaggerate any
increase or decrease in the market value of the Fund s portfolio.
The Investment Company Act of 1940 (the Act ) requires the Fund to
maintain asset coverage of at least 300% for all such borrowings
and, should such asset coverage at any time fall below 300%, the
Fund would be required to reduce its borrowings within three days
to the extent necessary to meet the requirements of the Act. The
Fund might be required to sell securities at a time when it would
be disadvantageous to do so in order to reduce its borrowings. See
Other Investment Restrictions in the Statement of Additional
Information.
Warrants, Options and Short Sales. The Fund may invest
up to 5% of the value of its net assets at the time of purchase in
warrants. It also may utilize listed options trading and has
limited such trading to (1) writing (i.e., selling) covered call
options on stocks it owns and the underlying stock of its existing
convertible positions; (2) purchasing put options on stocks it owns
and underlying stock of existing convertible positions; and (3)
entering into closing purchase transactions with respect to certain
of such options, provided that all options written or purchased by
the Fund are listed on a national securities exchange. The Fund
also has the ability to purchase put options in an attempt to hedge
its portfolio to reduce investment risks. The Fund s covered call
writing is generally intended to provide income to the Fund beyond
the level of income available from convertible securities alone.
The Fund may also make short sales against the box. See the
Statement of Additional Information for a further discussion of
these investment strategies.
Other Investment Restrictions. Information about other
investment restrictions on the Fund s investment activities is set
forth in the Statement of Additional Information. Unless the
Prospectus states that a percentage restriction applies
continuously, 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. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. Bond Fund Series (the Trust ) was
organized in 1986 as a Massachusetts business trust consisting of
one portfolio, the Fund. The Trust is an open-end, non-diversified
management investment company, with an unlimited number of
authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is
responsible under Massachusetts law for protecting the interests of
shareholders. The Trustees meet periodically throughout the year
to oversee the Fund s activities, review its performance, and
review the actions of the Manager. Trustees and Officers of the
Fund in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund will not normally hold annual meetings of
its shareholders, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call
a meeting to remove a Trustee or to take other action described in
the Fund s Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has four
classes of shares, Class A, Class B, Class C and Class M. All
classes invest in the same investment portfolio. Each class has
its own dividends and distributions and pays certain expenses which
may be different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally. Only
shares of a particular class vote as a class on matters that affect
that class alone. Shares are freely transferrable. Please refer
to How the Fund is Managed in the Statement of Additional
Information on voting of shares.
The Manager and Its Affiliates. The Fund is managed by the
Manager, OppenheimerFunds, Inc., which is responsible for selecting
the Fund s investments and handling its day-to-day business. The
Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an Investment Advisory Agreement
which states the Manager s responsibilities. The Agreement sets
forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since
1959. The Manager (including subsidiaries) currently manages
investment companies, including other Oppenheimer funds, with
assets of more than $_______ billion as of March 31, 1997, and with
more than 3 million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in
part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company.
Portfolio Manager. The Portfolio Manager of the Fund is
Michael S. Rosen. He has been the person primarily responsible for
the day-to-day management of the Fund s portfolio since the Fund s
inception in 1986. Mr. Rosen is Vice President of the Fund, and
has also served as an officer and director of the Fund s previous
investment adviser.
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: 0.625% of the first $50
million of net assets, 0.500% of the next $250 million of net
assets and 0.4375% of net assets in excess of $300 million. The
Fund s management fee for its last fiscal year was 0.49% of average
annual net assets.
The Fund pays expenses related to its daily operations, such
as custodian fees, Trustees fees, transfer agency fees, legal and
auditing costs. Those expenses are paid out of the Fund s assets
and are not paid directly by shareholders. However, those expenses
reduce the net asset value of shares, and therefore are indirectly
borne by shareholders through their investment. More information
about the Investment Advisory Agreement and the other expenses paid
by the Fund is contained in the Statement of Additional
Information.
There is also information about the Fund s brokerage
policies and practices in Brokerage Policies of the Fund in the
Statement of Additional Information. That section discusses how
brokers and dealers are selected for the Fund s portfolio
transactions. When deciding which brokers to use, the Manager is
permitted by the Investment Advisory Agreement to consider whether
brokers have sold shares of the Fund or any other funds for which
the Manager serves as investment adviser.
The Distributor. The Fund s shares are sold through dealers
and brokers that have a sales agreement with OppenheimerFunds
Distributor, Inc., a subsidiary of the Manager that acts as the
Distributor. The Distributor also distributes the shares of other
Oppenheimer funds and is sub-distributor for funds managed by a
subsidiary of the Manager.
The Transfer Agent. The Fund s transfer agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an at-cost basis.
It also acts as the shareholder servicing agent for the other
Oppenheimer funds. Shareholders should direct inquiries about
their account to the Transfer Agent at the address and toll-free
numbers shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
total return, average annual total return and yield to
illustrate its performance. The performance of each class of
shares is shown separately, because the performance of each class
of shares will usually be different as a result of the different
kinds of expenses each class bears. These returns measure the
performance of a hypothetical investment in the Fund over various
periods, and do not show the performance of each shareholder's
investment (which will vary if dividends and distributions are
received in cash or shares are sold or additional shares are
purchased). The Fund's performance information may help you see
how well your Fund has done over time and to compare it to other
funds or market indices, as we have done below.
It is important to understand that the Fund s total returns
represent past performance and should not be considered to be
predictions of future returns or performance. This performance
data is described below, but more detailed information about how
total returns are calculated is contained in the Statement of
Additional Information, which also contains information about other
ways to measure and compare the Fund s performance. The Fund s
investment performance will vary over time, depending on market
conditions, the composition of the portfolio, expenses and which
class of shares you purchase.
Total Returns. There are different types of total
returns used to measure the Fund s performance. Total return is
the change in value of a hypothetical investment in the Fund over
a given period, assuming that all dividends and capital gains
distributions are reinvested in additional shares. The cumulative
total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the
average rate of return for each year in a period that would produce
the cumulative total return over the entire period. However,
average annual total returns do not show the Fund s actual
year-by-year performance.
When total returns are quoted for Class A shares and Class
M shares, normally the current maximum initial sales charge has
been deducted. Total returns may also be quoted at net asset
value, without including the sales charge, and those returns would
be reduced if sales charges were deducted. When total returns are
shown for Class B shares or Class C shares, the contingent deferred
sales charge that applies to the period for which total return is
shown has been deducted. They may also be shown based on the
change in net asset value, without including the effect of the
contingent deferred sales charge, and those returns would be
reduced if sales charges were deducted.
Yield. Each class of shares calculates its yield by
dividing the annualized net investment income per share on the
portfolio during a 30-day period by the maximum offering price on
the last day of the period. The yield of each class will differ
because of the different expenses of each class of shares. The
yield data represents a hypothetical investment return on the
portfolio, and does not measure an investment return based on
dividends actually paid to shareholders. To show that return, a
dividend yield may be calculated. Dividend yield is calculated by
dividing the dividends of a class derived from net investment
income during a stated period by the maximum offering price on the
last day of the period. Yields and dividend yields for Class A
shares and Class M shares reflect the deduction of the maximum
initial sales charge, but may also be shown based on the Fund s net
asset value per share, and those returns would be reduced if sales
charges were deducted. Yields for Class B, and Class C shares do
not reflect the deduction of the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the
Manager of the Fund's performance during its last fiscal year ended
December 31, 1996, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index.
Management's Discussion of Performance. The Fund s
investments in convertible securities were positively affected by
the strong performance stock market during the past fiscal year,
although the weaker performance of the bond market dampened the
overall positive total return. Investments in securities in the
financial services sector, particularly banks, performed well.
During the last year, the Fund reduced its holdings in the retail
sector; that sector negatively affected the Fund s performance.
Additionally, the Funds s performance was negatively affected by
its holdings in telecommunications securities. That sector
underperformed because deregulation increased the number of new
telecommunications businesses and increased competition within the
sector, reducing profits. The Fund s portfolio holdings,
allocations and strategies are subject to change.
Comparing the Fund's Performance to the Market. The chart
below shows the performance of a hypothetical $10,000 investment in
Class A, Class B, Class C and Class M shares of the Fund held until
December 31, 1996; in the case of Class A and B shares, from the
inception of the classes on May 1, 1995, in the case of Class C
shares, from the inception of the class on March 11, 1996 and in
the case of Class M shares, from December 31, 1986 through December
31, 1996.
The performance of each class of the Fund's shares is
compared to the performance of the Goldman Sachs Convertible Bond
100 Index, an unmanaged index of convertible securities. The
performance of each class of the Fund s shares is also compared to
the S&P 500 Index, a broad-based index of equity securities widely
regarded as a general measurement of the performance of the U.S.
equity securities market, and the Lehman Brothers Aggregate Bond
Index, a broad-based, unmanaged index of publicly-issued
nonconvertible investment grade debt of U.S. issuers, widely
recognized as a measure of the U.S. fixed-rate bond market. Index
performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none
of the data below shows the effect of taxes. Also, the Fund's
performance reflects the effect of the Fund s business and
operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to the securities in
any one index. Moreover, the index performance data does not
reflect any assessment of the risk of the investments included in
the index.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in: Oppenheimer Bond Fund for Growth (Class A) and Goldman Sachs
Convertible Bond 100 Index, S&P 500 Index and the Lehman Brothers
Aggregate Bond Index
[graph]
Average Annual Total Return of Class A shares of the Fund at
12/31/961
1 Year Life
- ------------------------------------------------------------------
3.79% 11.52%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in: Oppenheimer Bond Fund for Growth (Class B) and Goldman Sachs
Convertible Bond 100 Index, S&P 500 Index and the Lehman Brothers
Aggregate Bond Index
[graph]
Average Annual Total Return of Class B shares of the Fund at
12/31/962
1 Year Life
- ------------------------------------------------------------------
4.82% 12.55%
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in: Oppenheimer Bond Fund for Growth (Class C) and Goldman Sachs
Convertible Bond 100 Index, S&P 500 Index and the Lehman Brothers
Aggregate Bond Index
[graph]
Cumulative Total Return of Class C shares of the Fund at 12/31/963
Life
- ------------------------------------------------------------------
6.74%
Class M Shares
Comparison of Change in Value of $10,000 Hypothetical Investments
in: Oppenheimer Bond Fund for Growth (Class C) and Goldman Sachs
Convertible Bond 100 Index, S&P 500 Index and the Lehman Brothers
Aggregate Bond Index
[graph]
Average Annual Total Return of Class M shares of the Fund at
12/31/964
1 Year 5 Years 10 Years
- ------------------------------------------------------------------
6.02% 16.01% 10.58%
_______________________
Total returns and the ending account values in the graphs reflect
change in share value and include reinvestment of all dividends and
capital gains distributions. The performance information for the
Indices begins on January 1, 1987.
(1) The inception date of the Class A shares was 5/1/95. Class A
returns and the ending account value in the graph are shown net of
the applicable 5.75% maximum initial sales charge.
(2) Class B shares of the Fund were first publicly offered on
5/1/95. Returns are shown net of the applicable 5% and 4%
contingent deferred sales charge, respectively, for the one-year
period and for the life-of-class. The ending account value in the
graph is net of the applicable 4% contingent deferred sales charge.
(3) Class C shares of the Fund were first publicly offered on
3/11/96. The cumulative total return for the Class C shares is
shown net of the applicable 1% contingent deferred sales charge.
(4) Class M shares of the Fund were first publicly offered on
6/3/86. Class M share returns and the ending account value in the
graph are shown net of the applicable 3.25% maximum initial sales
charge.
Past performance is not predicative of future performance.
Graphs are not drawn to same scale.
<PAGE>
A B O U T Y O U R A C C O U N T
How to Buy Shares
Classes of Shares. The Fund offers investors four different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices.
Class A Shares. If you buy Class A shares, you pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by Retirement Plans, as defined in Class
A Contingent Deferred Sales Charge ). If you purchase Class A
shares as part of an investment of at least $1 million ($500,000
for Retirement Plans) in shares of one or more Oppenheimer funds,
you will not pay an initial sales charge but if you sell any of
those shares within 18 months of buying them, you may pay a
contingent deferred sales charge. The amount of that sales charge
will vary depending on the amount you invested. Sales charge rates
are described in Buying Class A Shares below.
Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
six years of buying them, you will normally pay a contingent
deferred sales charge that varies depending on how long you own
your shares, as described in Buying Class B Shares below.
Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%, as described in Buying Class C
Shares below.
Class M Shares. If you buy Class M shares, you pay an
initial sales charge on investments up to $1 million. Purchase
orders for $1 million or more will be declined. Sales charge rates
are described in Buying Class M Shares below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund s operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over
time and you plan to purchase additional shares, you should
re-evaluate those factors to see if you should consider another
class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class and
considered the effect of the annual asset-based sales charge on
Class B, Class C and Class M expenses (which, like all expenses,
will affect your investment return). For the sake of comparison,
we have assumed that there is a 10% rate of appreciation in the
investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund s
actual investment returns and the operating expenses borne by each
class of shares, and which class of shares you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor s financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. Because of the effect of
class-based expenses, your choice will also depend on how much you
plan to invest. For example, the reduced sales charges available
for larger purchases of Class A or Class M shares may, over time,
offset the effect of paying an initial sales charge on your
investment (which reduces the amount of your investment dollars
used to buy shares for your account), compared to the effect over
time of higher class-based expenses on Class B or Class C shares,
for which no initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for less
than six years), you should probably consider purchasing Class C
shares rather than Class B shares, because of the effect of the
Class B contingent deferred sales charge if you redeem in less than
6 years, as well as the effect of the Class B asset-based sales
charge on the investment return for that class in the short-term.
Class C shares might be the appropriate choice (especially for
investments of less than $100,000), because there is no initial
sales charge on Class C shares, and the contingent deferred sales
charge does not apply to amounts you sell after holding them one
year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual
asset-based sales charge on Class C shares will have a greater
impact on your account over the longer term than the reduced
front-end sales charge available for larger purchases of Class A
shares. For example, Class A might be more advantageous than Class
C (as well as Class B) for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments
over $250,000 expected to be held 4 to 6 years (or more), Class A
shares may become more advantageous than Class C (and B). If
investing $500,000 or more, Class A may be more advantageous as
your investment horizon approaches three years or more. Investors
who are considering whether to purchase Class A shares or Class M
shares may want to consider the effect of the initial sales charge
applicable to the amount invested and the effect of the asset-based
sales charge applicable to Class M shares over the anticipated
length of the investment.
For investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how
long you intend to hold your shares. For that reason, the
Distributor normally will not accept purchase orders of $500,000 or
more of Class B shares or $1 million or more of Class C or Class M
shares from a single investor. Of course, these examples are based
on approximations of the effect of current sales charges and
expenses on a hypothetical investment over time, using the assumed
annual performance return stated above, and therefore should not be
relied on as rigid guidelines.
Investing for the Longer Term. If you are investing for the
longer-term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be
an appropriate consideration if you plan to invest less than
$100,000. If you plan to invest more than $100,000 over the long
term, Class A shares will likely be more advantageous than Class B
shares or C shares, as discussed above, because of the effect of
the expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A
shares under the Fund s Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumptions stated above and
therefore you should analyze your options carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) may not be advisable because of the effect of the
contingent deferred sales charge for Class B or Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares to buy.
For example, the exchange privileges available to Class M
Shareholders are limited. See How to Exchange Shares. Share
certificates are not available for Class B or Class C shares and if
you are considering using your shares as collateral for a loan,
that may be a factor to consider. Additionally, the dividends
payable to Class B, Class C and Class M shareholders will be
reduced by certain expenses borne by those classes that are not
borne by Class A, such as the Class B, Class C and Class M
asset-based sales charges described below and in the Statement of
Additional Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class than for selling another class.
It is important that investors understand that the purpose of the
Class B and Class C contingent deferred sales charges and the
purpose of asset-based sales charges which are applicable to Class
B, Class C and Class M shares are the same as the purpose of the
front-end sales charge on sales of Class A shares and Class M
shares: to compensate the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
How Much Must You Invest? Subject to certain exceptions, you can
open a Fund account with a minimum initial investment of $1,000 and
make additional investments at any time with as little as $25.
There are reduced minimum investments under special investment
plans:
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments for as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing and 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways
- - through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor s agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B, Class C
or Class M shares. If you do not choose, your investment will be
made in Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to OppenheimerFunds Distributor, Inc. Mail it to P.O.
Box 5270, Denver, Colorado 80217. If you don t list a dealer on
the application, the Distributor will act as your agent in buying
the shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for
you.
Buying Shares Through 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 receive further
instructions.
Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing
House (ACH) member. You can then transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your bank
account.
Shares are purchased for your account through AccountLink on
the regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to AccountLink
below for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are in the Statement
of Additional Information.
At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver. In most cases,
to enable you to receive that day s offering price, the Distributor
or its designated agent must receive your order by the time of day
The New York Stock Exchange closes, which is normally 4:00 P. M.,
New York time, but may be earlier on some days (all references to
time in this Prospectus mean New York time ). The net asset value
of each class of shares is determined as of that time on each day
The New York Stock Exchange is open (which is a regular business
day ).
If you buy shares through a dealer, the dealer must receive
your order by the close of The New York Stock Exchange, on a
regular business day and transmit it to the Distributor so that it
is received before the Distributor s close of business that day,
which is normally 5:00 P.M. The Distributor may reject any purchase
order for the Fund s shares, in its sole discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix
C to this Prospectus sets forth conditions for waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to purchases of shares of the Fund (including purchases
by exchange) by a person who was a shareholder of one of the Former
Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their
offering price, which is normally net asset value plus an initial
sales charge. However, in some cases, described below, purchases
are not subject to an initial sales charge, and the offering price
will be the net asset value. Special minimum investment
requirements may apply. In some cases, reduced sales charges may
be available, as described below. Out of the amount you invest,
the Fund receives the net asset value to invest for your account.
The sales charge varies depending on the amount of your purchase.
A portion of the sales charge may be retained by the Distributor
and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as
follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission
as Percentage as Percentage as Percentage
of Offering of Amount of Offering
Amount of Purchase Price Invested Price
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
- ----------------------------------------------------------------------------
$25,000 or more but less
than $50,000 5.50% 5.82% 4.75%
- ---------------------------------------------------------------------------
$50,000 or more but less
than $100,000 4.75% 4.99% 4.00%
- ----------------------------------------------------------------------------
$100,000 or more but less
than $250,000 3.75% 3.90% 3.00%
- --------------------------------------------------------------------------
$250,000 or more but less
than $500,000 2.50% 2.56% 2.00%
- ----------------------------------------------------------------------------
$500,000 or more but less
than $1 million 2.00% 2.04% 1.60%
</TABLE>
The Distributor reserves the right to reallow the entire
sales charge to dealers. If that occurs, the dealer may be
considered an underwriter under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more;
Purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more;
Purchases by a retirement plan qualified under section
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that: (1) buys
shares costing $500,000 or more, or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more; or
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option under a special
arrangement with the Distributor if the purchase occurs more than
30 days after the addition of the Oppenheimer funds as an
investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the
end of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") may be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions) or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's exchange privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the sales charge will apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges For Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares or
Class M shares, you and your spouse can add together Class A and
Class B and Class M shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf
of your children who are minors. A fiduciary can count all shares
purchased for a trust, estate or other fiduciary account (including
one or more employee benefit plans of the same employer) that has
multiple accounts.
Additionally, you can add together current purchases of
Class A and Class B and Class M shares of the Fund and other
Oppenheimer funds to reduce the sales charge rate that applies to
current purchases of Class A or Class M shares. You can also
include Class A, Class B and Class M shares of Oppenheimer funds
you previously purchased subject to an initial or contingent
deferred sales charge to reduce the sales charge rate for current
purchases of Class A or Class M shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares you previously purchased will be their current value
(at offering price). The Oppenheimer funds are listed in Reduced
Sales Charges in the Statement of Additional Information, or a
list can be obtained from the Distributor. The reduced sales
charge will apply only to current purchases and must be requested
when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you
purchase Class A shares Class B and/or Class M shares of the Fund
and other Oppenheimer funds during a 13-month period, you can
reduce the sales charge rate that applies to your purchases of
Class A or Class M shares. The total amount of your intended
purchases of Class A, Class B and Class M shares will determine the
reduced sales charge rate for the Class A or Class M shares
purchased during that period. This can include purchases made up
to 90 days before the date of the Letter. More information is
contained in the Application and in Reduced Sales Charges in the
Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales
charges are not imposed in the circumstances described below.
There is an explanation of this policy in Reduced Sales Charges
in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their immediate families as defined in Reduced
Sales Charges in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser s own
account (or for the benefit of such employee s spouse or minor
children);
dealers, brokers or registered investment advisors that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or advisor
for the purchase or sale of Fund shares);
(1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and rabbi trusts that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner of the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares);
directors, trustees, officers or full-time employees of
OpCap Advisors or its Affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
advisor (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent sales charge was paid (this
waiver also applies to shares purchased by exchange of shares of
Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see Shareholder Account
Rules and Policies, below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer s portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program; or
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant s account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact;(4) hardship withdrawals, as defined in the plan;(5) under a
Qualified Domestic Relations Order, as defined in the Internal
Revenue Code: (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish substantially equal
periodic payments as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of mutual fund
(other than a fund managed by the Manger or its subsidiary) offered
as an investment option in a Retirement Plan in which Oppenheimer
funds are also offered as investment options under a special
arrangement with the Distributor; or (11) plan termination or in-
service distributions , if the redemption proceeds are rolled over
directly to an OppenheimerFunds IRA;
for all distributions from Retirement Plans with 500 or more
eligible participants, except distributions due to termination of
the Fund as an investment option for the Plan; or
for all distributions from certain 401(k) plan programs
sponsored by broker-dealers that have entered into a special
agreement with the Distributor.
Service Plan and Agreement for Class A Shares. The Fund
has adopted a Service Plan and Agreement for Class A shares to
reimburse the Distributor for a portion of its costs incurred in
connection with the personal service and maintenance of shareholder
accounts that hold Class A shares. Reimbursement is made quarterly
at an annual rate that may not exceed 0.25% of the average annual
net assets of Class A shares of the Fund. The Distributor uses all
of those fees to compensate dealers, brokers, banks and other
financial institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares
and to reimburse itself (if the Fund s Board of Trustees authorizes
such reimbursements, which it has not yet done) for its other
expenditures under the Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund s investment
plans available and providing other services at the request of the
Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the dealer
or its customers. The payments under the Plan increase the annual
expenses of Class A shares. For more details, please refer to
Distribution and Service Plans in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset
value per share without an initial sales charge. However, if Class
B shares are redeemed within 6 years of their purchase, a
contingent deferred sales charge will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by an
increase in net asset value over the initial purchase price. The
Class B contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sales of Class B
shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
below in "Waivers of Class B and Class C Sales Charges."
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month on Redemptions in that Year
In Which Purchase Order Was (As % of Amount Subject to
Accepted Charge)
- -----------------------------------------------------------------
0 - 1 5.0%
- ----------------------------------------------------------------
1 - 2 4.0%
- ----------------------------------------------------------------
2 - 3 3.0%
- ----------------------------------------------------------------
3 - 4 3.0%
- -----------------------------------------------------------------
4 - 5 2.0%
- ----------------------------------------------------------------
5 - 6 1.0%
- ------------------------------------------------------------------
6 and following None
In the table, a year is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
For redemptions of Class B shares purchased on or before March
31, 1996 in accounts established on or before March 8, 1996, the
following contingent deferred sales charges (as a percentage of the
amount subject to the charge) will apply with respect to the number
of years which have elapsed since the beginning of the month in
which the purchase order was accepted: 0-1 years, 3.5%; 1-2 years,
3.0%, 2-3 years, 2.5%; 3-4 years, 2.0%; 4-5 years, 1.5%; 5-6 years,
1.0%, 6 years and thereafter, 0%. Upon an exchange of such shares,
the contingent deferred sales charge schedule of the class of
shares of the Fund into which the exchange was made will be
applicable.
Automatic Conversion of Class B Shares. Seventy-two
months after you purchase Class B shares, those shares will
automatically convert to Class A shares. This conversion feature
relieves Class B shareholders of the asset-based sales charge that
applies to Class B shares under the Class B Distribution and
Service Plan, described below. The conversion is based on the
relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other
Class B shares that were acquired by the reinvestment of dividends
and distributions on the converted shares will also convert to
Class A shares. The conversion feature is subject to the continued
availability of a tax ruling described in Alternative Sales
Arrangements - Class A, Class B, Class C and Class M Shares in the
Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset
value per share without an initial sales charge. However, if Class
C shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of the redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price
(including increases due to the reinvestment of dividends and
capital gains distributions). The Class C contingent deferred
sales charge is paid to the Distributor to reimburse its expenses
of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months and (3)
shares held the longest during the 12-month period. All purchases
are considered to have been made on the first regular business day
of the month in which the purchase was made.
Distribution And Service Plans and Agreements for Class B and
Class C Shares. The Fund has adopted Distribution and Service
Plans and Agreements for Class B and Class C shares to compensate
the Distributor for its services and costs in distributing Class B
and Class C shares and servicing accounts. Under the Plans, the
Fund pays the Distributor an annual asset-based sales charge of
0.75% per year on Class B and Class C shares. The Distributor also
receives a service fee of 0.25% per year under each plan.
Under each Plan, both fees are computed on the average of
the net asset value of shares in the respective class, determined
as of the close of each regular business day during the period.
The asset-based sales charge allows investors to buy Class B or
Class C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of average net assets per year of
the respective class.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class
C shares. Those services are similar to those provided under the
Class A Service Plan, described above. The Distributor pays the
0.25% service fees to dealers in advance for the first year after
Class B or Class C shares have been sold by the dealer and retains
the service fee paid by the Fund in that year. After the shares
have been held for a year, the Distributor pays the service fees to
dealers on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sales of Class B shares is therefore 4.00% of the
purchase price. The Distributor retains the Class B asset-based
sales charge.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sale of Class C shares is therefore 1.00% of the
purchase price. The Distributor retains the asset-based sales
charge during the first year Class C shares are outstanding to
recoup the sales commissions it has paid, the advances of service
fee payments it has made, and its financing costs and other
expenses. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares
that have been outstanding for a year or more.
The Distributor s actual expenses in selling Class B and
Class C shares may be more than the payments it receives from
contingent deferred sales charges collected on redeemed shares and
from the Fund under the Distribution and Service Plans for Class B
and Class C shares. At December 31, 1996, the end of the Class B
Plan year, the Distributor had incurred unreimbursed expenses in
connection with the sale of Class B shares of $6,713,841(equal to
3.2% of the Fund s net assets represented by Class B shares on that
date). At December 31, 1996, the end of the Class C Plan Year, the
Distributor had incurred unreimbursed expenses in connection with
the sale of Class C shares of $494,297 (equal to 1.3% of the Fund s
net assets represented by Class C shares on that date). If either
Plan is terminated by the Fund, the Board of Trustees may allow the
Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the Plan was terminated.
Waivers of Class B and Class C Sales Charges. The Class
B and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B and Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
described in Reduced Sales Charges in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply to the redemption:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary (the
death or disability must have occurred after the account was
established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a grantor trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from Retirement Plans to make substantially
equal periodic payments as permitted in Section 72(t) of the
Internal Revenue Code that do not exceed 10% of the account value
annually, measured from the date the Transfer Agent receives the
request); or
distributions from OppenheimerFunds prototype 401(k) plans
(1) for loans to participants or beneficiaries; (2) for hardship
withdrawals; (3) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (4) to meet minimum
distribution requirements as defined in the internal Revenue Code;
(5) to make substantially equal periodic payments as described in
Section 72(t) of the Internal Revenue Code; or (5) for separation
from service; or
distributions from certain 401(k) plan programs sponsored by
broker-dealers that have entered into a special agreement with the
Distributor.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and
Class C shares in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose;
shares issued in plans of reorganization to which the Fund
is a party; and
shares redeemed in involuntary redemptions as described
below.
Buying Class M Shares. Class M shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, with respect to certain accounts established
prior to March 11, 1996, purchases are not subject to an initial
sales charge, and the offering price will be the net asset value.
See Appendix B. Special minimum investment requirements may apply.
In some cases, reduced sales charges may be available, as described
below. Out of the amount you invest, the Fund receives the net
asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales
charge may be retained by the Distributor and allocated to your
dealer as a commission. The current sales charge rates and
commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION> Front-End Front-End
Sales Charge as Sales Charge as Commission as a
a Percentage of a Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $250,000 3.25% 3.36% 3.00%
- ----------------------------------------------------------------------------
$250,000 or more but
less than $500,000 2.25% 2.30% 2.00%
- ----------------------------------------------------------------------------
$500,000 or more but
less than $1,000,000 1.25% 1.27% 1.00%
</TABLE>
Purchases of $1,000,000 or more will generally not be accepted.
Investors considering an investment of $1,000,000 or more may want
to consider purchasing Class A shares of the Fund. The Distributor
reserves the right to reallow the entire commission to dealers. If
that occurs, the dealer may be considered an underwriter under
Federal securities laws.
The Fund offers several methods by which investors may
aggregate purchases to reduce the applicable sales load on Class A
or Class M shares. These methods, which include rights of
accumulation and letters of intent, are explained above in the
section entitled "How to Buy Shares - Buying Class A Shares."
Distribution and Service Plan for Class M Shares. The
Fund has adopted a Distribution and Service Plan for Class M shares
to reimburse the Distributor for its expenses incurred in
connection with the distribution of Class M shares and servicing
accounts. Under the Plan, the Fund pays the Distributor an annual
asset-based sales charge of up to 0.50% per year on Class M
shares that are outstanding. The Distributor also receives a
service fee of up to 0.25% per year. Both fees are computed on the
average annual net assets of Class M shares, determined as of the
close of each regular business day. The Distributor uses the
service fee to compensate dealers for providing personal services
for accounts that hold Class M shares. The Distributor may pay a
portion of the asset-based sales charge which it receives from the
Fund to provide additional compensation to dealers who sell Class
M shares. The asset-based sales charge and service fee increase
Class M expenses by 0.75% of average net assets per year.
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.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To
purchase shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to How to Exchange Shares, below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to How to Sell Shares, below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or
annual basis. The checks may be sent to you or sent automatically
to your bank account on AccountLink. You may even set up certain
types of withdrawals of up to $1,500 per month by telephone. You
should consult the Statement of Additional Information for more
details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange an amount you establish in advance automatically
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer funds account is
$25. These exchanges are subject to the terms of the Exchange
Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class
A, Class B or Class M shares of the Fund, you have up to 6 months
to reinvest all or part of the redemption proceeds in Class A
shares of the Fund or other Oppenheimer funds without paying a
sales charge. This privilege applies to redemptions of Class A or
Class M shares purchased subject to an initial sales charge or to
Class A or Class B shares on which you paid a contingent deferred
sales charge when you redeemed them. It does not apply to Class C
shares. You must be sure to ask the Distributor for this privilege
when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible
tax-exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP-IRAs
Pension and Profit-Sharing Plans for self-employed persons
and small business owners
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax
withholding requirements for distributions from retirement plans
and you must submit a withholding form with your request to avoid
delay. If your retirement plan account is held for you by your
employer, you must arrange for the distribution request to be sent
by the plan administrator or trustee. There are additional details
in the Statement of Additional Information.
Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business, or as a fiduciary,
you must also include your title in the signature.
Selling Shares By Mail. Write a letter of instructions that
includes:
Your name
The Fund s name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person
asking to sell shares.
Use the following address Send courier or Express Mail
for requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue,
Denver, Colorado 80217 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. Shares held in an OppenheimerFunds retirement plan
or under a share certificate may not be redeemed by telephone.
To redeem shares through a service representative, call
1-800-852-8457
To redeem shares automatically on PhoneLink, call
1-800-533-3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid By Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account. This service is not available within
30 days of changing the address on an account.
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 wire 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 wired.
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 additional information.
Please refer to Special Arrangements for Repurchase of Shares from
Dealers and Brokers in the Statement of Additional Information for
more details.
How To Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge.
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Except with respect to exchanges of Class M shares, which
may be exchanged only for Class A shares as described in the
following paragraph, shares of a particular class may be exchanged
only for shares of the same class in the other Oppenheimer funds.
For example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered Class A Shares for exchange purposes. 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.
The Fund is currently the only Oppenheimer fund which offers
Class M shares. Except as described herein there may be no
exchanges of any class of shares of any Oppenheimer fund into Class
M shares of the Fund. Class M shares may be exchanged for Class A
shares of Oppenheimer funds. Except for Class A shares of either
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves
which were acquired upon the exchange of Class M shares of the
Fund, no exchanges of any class of shares of any Oppenheimer fund
into Class M shares are permitted. Please refer to How to
Exchange Shares in the Statement of Additional Information for
more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in How to Sell
Shares.
Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at
1-800-852-8457 or by using PhoneLink for automated exchanges, by
calling 1-800-533-3310. Telephone exchanges may be made only
between accounts that are registered with the same name(s) and
address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or by
calling a service representative at 1-800-525-7048. Exchanges of
shares involve a redemption of the shares of the fund you own and
a purchase of shares of the other fund.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M. but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a market-timing strategy might
require the disposition of securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption of
the shares of the Fund you own and a purchase of the shares of the
other fund, which may result in a capital gain or loss. For more
information about taxes affecting exchanges, please refer to "How
to Exchange Shares" in the Statement of Additional Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules And Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange, which is
normally 4:00 P.M. but may be earlier on some days, on each day the
Exchange is open by dividing the value of the Fund s net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund s Board of Trustees has established
procedures to value the Fund s securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities, obligations for which market values cannot be readily
obtained, and call options and hedging instruments. These
procedures are described more completely in the Statement of
Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund s best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously.
The redemption price for shares will vary from day to day
because the value of the securities in the Fund s portfolio
fluctuates, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B, Class
C and Class M shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange to have your
bank provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
Backup Withholding of Federal income tax may be applied
at the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or Employer Identification Number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
How To Buy Shares, you may be subject to a contingent deferred
sales charge when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund s records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Income Dividends. The Fund receives income in the form of
interest and dividends paid by its investments. This income, less
the expenses incurred in the Fund s operations, is referred to as
net investment income. Income dividends are declared and recorded
each day based on estimated net investment income. Such dividends
are paid quarterly. Investors earn such dividends beginning on the
day payment for shares is received to the day prior to the
settlement date of redemption. For federal income tax purposes,
all distributions declared in the fourth quarter of any calendar
year are deemed paid in that calendar year even if they are
distributed in January of the following year. Any net gain the
Fund may realize from transactions in securities held less than the
period required for long term capital gain recognition (taking into
account any carryover of capital losses from previous years), while
technically a distribution from capital gain, is taxed as an income
dividend under the Internal Revenue Code of 1986, as amended (the
Code ).
Capital Gains. If, during any fiscal year, the Fund realizes a net
gain on transactions in securities held for more than one year, it
has a net long term capital gain. After deduction of the amount of
any net short term loss, the balance may be used to offset any
carryover of capital losses from previous years, or, if there is no
loss carryover, will be paid out to shareholders as a capital gain
distribution. Capital gain distributions, if any, will be paid to
shareholders of record prior to the end of each calendar year.
Because the value of Fund shares is based directly on the
amount of its net assets, rather than on the principle of supply
and demand, any distribution of income or capital gain will result
in a decrease in the value of Fund shares equal to the amount of
the distribution.
All dividends and capital gain distributions are paid in
additional full and fractional shares at net asset value for each
shareholder s account unless otherwise requested on the Account
Application or by notifying the Fund in writing or by telephone.
Notice will be effective for the current dividend or distribution
only if it is received by the Fund at least five business days
before the record date. Notice received thereafter will be
effective commencing with the next dividend or distribution.
Income dividends and capital gain distributions will be credited to
a shareholder s account in additional shares valued at the closing
net asset value (without a sales load).
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
Reinvest all Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in 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. 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. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local income 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.
Buying a Dividend : When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy
shares on or just before the ex-dividend date, or just before the
Fund declares a capital gains distribution, you will pay the full
price for the shares and then receive a portion of the price back
as a taxable dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax. A
capital gain or loss is the difference between the price you paid
for the shares and the price you received when you sold them.
Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER BOND FUND FOR GROWTH
Graphic material included in Prospectus of Oppenheimer Bond
Fund For Growth: "Comparison of Total Return of Oppenheimer Bond
Fund For Growth and The Goldman Sachs Convertible Bond Index -
Change in Value of a $10,000 Hypothetical Investment"
Linear graphs will be included in the Prospectus of Oppenheimer
Bond Fund For Growth (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 in the
Fund in Class A, Class B, Class C and Class M shares of the Fund
held until December 31, 1996; in the case of Class A and B shares,
from the inception of the classes on May 1, 1995, in the case of
Class C shares, from the inception of the class on March 11, 1996
and in the case of Class M shares, from December 31, 1986 through
December 31, 1996. The graphs will compare such values with the
same investments over the same time periods with The Goldman Sachs
Convertible Bond Index. Set forth below are the relevant data
points that will appear on the linear graphs. Additional
information with respect to the foregoing, including a description
of The Goldman Sachs Convertible Bond Index, is set forth in the
Prospectus under "Performance of the Fund -- Comparing the Fund's
Performance to the Market"
Fiscal Year Oppenheimer Bond Fund Goldman Sachs
(Period) Ended for Growth Class A(1) Convertible Bond Index
5/1/95 $ 9,425 $10,000
12/31/95 $10,890 $11,480
12/31/96 $11,993 $13,058
Fiscal Year Oppenheimer Bond Fund Goldman Sachs
(Period) Ended for Growth Class B(1) Convertible Bond Index
5/1/95 $10,000 $10,000
12/31/95 $11,509 $11,480
12/31/96 $12,177 $13,058
Fiscal Year Oppenheimer Bond Fund Goldman Sachs
(Period) Ended for Growth Class C(2) Convertible Bond Index
3/11/96 $10,000 $10,000
12/31/96 $10,675 $10,874
Fiscal Year Oppenheimer Bond Fund Goldman Sachs
(Period) Ended for Growth Class M Convertible Bond Index
12/31/86 $9,675 $10,000
04/15/88 $8,772 $9,948
12/31/88 $9,862 $11,278
12/31/89 $10,665 $12,116
12/31/90 $9,797 $10,871
12/31/91 $12,589 $13,882
12/31/92 $16,513 $16,331
12/31/93 $20,021 $19,128
12/31/94 $19,797 $18,201
12/31/95 $24,944 $23,206
12/31/96 $27,334 $26,397
- ----------------------
(1) Class A & B shares of the Fund were first publicly offered on
May 1, 1995.
(2) Class C shares of the Fund were first publicly offered on July
11, 1995.
<PAGE>
Appendix A
Description of Securitie s Ratings
Moody s Investors Service, Inc. Bond Ratings
Aaa: Bonds which are rated Aaa are judged to be the best quality
and to carry the smallest degree of investment risk. Interest
payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective
elements are likely to change, the changes that can be expected are
most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group, they comprise what
are generally known as high-grade bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as with Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than
those of Aaa securities.
A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
The investments in which the Fund will principally invest will be
in the lower-rated categories described below.
Baa: Bonds which are rated Baa are considered medium grade
obligations, i. e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered well-assured. Often
the protection of interest and principal payments may be very
moderate and not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds which are rated B generally lack characteristics of
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa: Bonds which are rated Caa are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds
and can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Standard & Poor s Bond Ratings
AAA: AAA is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in small
degree.
A: Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions. The
investments in which the Fund will principally invest will be in
the lower-rated categories, described below.
BBB: Bonds rated BBB are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the A category.
BB, B CCC, CC: Bonds rated BB, B, CCC and CC are regarded,
on balance, as predominantly speculative with respect to the
issuer s capacity to pay interest and repay principal in accordance
with the terms of the obligation. BB indicates the lowest degree
of speculation and CC the highest degree. While such bonds will
likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
C: Bonds on which no interest is being paid are rated C .
D: Bonds rated D are in payment default and payment of interest
and/or repayment of principal is in arrears.
Fitch Investors Service, Inc.
Investment Grade Bond Ratings
AAA Bonds 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 Bonds 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."
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+."
A Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal
is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with
higher ratings.
BBB Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher
ratings.
Speculative Grade Bond Ratings
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse
economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt
service requirements.
B Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflect the obligor's limited margin of safety and the need for
reasonable business and economic activity through out the life of
the issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations
requires an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or
principal.
DDD, DD and D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in liquidation
or reorganization of the obligor. "DDD" represents the highest
potential for recovery on these bonds, and "D" represents the
lowest potential for recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the
rating category. Plus and minus signs, however, are not used in
the "AAA," "DDD," "DD," or "D" categories.
Duff & Phelps' Ratings
Long-Term Debt and Preferred Stock
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free US Treasury debt.
AA+, AA & AA- High credit quality protection factors are strong.
Risk is modest but may vary slightly from time to time because of
economic conditions.
A+, A & A- Protection factors are average but adequate. However,
risk factors are more variable and greater in periods of economic
stress.
BBB+, BBB & BBB- Below average protection factors but still
considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.
BB+, BB & BB- Below investment grade but deemed to meet
obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company
fortunes. Overall quality may move up or down frequently within
the category.
B+, B & B- Below investment grade and possessing risk that
obligations will not be met when due. Financial protection factors
will fluctuate widely according to economic cycles, industry
conditions and/or company fortunes. Potential exists for frequent
changes in the rating within this category or into a higher of
lower rating grade.
CCC Well below investment grade securities. Considerable
uncertainty exists as to timely payment of principal interest or
preferred dividends. Protection factors are narrow and risk can be
substantial with unfavorable economic industry conditions, and/or
with unfavorable company developments.
DD Defaulted debt obligations issuer failed to meet scheduled
principal and/or interest payments.
DP Preferred stock with dividend arrearages.
<PAGE>
Appendix B
Sales Charge Waivers on Purchases of Class M Shares for Accounts
Established Prior to March 11, 1996
The Fund may sell Class M shares at net asset value to investors
who satisfy the following criteria and who, prior to March 11,
1996, had established accounts, pursuant to which such investors
were permitted to purchase the Fund s then outstanding Class A
shares at net asset value: (a) the Manager or its affiliates, (b)
present or former officers, directors, trustees and employees (and
their immediate families as defined in the Statement of
Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees, (c) registered management investment companies, or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose, (d) dealers or
brokers that have a sales agreement with the Distributor, if they
purchase shares for their own accounts or for retirement plans for
their employees, (e) employees and registered representatives (and
their spouses) of dealers or brokers described above or financial
institutions that have entered into sales arrangements with such
dealers or brokers (and are identified to the Distributor) or with
the Distributor; the purchaser must certify to the Distributor at
the time of purchase that the purchase is for the purchaser s own
account (or for the benefit of such employee s spouse or minor
children), (f) dealers, brokers or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
on the purchase of Fund shares), and (g) dealers, brokers or
registered investment advisers that have entered into an agreement
with the Distributor to sell shares to defined contribution
employee retirement plans for which the dealer, broker or
investment adviser provides administrative services.
<PAGE>
APPENDIX C
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers
for Class A, Class B and Class C shares of the Fund described
elsewhere in this Prospectus are modified as described below for
those shareholders of (i) Quest for Value Fund, Inc., Quest for
Value Growth and Income Fund, Quest for Value Opportunity Fund,
Quest for Value Small Capitalization Fund and Quest for Value
Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment advisor to those
funds, and (ii) Quest for Value U.S. Government Income Fund, Quest
for Value Investment Quality Income Fund, Quest for Value Global
Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for
Value National Tax-Exempt Fund and Quest for Value California Tax-
Exempt Fund when those funds merged into various Oppenheimer funds
on November 24, 1995. The funds listed above are referred to in
this Prospectus as the Former Quest for Value Funds. The waivers
of initial and contingent deferred sales charges described in this
Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds
or (ii) received by such shareholder pursuant to the merger of any
of the Former Quest for Value Funds into an Oppenheimer fund on
November 24, 1995.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain
Former Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a Qualified
Retirement Plan through a single broker, dealer or financial
institution, or by members of Associations formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a Qualified Retirement Plan includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
- ----------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- ----------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
- ----------------------------------------------------------------
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages 33 to 34 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund s Distributor.
Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund issued in the reorganization on November
24, 1995 for shares of Quest For Value Investment Quality Income
Fund that were subject to a contingent deferred sales charge, will
be subject to a contingent deferred sales charge at the following
rates: if they are redeemed within 18 months of the end of the
calendar month in which they were purchased, at a rate equal to
1.0% if the redemption occurs within 12 months of their initial
purchase and at a rate of 0.50 of 1.0% if the redemption occurs in
the subsequent six months. This contingent deferred sales charge
rate also applies to shares of the Fund purchased by exchange of
shares of other Oppenheimer funds that were acquired as a result of
the merger of Former Quest for Value Funds into those Oppenheimer
funds, and which shares were subject to a Class A contingent
deferred sales charge prior to November 24, 1995. Class A shares
of any of the Former Quest for Value Funds purchased without an
initial sales charge on or before November 22, 1995 will continue
to be subject to the applicable contingent deferred sales charge in
effect as of that date as set forth in the then-current prospectus
for such fund.
Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in
Certain Transactions. The Class A contingent deferred sales charge
will not apply to redemptions of Class A shares of the Fund
purchased by the following investors who were shareholders of any
Former Quest for Value Fund:
Investors who purchased Class A shares from a dealer that
is or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special strategic alliance with the distributor of those funds.
The Fund s Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in Class A Contingent
Deferred Sales Charge.
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March
6, 1995. In the following cases, the contingent deferred sales
charge will be waived for redemptions of Class A, B or C shares of
the Fund acquired by merger of a Former Quest for Value Fund into
the Fund or by exchange from an Oppenheimer fund that was a Former
Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder s account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After
March 6, 1995 but Prior to November 24, 1995. In the following
cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For Value
Fund or into which such fund merged, if those shares were purchased
on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from
Individual Retirement Accounts under Section 408(a) of the Internal
Revenue Code or retirement plans under Section 401(a), 401(k),
403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than
from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder s account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder s account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in this Fund or another Oppenheimer fund.
Special Dealer Arrangements. Dealers who sold Class B shares of a
Former Quest for Value Fund to Quest for Value prototype 401(k)
plans that were maintained on the TRAC-2000 recordkeeping system
and that were transferred to an OppenheimerFunds prototype 401(k)
plan shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and (i) the shares held by
those plans were exchanged for Class A shares, or (ii) the plan
assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
Oppenheimer Bond Fund for Growth
350 Linden Oaks
Rochester, New York 14625-2807
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
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Price Waterhouse LLP
1100 Bausch & Lomb Place
Rochester, New York 14604-0075
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N. W.
Washington, D.C. 20036-5891
No dealer, salesperson or another person has been authorized to
give any information or to make any representations other than
those contained in this Prospectus or the Statement of Additional
Information, and if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
PR0345.001.0397
<PAGE>
Bond Fund Series
Oppenheimer Bond Fund for Growth
350 Linden Oaks, Rochester, New York 14625
1-800-525-7048
Statement of Additional Information dated April 11, 1997
This Statement of Additional Information of Bond Fund Series-
Oppenheimer Bond Fund for Growth (the Fund ) is not a Prospectus.
This document contains additional information about the Fund and
supplements information in the Prospectus dated April 11, 1997 It
should be read together with the Prospectus, which may be obtained
by writing to OppenheimerFunds Services, the Fund's Transfer Agent,
at P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number shown above.
CONTENTS
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . . . . . . . . .2
Investment Policies and Strategies. . . . . . . . . . . . . . . . . .2
Other Investment Techniques and Strategies. . . . . . . . . . . . . .7
Other Investment Restrictions . . . . . . . . . . . . . . . . . . . 12
How the Fund is Managed. . . . . . . . . . . . . . . . . . . . . . . . . 15
Organization and History. . . . . . . . . . . . . . . . . . . . . . 15
Trustees and Officers of the Fund . . . . . . . . . . . . . . . . . 17
The Manager and Its Affiliates. . . . . . . . . . . . . . . . . . . 22
Brokerage Policies of the Fund . . . . . . . . . . . . . . . . . . . . . 25
Performance of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . 27
Distribution and Service Plans . . . . . . . . . . . . . . . . . . . . . 33
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
How To Sell Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
How To Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . 51
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . . . . . . . 54
Additional Information About the Fund. . . . . . . . . . . . . . . . . . 56
Financial Information About the Fund
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective
and policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund invests, as well as the
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meaning as those terms have in the Prospectus.
The Fund seeks a high level of total return on its assets
through a combination of current income and capital appreciation.
The Fund invests primarily in a portfolio which consists of a
variety of fixed income securities, including convertible
securities, which in the opinion of OppenheimerFunds, Inc. (the
Manager ) will assist the Fund in achieving its investment
objective. Convertible securities include corporate bonds, notes
and preferred stock which can be converted into (exchanged for)
common stock or other securities which provide an opportunity for
participation. The Fund invests a substantial portion of its
assets in high-yield, lower rated bonds which are commonly referred
to as junk bonds. Investments of this type are subject to
greater risk of loss of principal and interest. High yield bonds
generally offer a higher yield to maturity than bonds with higher
ratings as compensation for holding an obligation perceived to be
of greater risk. The high yield opportunity has been the result of
wide yield spreads between high yield obligations and high grade
obligations, with actual losses resulting from default remaining
low relative to the values of outstanding high yield bonds. In
addition to offering higher absolute returns, high yield securities
have greater potential than high-grade bonds for better relative
performance if their credit quality improves.
The Manager evaluates the investment merits of fixed-income
securities primarily through the exercise of its own investment
analysis. This may include consideration of the financial strength
of the issuer, including its historic and current financial
condition, the trading activity in its securities, present and
anticipated cash flow, estimated current value of assets in
relation to historical cost, the issuer's experience and managerial
expertise, responsiveness to changes in interest rates and business
conditions, debt maturity schedules, current and future borrowing
requirements, and any change in the financial condition of the
issuer and its continuing ability to meet its future obligations.
The Manager also may consider anticipated changes in business
conditions, levels of interest rates of bonds as contrasted with
levels of cash dividends, industry and regional prospects, the
availability of new investment opportunities, and the general
economic, legislative and monetary outlook for specific industries,
the nation and the world.
The Fund is classified as non-diversified within the meaning
of the Investment Company Act of 1940, as amended, (the Act ),
which means that the Fund is not limited by the Act in the
proportion of its assets that it may invest in obligations of a
single issuer. The Fund intends to continue to qualify as a
regulated investment company, however, under the Internal Revenue
Code of 1986, as amended (the Code ). See Dividends, Capital
Gains and Taxes. In addition to satisfying other requirements to
so qualify, the Fund will limit its investments so that, at the
close of each quarter of its taxable year, (i) not more than 25% of
the market value of its total assets will be invested in the
securities of a single issuer and (ii) with respect to 50% of its
total assets, not more than 5% will be invested in the securities
of a single issuer. In contrast, a fund which elects to be
classified as diversified under the Act must satisfy the
foregoing 5% requirement with respect to 75% of its assets at all
times. To the extent that the Fund assumes large positions in the
obligations of a small number of issuers, the Fund's total return
may fluctuate to a greater extent than that of a diversified
company as a result of changes in the financial condition or in the
market's assessment of the issuers.
Convertible Fixed Income Securities. Convertible
securities are fixed income securities which may be exchanged for
or converted into the underlying common stock of the issuer at the
option of the holder during a specified period of time.
Convertible securities may take the form of convertible preferred
stock, convertible bonds or notes, or other fixed income
securities with stock purchase warrants, or a combination of the
features of several of these securities. Because of the conversion
feature, the price of a convertible security will normally vary in
some proportion to changes in the price of the underlying common
stock. Convertible fixed income securities are generally
characterized by less price volatility than the common stocks into
which they are convertible because of their comparatively higher
yields. The investment characteristics of each convertible security
vary widely, and such versatility permits the Fund to use
convertible securities in different ways in pursuing its investment
objective of high total return. For example, the Fund may invest
in convertible securities which provide a relatively high level of
income, with less appreciation potential as well as those with high
appreciation potential and a relatively low level of income or
convertible securities which provide some combination of both
income and appreciation potential.
Convertible bonds and convertible preferred stocks are fixed
income securities that retain the investment characteristics of
fixed income securities until they have been converted. The holder
is entitled to receive the fixed income of a bond or the dividend
preference of a preferred stock until the holder elects to
exercise the conversion privilege. Convertible securities are
senior securities, and therefore, have a claim to assets of the
corporation prior to the holders of common stock upon liquidation.
Convertible securities, however, are generally subordinated to
similar non-convertible securities of the same company. The
interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with yields which are
generally higher than common stocks, but lower than
non-convertible securities of similar quality.
As with all fixed income securities, various market forces
influence the market value of convertible securities, including
changes in the level of interest rates. As the level of interest
rates increases, the market value of convertible securities may
decline and, conversely, as interest rates decline, the market
value of convertible securities may increase. The unique
investment characteristic of convertible securities, the right to
be exchanged for the issuer's common stock, causes the market value
of convertible securities to increase when the value of the
underlying common stock increases. Since securities prices
fluctuate, however, there can be no assurance that the market value
of convertible securities will increase. Convertible securities
generally will not reflect quite as great a degree of capital
appreciation as the underlying stock. When the underlying common
stock is experiencing a decline, the value of the convertible
security tends to decline to a level approximating the
yield-to-maturity basis of straight non-convertible debt of similar
quality, often called investment value, and may not experience
the same decline as the underlying common stock.
Many convertible securities sell at a premium over their
conversion values (i.e., the number of shares of common stock to be
received upon conversion multiplied by the current market price of
the stock). This premium represents the price investors are
willing to pay for the privilege of purchasing a fixed income
security with a possibility of capital appreciation due to the
conversion privilege. There can be no assurance that the
underlying common stock will appreciate enough for this premium to
be recovered by the Fund on any particular convertible security.
Investment Risks of Fixed-Income Securities. All fixed-
income securities are subject to two types of risks: credit risk
and interest rate risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments on a security as they
become due. Generally, higher yielding lower-grade bonds are
subject to credit risk to a greater extent than lower yielding,
investment grade bonds. Interest rate risk refers to the
fluctuations in value of fixed-income securities resulting solely
from the inverse relationship between price and yield of
outstanding fixed-income securities. An increase in prevailing
interest rates will generally reduce the market value of already-
issued fixed-income investments, and a decline in interest rates
will tend to increase their value. In addition, debt securities
with longer maturities, which tend to produce higher yields, are
subject to potentially greater changes in their prices from changes
in interest rates than obligations with shorter maturities.
Fluctuations in the market value of fixed-income securities after
the Fund buys them will not affect the interest payable on those
securities, nor the cash income from such securities. However,
those price fluctuations will be reflected in the valuations of
these securities and therefore the Fund's net asset values.
As stated in the Prospectus, the fixed-income securities in
which the Fund will principally invest will be in those in the
lower rating categories or in those which are unrated. The Fund
may invest in securities rated as low as C by a nationally
recognized statistical rating organization ( NRSRO ) or in bonds
which are unrated. The Manager will not rely solely on the ratings
assigned by rating services and may invest, without limit, in
unrated securities which offer, in the opinion of the Manager,
yields and risks comparable to those of rated securities in which
the Fund may invest. The Fund will not invest in securities which
are in default at the time of purchase. Because investment in
lower rated and unrated fixed income securities involves greater
investment risk, achievement of the Fund's investment objectives
will be more dependent upon the Manager's credit analysis than
would be the case if the Fund were investing in higher quality debt
securities.
Some of the principal risks of high yield securities include:
(i) limited liquidity and secondary market support, (ii)
substantial market price volatility resulting from changes in
prevailing interest rates, (iii) subordination of the holder's
claims to the prior claims of banks and other senior lenders in
bankruptcy proceedings, (iv) the operation of mandatory sinking
fund or call/redemption provisions during periods of declining
interest rates, whereby the holder might receive redemption
proceeds at times when only lower-yielding portfolio securities are
available for investment, (v) the possibility that earnings of the
issuer may be insufficient to meet its debt service, and (vi) the
issuer's low creditworthiness and potential for insolvency during
periods of rising interest rates and economic downturn. Some high
yield bonds pay interest in kind rather than in cash.
As a result of the limited liquidity of high yield securities,
their prices have at times experienced significant and rapid
decline when a significant number of holders of high yield
securities simultaneously decided to sell them. A decline is also
likely in the high yield bond market during an economic downturn.
An economic downturn or an increase in interest rates could
severely disrupt the market for high yield securities and adversely
affect the value of outstanding securities and the ability of the
issuers to repay principal and interest. In addition, in recent
years there have been several Congressional attempts to limit the
use or limit tax and other advantages of high yield bonds. If
enacted, such proposals could adversely affect the value of these
securities and consequently the Fund's net asset value per share.
For example, federally insured savings and loan associations have
been required to divest their investments in high yield securities.
Convertible Preferred Stock. The Fund may invest in a
type of convertible preferred stock that is an equity security with
certain characteristics of both a debt security and a call option.
These securities can be considered derivative securities because
of their imbedded option component. These stock instruments trade
under a variety of acronyms. They typically provide for a three-
year period prior to conversion to common stock (although they are
callable by the issuer prior to conversion) and pay a cumulative,
fixed dividend that is senior to, and expected to be in excess of,
the dividends paid on the common stock of the same issuer. At the
mandatory conversion date, the preferred stock is converted into
not more than one share of the issuer's common stock at the call
price that was established at the time the preferred stock was
issued. Generally, the call price is 30% to 45% above the price of
the issuer's common stock at the time the preferred stock is issued
and may be subject to downward adjustment over time. If the price
per share of the related common stock on the mandatory conversion
date is less than the call price, the holder of the preferred stock
will nonetheless receive only one share of common stock for each
share of preferred stock (plus cash in the amount of any accrued
but unpaid dividends). At any time prior to the mandatory
conversion date, the issuer may redeem the preferred stock upon
issuing to the holder a number of shares of common stock equal to
the call price of the preferred stock in effect on the date of
redemption divided by the market value of the common stock, with
such market value typically determined one or two trading days
prior to the date notice of redemption is given. The issuer must
also pay the holder of the preferred stock cash in an amount equal
to any accrued but unpaid dividends on the preferred stock.
This convertible preferred stock is subject to the same market
risk as the common stock of the issuer, except to the extent that
such risk is mitigated by the higher dividend paid on the preferred
stock. The opportunity for equity appreciation afforded by an
investment in such convertible preferred stock, however, is
limited, because in the event the market value of the issuer's
common stock increases to or above the call price of the preferred
stock, the issuer may (and would be expected to) call the preferred
stock for redemption at the call price. This convertible preferred
stock is also subject to credit risk with regard to the ability of
the issuer to pay the dividend established upon issuance of the
preferred stock. Generally, convertible preferred stock is less
volatile than the related common stock of the issuer.
Other Investment Techniques and Strategies
Short Sales. Although the Fund may not make short sales
generally, the Fund may make short sales against the box. While
a short sale is made by selling a security the Fund does not own,
a short sale is said to have been made against the box to the
extent that the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short at no added cost.
The Fund will engage in this type of transaction only when (i) the
yield on the convertible bond or preferred stock is substantially
larger than that on the common stock so that the Fund may benefit
from this incremental cash flow without bearing any market risk;
(ii) the Manager believes that the premium on the convertible bond
or preferred stock relative to the common stock is unusually small
and will widen to a more normal range; or (iii) there is a large
unrealized gain in a portfolio security which the Manager wishes to
sell and the Manager believes that it will be advantageous to defer
the realization of the gain until a subsequent tax year. When a
short sale is effected, any decline in the value of the Fund's
portfolio securities would be reduced by a gain in the short sale
transaction. Conversely, any increase in the value of the Fund's
portfolio securities would be reduced by a loss in the short sale
transaction. The extent to which such gains or losses are reduced
will depend upon the amount of the security sold short relative to
the amount the Fund owns, either directly or indirectly, and, in
the case where the Fund owns convertible securities, changes in the
conversion premium (the difference between a convertible security's
market price and its value if it were converted into its underlying
common stock). As a fundamental policy, the Fund may not make
short sales or maintain a short position unless at all times when
a short position is open, not more than 10% of that Fund's total
assets (taken at current value) is held as collateral for such
sales at any one time.
Warrants. The Fund has adopted as a fundamental policy
that it may invest up to 15% of the value of its net assets at the
time of purchase in warrants (other than those that have been
acquired in units or attached to other securities). This
fundamental policy is currently limited by an operational policy
which provides that the Fund may not invest more than 5% of the
value of the Funds' net assets in warrants, valued at market.
Included within that amount, but not to exceed 2% of the value of
the Funds' net assets, may be warrants which are not listed in the
New York or American Stock Exchange. Warrants acquired by the Fund
in units or attached to securities may be deemed to be without
value for purposes of the limitation imposed by the operational
policy. A warrant basically is an option to purchase common stock
at a specific price (usually at a premium above the market value of
the optioned common stock at issuance) valid for a specific period
of time. Warrants may have a life ranging from less than a year to
twenty years or may be perpetual. However, many warrants have
expiration dates after which they are worthless unless such
warrants are exercised or sold before expiration. In addition, if
the market price of the common stock does not exceed the warrant's
exercise price during the life of the warrant, the warrant will
expire worthless. Warrants have no voting rights, pay no dividends
and have no rights with respect to the assets of the corporation
issuing them. The percentage increase or decrease in the market
price of a warrant may tend to be greater than the percentage
increase or decrease in the market price of the optioned common
stock.
Fund's Use of Listed Options. The Fund will limit
options trading activity to: (1) writing (i.e., selling)
covered call options on stocks and the underlying stock of
existing convertible positions; (2) purchasing put options on
stocks; and (3) entering into closing purchase transactions
with respect to certain of such options, provided that all
options traded by the Fund are listed on a national
securities exchange.
The Fund will write covered call options in an attempt to
increase its income. The Fund may also purchase put options on
stock in order to attempt to hedge its portfolio and to reduce
investment risks. Hedging strategies are defensive in nature;
some capital gain potential is forsaken in advancing markets for
a reduction of risk in declining markets. No assurances can be
made that these options hedging strategies will result in
successful investments by the Fund.
Characteristics of Listed Options. Because listed options
can be employed in a variety of ways to pursue a variety of
investment objectives, it follows that the risks and potential
rewards of options trading depend in large measure on the
manner in which the options are used. Listed options are puts
and calls on common stock. A call option conveys the right to
buy and a put option conveys the right to sell. Although put
options and call options are generally traded on the same
underlying securities, it should be clearly understood that call
options and put options are separate and distinct investment
securities. The purchase or sale of a call in no way involves
a put. The purchase or sale of a put in no way involves a call.
The option contract has a duration period of up to
nine months and precisely identifies the underlying security.
Options traded on options exchanges (the Exchanges ), have
standardized the terms of options contracts. An options contract
has four specifications: (1) the type (put or call); (2) the
underlying common stock name; (3) the expiration date; and (4) the
exercise or strike price. Option contracts give their holder
the right to buy or sell a stated number of shares, usually 100,
of a particular underlying common stock, at a fixed price (called
the strike price) for a predetermined period of time (called the
expiration period). An option is a wasting asset; that is, it has
only an initial value that declines as time passes. It may expire
having no value, or the holder may have to exercise it in order to
recover some value before expiration. Of course, the holder may
sell the option in the listed option market before expiration.
Although an option is a security, it derives its value from
the underlying common stock. The option price fluctuates as the
price of the underlying stock rises or falls. Splits and stock
dividends in the underlying stock affect the terms of listed
options, although cash dividends do not.
Covered Call Option Writing. A call option gives the
purchaser of the option the right to buy, and imposes on the
writer the obligation to sell, the underlying security at the
exercise price during the option period. The Fund may write
covered call options, that is, options on securities the Fund
holds in its portfolio or has an immediate right to
acquire, without additional consideration, upon conversion or
exchange of securities currently held in its portfolio. For
writing a call option, the Fund is paid a sales price or
premium. If the call option expires unexercised, the Fund
realizes a gain equal to the amount of the premium received upon
writing the option, less transaction costs. So long as the
obligation of a writer continues, he may be assigned an
exercise notice by the broker-dealer through whom such a call
option was sold, requiring him to deliver the underlying security
against payment of the exercise price. This obligation
terminates upon expiration of the call option, or at such earlier
time at which the writer effects a closing purchase transaction
(i.e., the purchase of a call option on the same security with
the same exercise price and expiration date as the call option
already written). Once a writer has been assigned an exercise
notice with respect to a call option, he will thereafter be unable
to effect a closing purchase transaction with respect to that
option. In return for the premium it receives, so long as the
Fund's obligation as a writer continues, it will forego the
opportunity to profit from any price increase in the underlying
stock above the exercise price.
The Fund will write covered call options for hedging
purposes in order to protect against possible declines in the
market values of the stocks or convertible securities held in its
portfolio. If, for example, the market price of a common stock
underlying a convertible security held by a Fund declines and the
convertible security also declines in value, such decline will be
offset in part (or wholly) by the receipt of the premium on
covered call options written by the Fund on such stock. However,
if the market price of the underlying common stock increases and
the convertible security held by a Fund also increases in value,
such increases will be offset in part (or wholly) by any loss
resulting from the cancellation of the Fund's position through
closing purchase transactions on covered call options written by
the Fund or the opportunity loss if the option is exercised. The
main risk of any covered call writing strategy is that the common
stock/covered call package (such as that embedded in a mandatory
conversion security) will under perform the common stock alone
should the stock's price rise substantially above the strike price
of the call option.
The Fund may not sell any covered call options if, as a result
of such sale, the aggregate value of its securities
underlying such options (valued at the lower of the option
price or market price) would exceed 25% of its net assets. This
limitation may not be changed by the Fund without shareholder
approval. To secure its obligation to deliver the underlying
security, the Fund, as the writer of a call option, is required
to deposit in escrow with its custodian the underlying common
stock or a security immediately convertible into the
underlying common stock in accordance with the rules of the Options
Clearing Corporation and of the various Exchanges.
Purchase of Put Options. The Fund will also purchase put
options in an attempt to hedge its portfolio and to reduce
investment risks. When a convertible security is purchased
because the Manager believes the market price of such security
may rise, the Manager may nonetheless wish to protect the
holdings of such security against a decline in market value by
purchasing a put option on the common stock underlying such
security. A put option gives the purchaser the right to sell the
underlying common stock at the put exercise price regardless of
any decline in the underlying stock's market price.
Thus, the purchase of a put option when used as a defensive
measure provides profits should the underlying common stock
decline, which would be of use to offset losses from the
corresponding decline in the value of the convertible security
held. The reduction in loss that this defensive strategy provides
is limited to the profit made on the put option transaction, less
the premium paid for the put option, less the transaction costs
incurred in connection with the put. Should the underlying common
stock, and consequently the convertible securities held, increase
in value, the profit realized would be reduced by the cost of the
purchase of the put options.
Risks of Transactions in Stock Options. An option
position may be closed out by the Fund only on an Exchange which
provides a secondary market for an option of the same series.
Although the Fund will generally purchase or write only those
options for which there is an active secondary market, there is
no assurance that a liquid secondary market on an Exchange
will exist for any particular option or at any particular time.
Absence of a liquid secondary market on an Exchange may result
from a variety of economic, market and regulatory factors
including the suspension of trading or an insufficient amount of
trading interest. For example, if trading were suspended in an
option purchased or written by the Fund, the Fund would not be
able to close out the option. If the Fund, as a covered call
option writer, is unable to effect a closing purchase transaction
in a secondary market, the Fund will not be able to sell
the underlying common stock until the option expires or until
it delivers the underlying common stock upon exercise. Similarly,
in the absence of a liquid secondary market, the Fund, as the
purchaser of a put option, would be able to realize a profit or
limit a loss on such option only by exercising such option and,
in the case of a put option on stock, by incurring additional
transaction costs on the disposition of the underlying security.
The Exchanges have established limitations governing the
maximum number of calls and puts of each class which may be held
or written by an investor or group of investors acting in concert
(regardless of whether the options are written on the same or
different Exchanges or are held or written in one or more accounts
or through one or more brokers). An Exchange may order the
liquidation of positions found to be in violation of these limits.
The Manager does not anticipate that such limits will affect the
Fund's option trading activities.
Mandatory Conversion Securities. In addition to the more
traditional convertible securities in which the Fund may invest as
described in the Prospectus, the Fund may also invest in more
recently developed varieties of convertible securities which are
referred to herein as mandatory conversion securities. Such
securities may combine several of the features of debt securities
and equity securities, including both preferred stock and common
stock. Unlike the more traditional convertible securities,
however, many of these securities are characterized by a mandatory
conversion feature and an adjustable conversion ratio. Thus, many
of these securities offer limited potential for capital
appreciation and, in some instances, involve unlimited potential
for loss of capital. These securities are designed and marketed by
major investment banking firms and trade in the marketplace under
various acronyms which are proprietary to the investment banking
firm. The Fund may be exposed to counterparty risk to the extent
it invests in synthetic mandatory conversion securities, which
are issued by investment banking firms and are unsecured
obligations of the issuing firm. Should the issuing firm of such
a security experience financial difficulty, its ability to perform
according to the terms of the security may become impaired. The
mandatory conversion securities which may be purchased by the Fund
include, but are not limited to, the so-called equity-linked debt
securities and certain varieties of convertible preferred stock.
The market for these securities is relatively new.
Equity-linked Debt Securities. The Fund may purchase debt
securities whose principal amount at maturity is dependent upon the
performance of a specified equity security. Equity-linked debt
securities differ from ordinary debt securities in that the
principal amount received at maturity is not fixed, but is based on
the price of the linked equity security at the time the debt
security matures. Such debt securities usually mature in three to
four years, and during the years to maturity pay interest at a
favorable fixed rate. Although the debt securities are typically
adjusted for diluting events such as stock splits, stock dividends
and certain other events affecting the market value of the linked
equity security, the debt securities are not adjusted for
subsequent issuances of the linked equity security for cash. Such
an issuance could adversely affect the price of the debt security.
In general, however, such debt securities are less volatile than
the equity securities to which they are linked.
Other Investment Restrictions
Specific investment restrictions help the Fund limit investment
risks for shareholders. The following investment restrictions are
fundamental investment policies of the Fund and cannot be changed
without approval of a majority of the outstanding voting securities
of the Fund (defined for purposes of the Prospectus and this
Statement as the lesser of: (i) 67% of the shares present or
represented by proxy at a meeting at which more than 50% of the
outstanding shares are present or represented by proxy; or (ii)
more than 50% of the outstanding shares). These restrictions
provide that the Fund may not do any of the following:
The Fund may not invest more than 25% of the value of the
Fund's total assets in the securities of any one issuer or any
group of issuers in the same industry, which restriction will not,
however, prevent it from investing more than 25% of such Fund's
total assets in securities of the United States Government, its
agencies or instrumentalities.
The Fund may not make any investment if, as a result
thereof, less than 50% of the Fund's total assets would be in cash,
cash items, U.S. Government securities, and securities of issuers
in which its investment is limited to not more than 5% of the
value of the Fund's total assets and not more than 10% of the
outstanding voting securities of any issuer.
The Fund may not purchase securities on margin, but the Fund
may obtain unsecured loans to purchase securities and may also
borrow amounts equivalent to up to 5% of the Fund's net assets for
temporary, extraordinary or emergency purposes. The aggregate of
all unsecured loans, however, may not exceed 50% of the Fund's
total assets.
The Fund may not make short sales on securities or maintain
a short position, unless at all times when a short position is
open, the Fund owns an equal amount of such securities or owns
securities which, without payment of any further consideration,
are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short; no
more than 10% of the Fund's total assets will be held as collateral
for such short sales at any one time. See Short Sales.
The Fund may not engage in the purchase and sale of put and
call options or in writing such options except as set forth herein
and in the Prospectus.
The Fund may not invest in warrants other than warrants
acquired by the Fund as part of a unit or attached to securities
at the time of purchase, and other than the investment of no more
than 15% of the value of its net assets in warrants valued at the
lower of cost or market (of which not more than 5% of the Fund's
net assets may be invested in warrants not listed on the New York
or American Stock Exchange).
The Fund may not make loans, provided that this policy does
not prohibit the Fund from (1) making loans of its portfolio
securities, (2) purchasing notes, bonds or other evidences of
indebtedness or making deposits with banks and other financial
institutions, and (3) entering into repurchase agreements.
The Fund may not purchase or sell real estate, or real
estate mortgage loans provided, however, that the Fund may invest
not more than 5% of its total assets in marketable securities of
real estate investment trusts.
The Fund may not deal in commodities or commodities
contracts.
The Fund may not purchase or retain securities of any issuer
if any of its officers and trustees, or any of the officers and
directors of the Manager (as hereinafter defined) or Distributor
(as hereinafter defined), own individually beneficially more than
0.5% of the outstanding securities of such issuer, or if all of
those persons together own more than 5% of that issuer's
securities.
The Fund may not invest more than 5% of the value of its
total assets in securities of any company (including its
predecessors) that has not been in business for at least three
consecutive years.
The Fund may not issue any securities which are senior to
shares of the Fund.
The Fund may not underwrite securities of other issuers.
The Fund may not acquire securities of any other investment
company, if as a result of such acquisition, the Fund would own in
the aggregate: (i) more than 3% of the voting stock of such
investment company; (ii) securities of such investment company
having an aggregate value in excess of 5% of the value of the total
assets of the Fund; or (iii) securities of such investment company
and of any other investment companies (but excluding treasury stock
of those funds) having an aggregate value in excess of 10% of the
total assets of the Fund. However, none of these limitations is
applicable to a security received as a dividend or as a result of
an offer of exchange, a merger or plan of reorganization.
The percentage limitations on investments which are set forth
herein are applied at the time an investment is made. No
violation of the percentage limitation will occur unless the
limitation is exceeded immediately after an investment is made and
as a result thereof.
Operational Policies. The following restrictions are
operational investment policies of the Fund. While these operating
investment policies are not fundamental policies and do not require
shareholder approval to be changed and may be changed by the Board
of Trustees, the Fund has, as a matter of policy, agreed not to
change these policies without prior notice to its shareholders.
These operating policies provide that the Fund may not do any of
the following:
The Fund may not invest in any issuer for the purpose of
exercising control or management of that issuer, unless approved
by the Fund's Board of Trustees.
The Fund may not invest any part of its total assets in
interests in oil, gas, or other mineral exploration or development
programs, although it may invest in securities of companies which
invest in or sponsor such programs. The Fund may not invest in
oil, gas or other mineral leases.
The Fund may not invest more than 5% of the value of the
Fund's assets in warrants, valued at the lower of cost or market.
Included within that amount, but not to exceed 2% of the value of
the Fund's net assets, may be warrants which are not listed on the
New York or American Stock Exchange. Warrants acquired by the Fund
in units or attached to securities may be deemed to be without
value.
For purposes of the first Fundamental Investment Restriction
described above, the Fund's policy with respect to concentration of
investments shall be interpreted as prohibiting the Fund from
making an investment in the securities of any one issuer or group
of issuers in the same industry if, upon making the proposed
investment, 25% or more of the value of its (total) assets would be
invested in such industry.
As a non-fundamental policy, the Fund may not invest more
than 15% of the value of the Fund's net assets in Illiquid
Securities. An additional operational policy of the Fund provides
that certain restricted securities, as defined in the section
entitled Illiquid Securities in the prospectus, may be excluded
from the Fund's 15% limitation on investments in Illiquid
Securities. Rule 144A under the Securities Act of 1933, as
amended, permits certain resales of unregistered securities (i.e.,
restricted securities) provided that such securities have been
determined to be eligible for resale under the provisions of Rule
144A. The Fund's Board of Trustees has adopted guidelines and
procedures to be utilized by the investment adviser for determining
the liquidity of such Rule 144A securities and for monitoring the
investment adviser's implementation of the guidelines and
procedures. Such determination will be based upon all relevant
factors including, among other things: (1) the unregistered nature
of a Rule 144A security; (2) the frequency of trades and quotes for
the security; (3) the number of dealers willing to purchase or sell
the security and the number of potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature
of the security and the nature of marketplace trades, including,
the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when
required to do so by the Act or other applicable law, or when a
shareholder meeting is called by the Trustees. Shareholders have
the right, upon the declaration in writing or vote of two-thirds of
the outstanding shares of the Fund, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal
of a Trustee upon the written request of the record holders of 10%
of its outstanding shares. In addition, if the Trustees receive a
request from at least 10 shareholders (who have been shareholders
for at least six months) holding shares of the Fund valued at
$25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate
with other shareholders to request a meeting to remove a Trustee,
the Trustees will then either make the Fund's shareholder list
available to the applicants or mail their communication to all
other shareholders at the applicants' expense, or the Trustees may
take such other action as set forth under Section 16(c) of the Act.
Each share of the Fund represents an interest in the Fund
proportionately equal to the interest of each other share of the
same class and entitles the holder to one vote per share (and a
fractional vote for a fractional share) on matters submitted to
their vote at shareholders' meetings. Shareholders of the Fund
vote together in the aggregate on certain matters at shareholders'
meetings, such as the election of Trustees and ratification of
appointment of auditors for the Fund. Shareholders of a particular
series or class vote separately on proposals which affect that
series or class, and shareholders of a series or class which is not
affected by that matter are not entitled to vote on the proposal.
The Trustees are authorized to create new series and classes
of series. The Trustees may reclassify unissued shares of the Fund
or its series or classes into additional series or classes of
shares. The Trustees may also divide or combine the shares of a
class into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest of a shareholder in
the Fund. Shares do not have cumulative voting rights or
preemptive or subscription rights. Shares may be voted in person
or by proxy.
The Fund's Declaration of Trust contains an express disclaimer
of shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of
its property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a business trust (such as the Fund) to be held
personally liable as a partner under certain circumstances, the
risk of a Fund shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
obligations described above. Any person doing business with the
Trust, and any shareholder of the Trust, agrees under the Trust's
Declaration of Trust to look solely to the assets of the Trust for
satisfaction of any claim or demand which may arise out of any
dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
The Fund is currently the only series of a business trust
organized under the laws of the Commonwealth of Massachusetts in
1986. From 1990 through April 30, 1993, the Fund's name was
Rochester Convertible Fund, at which time the name of the trust was
changed to Rochester Fund Series and the name of the Fund was
changed to The Bond Fund For Growth. On March 8, 1996, the name of
the trust was changed to Bond Fund Series and the name of the Fund
was changed to Oppenheimer Bond Fund for Growth.
Trustees and Officers of the Fund. The Fund's Trustees and
officers, one of which is the Fund's portfolio manager, are listed
below, together with their principal occupations and business
affiliations during the past five years.
The address of each is Two World Trade Center, New York,
New York 10048, except as noted. All of the Trustees are also
trustees of Rochester Fund Municipals and Limited Term New York
Municipal Fund (collectively, with the Fund, the "Oppenheimer
Rochester Funds"). With the exception of Mr. Cannon, all of the
Trustees are also trustees or directors of Oppenheimer Quest Growth
& Income Value Fund, Oppenheimer Quest Officers Value Fund,
Oppenheimer Quest Opportunity Value Fund, Oppenheimer Quest Small
Cap Fund, Oppenheimer Quest Value Fund, Inc, Oppenheimer Quest
Global Value Fund, Inc. and Oppenheimer Quest Capital Value Fund,
Inc. (collectively, the "Oppenheimer Quest Funds"). Ms. Macaskill
(in her capacity as President), Messrs. Donohue, Bowen, Zack,
Bishop and Farrar, respectively, hold the same offices with the
Oppenheimer Rochester Funds and the Oppenheimer Quest Funds as with
the Fund. As of March 21, 1997 the Trustees and officers of the
Fund as a group owned less than 1% of the outstanding shares of the
then outstanding shares of each class of the Fund except that
certain Trustees and officers of the Fund as a group owned less
than 1% of the Fund's then outstanding shares. The foregoing does
not include shares held of record by an employee benefit plan for
employees of the Manager for which one of the officers below, Mr.
Donohue, is a trustee, other than the shares beneficially owned
under that plan by the officers of the Fund listed below.
Bridget A. Macaskill, Chairman of the Board of Trustees and
President; Age 48
President, Chief Executive Officer, and a Director of
OppenheimerFunds, Inc. (the "Manager") and HarbourView Asset
Management Corporation ("HarbourView") a subsidiary of the
Manager; President and a director of Oppenheimer Acquisition Corp.
("OAC"), the Manager's parent holding company, and of Oppenheimer
Partnership Holdings, Inc.; Chairman and a director of Shareholder
Services, Inc. ("SSI"), a transfer agent subsidiary of the Manager
and Shareholder Financial Services, Inc. ("SFSI"); and a director
of Oppenheimer Real Asset Management, Inc.
John Cannon, Trustee; Age 67
620 Sentry Parkway West Suite 220, Blue Bell, PA 19422
Independent Consultant; Chief Investment Officer, CDC Associates,
Inc., registered investment adviser, Director, Neuberger & Berman
Income Managers Trust, Neuberger & Berman Income Funds and
Neuberger Berman Trust, 1995-Present; formerly, Chairman and
Treasurer, CDC Associates, 1993 - February, 1996, President, AMA
Investment Advisers, Inc., a mutual fund investment adviser, 1976-
1991, Senior Vice President AMA Investment Advisers, Inc., 1991-
1993.
Paul Y. Clinton, Trustee; Age 66
39 Blossom Avenue, Osterville, Massachusetts 02655
Principal of Clinton Management Associates, a financial and venture
capital consulting firm; Trustee of Capital Cash Management Trust,
a money-market fund and Narragansett Tax-Free Fund, a tax-exempt
bond fund; Director of OCC Cash Reserves, Inc. and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies.
formerly: Director, External Affairs, Kravco Corporation, a
national real estate owner and property management corporation;
President of Essex Management Corporation, a management consulting
company; a general partner of Capital Growth Fund, a venture
capital partnership; a general partner of Essex Limited
Partnership, an investment partnership; President of Geneve Corp.,
a venture capital fund; Chairman of Woodland Capital Corp., a small
business investment company; and Vice President of W.R. Grace & Co.
Thomas W. Courtney, Trustee; Age 63
833 Wyndemere Way, Naples, Florida 34105
Principal of Courtney Associates, Inc. (venture capital firm);
formerly General Partner of Trivest Venture Fund (private venture
capital fund); President of Investment Counseling Federated
Investors, Inc.; Trustee of Cash Assets Trust, a money market fund;
Director of OCC Cash Reserves, Inc., and Trustee of OCC
Accumulation Trust, all of which are open-end investment companies;
former President of Boston Company Institutional Investors; Trustee
of Hawaiian Tax-Free Trust and Tax Free Trust of Arizona, tax-
exempt bond funds; Director of several privately owned corpora-
tions; former Director of Financial Analysts Federation.
Lacy B. Herrmann, Trustee; Age 67
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management
Corporation, the sponsoring organization and Administrator and/or
Sub-Adviser to the following open-end investment companies, and
Chairman of the Board of Trustees and President of each: Churchill
Cash Reserves Trust, Short Term Asset Reserves, Pacific Capital
Cash Assets Trust, Pacific Capital U.S. Treasuries Cash Assets
Trust, Pacific Capital Tax-Free Cash Assets Trust, Prime Cash Fund,
Narragansett Insured Tax-Free Income Fund, Tax-Free Fund For Utah,
Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-
Free Trust, and Aquila Rocky Mountain Equity Fund; Vice President,
Director, Secretary, and formerly Treasurer of Aquila Distributors,
Inc., distributor of the above funds; President and Chairman of the
Board of Trustees of Capital Cash Management Trust ("CCMT"), and an
Officer and Trustee/Director of its predecessors; President and
Director of STCM Management Company, Inc., sponsor and adviser to
CCMT; Chairman, President and a Director of InCap Management
Corporation, formerly sub-adviser and administrator of Prime Cash
Fund and Short Term Asset Reserves; Director of OCC Cash Reserves,
Inc., and Trustee of OCC Accumulation Trust and The Saratoga
Advantage Trust, each of which is an open-end investment company;
Trustee of Brown University.
George Loft, Trustee; Age 82
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of OCC Cash Reserves, Inc., and Trustee
of OCC Accumulation Trust and The Saratoga Advantage Trust, all of
which are open-end investment companies; formerly a Director of the
Quest for Value Dual Purpose Fund, Inc., a closed-end investment
company.
Andrew J. Donohue, Secretary; Age 46
Executive Vice President, General Counsel and a Director of the
Manager, the Distributor, HarbourView, SSI, SFSI, Oppenheimer
Partnership Holdings, Inc. and MultiSource Services, Inc. (a
broker-dealer); President and a director of Centennial;
President and a director of Oppenheimer Real Asset Management,
Inc.; General Counsel of OAC; an officer of other Oppenheimer
funds.
George C. Bowen, Treasurer; Age 60
6803 South Tucson , Englewood, Colorado 80112
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; President, Treasurer and a director of Centennial
Capital Corporation; Senior Vice President, Treasurer and
Secretary of SSI; Vice President, Treasurer and Secretary of SFSI;
Treasurer of OAC; Treasurer of Oppenheimer Partnership Holdings,
Inc.; Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc.; Chief Executive Officer, Treasurer and a
director of MultiSource Services, Inc. (a broker-dealer); an
officer of other Oppenheimer funds.
Robert Bishop, Assistant Treasurer; Age 38
6803 South Tucson , Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Scott T. Farrar, Assistant Treasurer; Age 31
6803 South Tucson , Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Robert G. Zack, Assistant Secretary; Age 48
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other Oppenheimer
funds.
Adele A. Campbell, Assistant Treasurer; Age 33
350 Linden Oaks, Rochester, New York 14625
Assistant Vice President of the Manager; formerly Assistant Vice
President of Rochester Fund Services, Inc., Assistant Manager of
Fund Accounting, Rochester Fund Services, Audit Manager for Price
Waterhouse, LLP.
Michael S. Rosen, Vice President and Portfolio Manager; Age 36
350 Linden Oaks, Rochester, NY 14625
Vice President of the Manager; President of Rochester Division;
formerly Vice President of Rochester Fund Services, Inc., President
and Director of Rochester Fund Distributors, Inc., Vice President
and a director of Fielding Management Company, Inc., Rochester
Capital Advisors, Inc. and Rochester Tax Managed Fund, Inc.
Edward Everett, Assistant Portfolio Manager; Age 30
Assistant Vice President of the Manager; formerly Assistant Vice
President and Assistant Portfolio Manager of Rochester Fund
Services, Inc., portfolio analyst for Rochester Fund Services, Inc.
and Dealer Services Associate with Dean Witter Reynolds, Inc.
Remuneration of Trustees. All officers of the Fund and
Ms. Macaskill, a Trustee and President, are officers or directors
of the Manager and receive no salary or fee from the Fund. The
following table sets forth the aggregate compensation received by
the non-interested Trustees from (i) the Fund during its fiscal
year ended December 31, 1996 and (ii) the other Oppenheimer
Rochester Funds and the Oppenheimer Quest Funds, paid during the
calendar year ended December 31, 1996.
Pension or
Retirement
Aggregate Benefits Total
Compensation Accrued as Compensation
from the Part of Fund From Fund
Name of Person Fund(1) Expenses(2) Complex(3)
John Cannon $6,528 $0 $20,250
Paul Y. Clinton $7,025 $0 $54,450
Thomas W. Courtney $7,025 $0 $54,450
Lacy B. Herrmann $7,025 $0 $54,450
George Loft $6,675 $0 $53,400
_____________________
(1)During the fiscal year ended December 31, 1996.
(2)The Board of Rochester Fund Municipals has adopted a Retirement
Plan for Independent Trustees of that Fund. Under the terms of the
Retirement Plan, as amended and restated on October 16, 1995, an
eligible Trustee (an Independent Trustee who has served as such for
at least three years prior to retirement) may receive an annual
benefit equal to the product of $1500 multiplied by the number of
years of service as an Independent Trustee up to a maximum of nine
years. The maximum annual benefit which may be paid to an eligible
Trustee under the Retirement Plan is $13,500. The Retirement Plan
will be effective for all eligible Trustees who have dates of
retirement occurring on or after December 31, 1996. Subject to
certain exceptions, retirement is mandatory at age 72 in order to
qualify for the Retirement Plan. Although the Retirement Plan
permits Eligible Trustees to elect early retirement at age 63,
retirement benefits are not payable to Eligible Trustees who elect
early retirement until age 65. The Retirement Plan provides that
no Independent Trustee who is elected as a Trustee of Rochester
Fund Municipals after September 30, 1995, will be eligible to
receive benefits thereunder. Mr. Cannon is the only current
Independent Trustee who may be eligible to receive benefits under
the Retirement Plan. Because each Trustee's retirement benefits
will depend on the amount of the Trustee's 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.
(3) For the purpose of the chart above, "Fund Complex" includes
Limited Term New York Municipal Fund, Rochester Fund Municipals,
Oppenheimer Quest Growth & Income Fund, Oppenheimer Quest Officers
Value Fund, Oppenheimer Quest Opportunity Value Fund, Oppenheimer
Quest Small Cap Value Fund, Oppenheimer Quest Global Value Fund,
Inc. and Oppenheimer Quest Value Fund, Inc.
Major Shareholders. The Fund currently offers four classes of
shares of beneficial interest: Class A shares, Class B shares,
Class C shares and Class M shares. The different classes of shares
represent investments in the same portfolio of securities, but are
subject to different expenses and are likely to have different
share prices. On March 11, 1996, the Fund redesignated as Class M
shares its Class A shares, which had been outstanding prior to
that date, redesignated as Class A shares its Class Y shares, which
had been outstanding prior to that date and authorized the issuance
of Class C shares. As of March 21, 1997, no person owned of record
or was known by the Fund to own beneficially 5% or more of the
Fund as a whole or the Fund's then outstanding Class A, Class B,
Class C or Class M shares, except: Merrill Lynch Pierce Fenner &
Smith, Inc., which was the record owner of 5,849,544.179 Class B
shares (representing 34.48% of the Class B shares then
outstanding), 1,633,250.000 Class C shares (representing 47.45% of
the Class C shares then outstanding) and 4,775,643.615 Class M
shares (representing 25.23% of the Class M shares then
outstanding). The Fund has been advised that Merrill Lynch Pierce
Fenner & Smith, Inc. holds such shares for the benefit of its
customers.
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 serve as officers of the Fund and one of whom (Ms. Macaskill)
serves as a Trustee of the Fund.
The Manager and the Fund have a Code of Ethics. It is
designed to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
The Investment Advisory Agreement. The Investment Advisory
Agreement between the Manager and the Fund which was entered into
on January 4, 1996 ( Advisory Agreement ) requires the Manager, at
its expense, to provide the Fund with adequate office space,
facilities and equipment, and to provide and supervise the
activities of all administrative and clerical personnel required to
provide effective corporate administration for the Fund, including
the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and
the composition of proxy materials and registration statements for
continuous public sale of shares of the Fund. For these services,
the Manager will receive from the Fund an annual fee, computed and
payable monthly as a percentage of average daily net assets, as
follows: average daily net assets up to $50 million, 0.625%;
average daily net assets on the next $250 million, 0.50%; and
average daily net assets in excess of $300 million, 0.4375%.
Expenses not expressly assumed by the Manager under the
Advisory Agreement or by the Distributor are paid by the Fund.
The Advisory Agreement lists examples of expenses paid by the Fund,
the major categories of which relate to interest, taxes, brokerage
commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs, and non-recurring
expenses, including litigation. For the Fund's fiscal years ended
December 31, 1994, 1995 and 1996, the management fees paid by the
Fund to its previous investment adviser, Fielding Management
Company, Inc., were $596,082, $1,030,091 and $16,104, respectively.
During the Fund s fiscal year ended December 31, 1996, the
management fees paid by the Fund to OppenheimerFunds, Inc., its
current Investment Adviser, was $2,132,110.
The Investment Advisory Agreement contains no expense
limitation. However, because of state regulations limiting fund
expenses that previously applied, the Manager had voluntarily
undertaken that the Fund s total expenses in any fiscal year
(including the investment advisory fee but exclusive of taxes,
interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses, including litigation) would
not exceed the most stringent state regulatory limitation
applicable to the Fund. Due to changes in federal securities laws,
such state regulations no longer apply and the Manager s
undertaking is therefore inapplicable and has been withdrawn.
During the Fund s last fiscal year, the Fund s expenses did not
exceed the most stringent state regulatory limit and the voluntary
undertaking was not invoked.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties thereunder, the Manager shall not be
liable for any loss sustained by reason of good faith errors or
omissions on its part with respect to any matters to which the
Advisory Agreement relates. The Agreement permits the Manager to
act as investment adviser for any other person, firm or corporation
and to use the name Oppenheimer in connection with other
investment companies for which it may act as investment adviser.
If the Manager shall no longer act as investment adviser to the
Fund, the right of the Fund to use the name Oppenheimer as part
of its name may be withdrawn.
The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of shares of the
Fund's Class A, Class B, Class C and Class M shares, but is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales, (excluding payments under the Distribution
and Service Plans but including advertising and the cost of
printing and mailing prospectuses, other than those furnished to
existing shareholders), are borne by the Distributor. During the
Fund's fiscal years ended December 31, 1996, the aggregate sales
charges on sales of the Fund's Class A shares was $1,744,103, of
which the Distributor and an affiliated broker-dealer retained in
the aggregate $571,488. During the Fund's fiscal year ended
December 31, 1996, the contingent deferred sales charges collected
on the Fund's Class B shares totaled $142,078, all of which the
Distributor retained. During the period from May 1, 1995, the
inception of the Class B, through December 31, 1995, the contingent
deferred sales charge collected by Rochester Fund Distributors,
Inc. on the redemption of Class B shares totaled $5,001. During
the Fund's fiscal year ended December 31, 1996, the contingent
deferred sales charges collected of the Fund's Class C shares
totaled $10,119, all of which was retained by the Distributor.
During the Fund's fiscal year ended December 31, 1996, the
aggregate sales charges on sales of the Fund's Class M shares was
$1,939,722, of which the Distributor and an affiliated broker-
dealer retained in the aggregate $125,679. During the Fund's fiscal
years ended December 31, 1994 1995, the aggregate amount of sales
charge on sales of the Fund's Class M shares were $2,041,729 and
$2,744,786, respectively, of which Rochester Fund Distributors,
Inc., the Fund's previous principal underwriter, retained $171,428
and $228,970 in those respective years. For additional information
about distribution of the Fund's shares and the payments made by
the Fund to the Distributor in connection with such activities,
please refer to "Distribution and Service Plans," below.
The Transfer Agent. OppenheimerFunds Services, a division of
the Manager, serves as the Fund's Transfer Agent pursuant to a
Service Contract dated March 8, 1996. The Transfer Agent is
responsible for maintaining shareholder accounting records, and for
shareholder servicing and administrative functions. The Transfer
Agent is compensated on the basis of a fixed fee per account and as
a percentage of the Fund's average daily net assets. The
compensation paid by the Fund for such services under a comparable
arrangement with Rochester Fund Services, Inc., the Fund's previous
shareholder services agent, for the fiscal years ending December 31
1994 and 1995 was $129,352 and $245,510, respectively. The
compensation paid by the Fund for such services for the fiscal
years ending December 31, 1996 was $484,088, of which $3,246 was
paid to Rochester Fund Services, the Fund's prior transfer agent
and $480,842 was paid to OppenheimerFunds Services.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One
of the duties of the Manager under the Advisory Agreement is to
arrange the portfolio transactions for the Fund. The Advisory
Agreement contains provisions relating to the employment of broker-
dealers ( brokers ) to effect the Fund's portfolio transactions.
In doing so, the Manager is authorized by the Advisory Agreement to
employ broker-dealers, including affiliated brokers, as that term
is defined in the Act, as may, in its best judgment based on all
relevant factors, implement the policy of the Fund to obtain, at
reasonable expense, the best execution (prompt and reliable
execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission
bidding but is expected to minimize the commissions paid to the
extent consistent with the interest and policies of the Fund as
established by its Board of Trustees.
Under the Advisory Agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its
affiliates have investment discretion. The commissions paid to
such brokers may be higher than that which would have been charged
by another qualified broker if a good faith determination is made
by the Manager that the commission is fair and reasonable in
relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of
the Fund and other investment companies managed by the Manager or
its affiliates as a factor in the selection of brokers for the
Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the Advisory Agreement and the
procedures and rules described above, allocations of brokerage are
generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain
instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the Advisory
Agreement and the procedures and rules described above. In either
case, brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those
for which an exchange is the primary market are generally done with
principals or market makers. As stated in the prospectus, the
portfolio securities of the Fund are generally traded on a net
basis and, as such, do not involve the payment of brokerage
commissions. It is the policy of the Manager to obtain the best
net results in conducting portfolio transactions for the Fund,
taking into account such factors as price (including the applicable
dealer spread) and the firm's general execution capabilities.
Where more than one dealer is able to provide the most competitive
price, both the sale of Fund shares and the receipt of research may
be taken into consideration as factors in the selection of dealers
to execute portfolio transactions for the Fund. The transaction
costs associated with such transactions consist primarily of the
payment of dealer and underwriter spreads. Brokerage commissions
are paid primarily for effecting transactions in listed securities
and or for certain fixed-income agency transactions, in the
secondary market, otherwise only if it appears likely that a better
price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent
orders to purchase or sell the same security by more than one of
the accounts managed by the Manager or its affiliates are combined.
The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase
or sale orders actually placed for each account.
The research services provided by a particular broker may be
useful in one or more of the advisory accounts of the Manager and
its affiliates. 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. The Board of Trustees, including the independent
Trustees of the Fund (those Trustees of the Fund who are not
interested persons as defined in the Act, and who have no direct
or indirect financial interest in the operation of the Advisory
Agreement or the Distribution Plans described below) annually
review information furnished by the Manager as to the commissions
paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably
related to the value or benefit of such services. Total brokerage
commissions paid by the Fund (not including any spreads or
concessions on principal transactions on a net trade basis) for the
fiscal years ended December 31, 1994, 1995 and 1996 were
appro ximately $44,872, $86,680 and $184,835, respectively.
A change in securities held by the Fund is known as portfolio
turnover. The Fund's options hedging and income strategies may
increase the portfolio turnover of the Fund. Therefore, the
portfolio turnover of the Fund may be higher than other investment
companies not utilizing such options trading techniques. As
portfolio turnover increases, the Fund can be expected to incur
brokerage commission expenses and transaction costs which will be
borne by the Fund. In any particular year, however, market
conditions could result in portfolio activity at a greater or
lesser rate than anticipated. For the fiscal years ended December
31, 1994, 1995 and 1996 the Fund's portfolio turnover rates were
and 52.82%, 57.51% and 52.67%, respectively.
Performance of the Fund
Yield and Total Return Information. As described in the
Prospectus, from time to time the standardized yield, dividend
yield, average annual total return, cumulative total return,
average annual total return at net asset value and total return
at net asset value of an investment in a class of shares of the
Fund may be advertised. An explanation of how these total returns
are calculated for each class and the components of those
calculations is set forth below. The Fund currently offers four
classes of shares of beneficial interest: Class A shares, Class B
shares, Class C shares and Class M shares. The different classes
of shares represent investments in the same portfolio of
securities, but are subject to different expenses and are likely to
have different share prices. On March 11, 1996, the Fund
redesignated as Class M shares its Class A shares, which had been
outstanding prior to that date and redesignated as Class A shares
its Class Y shares, which had been outstanding prior to that date.
Class B shares were first publicly offered on May 1, 1995. Class C
shares were first publicly offered on March 11, 1996.
The Fund's advertisements of its performance data with respect
to any class must, under applicable rules of the Securities and
Exchange Commission, include the average annual total returns for
that class of shares of the Fund for the 1, 5, and 10-year periods
(or the life of the class, if less) ending as of the most recently-
ended calendar quarter prior to the publication of the
advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured, and its returns and share
prices are not guaranteed and normally fluctuate on a daily basis.
When redeemed, an investor's shares may be worth more or less than
their original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of each class of shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to the particular class.
Standardized Yields
Yield. The Fund's yield (referred to as standardized
yield ) for a given 30-day period for a class of shares is
calculated using the following formula set forth in rules adopted
by the Securities and Exchange Commission ( SEC )that apply to all
funds that quote yields:
(a-b) 6
Standardized Yield = 2 ((--- + 1) - 1)
( cd)
The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense
reimbursements).
c = the average daily number of shares of that class
outstanding during the 30-day period that were entitled
to receive dividends.
d = the maximum offering price per share of that class on the
last day of the period, adjusted for undistributed net
investment income.
The standardized yield of a class of shares for a 30-day
period may differ from its yield for any other period. The SEC
formula assumes that the standardized yield for a 30-day period
occurs at a constant rate for a six-month period and is annualized
at the end of the six-month period. This standardized yield is not
based on actual distributions paid by the Fund to shareholders in
the 30-day period, but is a hypothetical yield based upon the net
investment income from the Fund's portfolio investments calculated
for that period. The standardized yield may differ from the
dividend yield of that class, described below. Additionally,
because each class of shares is subject to different expenses, it
is likely that the standardized yields of the Fund's classes of
shares will differ. For the 30-day period ended December 31, 1996,
the standardized yields for the Fund's then outstanding Class A,
Class B, Class C and Class M shares were 4.63%, 4.12%, 4.14% and
4.25%, respectively.
Dividend Yield and Distribution Return. From time to time
the Fund may quote a dividend yield or a distribution return for
each class. Dividend yield is based on the dividends paid on
shares of a class from dividends derived from net investment income
during a stated period. Distribution return includes dividends
derived from net investment income and from realized capital gains
declared during a stated period. Under those calculations, the
dividends and/or distributions for that class declared during a
stated period of one year or less (for example, 30 days) are added
together, and the sum is divided by the maximum offering price per
share of that class on the last day of the period. When the result
is annualized for a period of less than one year, the dividend
yield is calculated as follows:
Dividend Yield of the Class =
Dividends of the Class
-----------------------------------------------------
Max. Offering Price of the Class (last day of period)
divided by Number of days (accrual period) x 365
The maximum offering price for Class A shares and Class M
shares includes the maximum front-end sales charge. For Class B or
Class C shares, the maximum offering price is the net asset value
per share, without considering the effect of contingent deferred
sales charges.
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return," "average annual total return at net asset value" and
"total return at net asset value" of an investment in a class of
shares of the Fund may be advertised. An explanation of how these
total returns are calculated for each class and the components of
those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each advertised class of
shares of the Fund for the 1, 5, and 10-year periods (or the life
of the class, if less) ending as of the most recently-ended
calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the
performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a
basis for comparison with other investments. An investment in the
Fund is not insured; its returns and share prices are not
guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of each class of shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to the particular class.
Average Annual Total Returns. The average annual total
return of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ( P in the formula below) held for a
number of years ( n ) to achieve an Ending Redeemable Value ( ERV )
of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative total return
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares and Class M
shares, the current maximum sales charges of 5.75% and 3.25%,
respectively (as a percentage of the offering price) are deducted
from the initial investment ( P ) (unless the return is shown at
net asset value, as described below). For Class B shares, payment
of a contingent deferred sales charge of 5.0% for the first year,
4.0% for the second year, 3.0% for the third year, 3.0% for the
fourth year, 2.0% for the fifth year and 1.0% for the sixth year,
and none thereafter, is applied, as described in the Prospectus.
For Class C shares, the payment of the 1% contingent deferred sales
charge for the first 12 months is applied as described in the
Prospectus. Total returns also assume that all dividends and
capital gains distributions during the period are reinvested to buy
additional shares at net asset value per share, and that the
investment is redeemed at the end of the period.
The average annual total returns on an investment in Class A
shares of the Fund for the one year period ended December 31, 1996
and for the period from May 1, 1995 through December 31, 1996,
were 3.79% and 11.52%, respectively. The cumulative total return
on Class A shares for the period from May 1, 1995 through December
31, 1996 was 19.93%. The average annual total returns for Class B
shares for the one year period ended December 31, 1996 and for the
period from May 1, 1995 through December 31, 1996, were 4.28% and
12.55% respectively. The cumulative total return on Class B
shares for the period from May 1, 1995 through December 31, 1996
was 21.77%. The cumulative total return of Class C shares for the
period from March 11, 1996 (date of first public offering of Class
C shares) through December 31, 1996 was 6.74%. The average annual
total returns on an investment in Class M shares of the Fund for
the one, five and ten year periods ended December 31, 1996 were
6.02%,16.01% and 10.58%, respectively. The cumulative total
return on Class M shares for the period from June 3, 1986 through
December 31, 1996 was 172.24%.
Total Returns at Net Asset Value. From time to time the
Fund may also quote an average annual total return at net asset
value or a cumulative total return at net asset value for Class A,
Class B, Class C or Class M shares. Each is based on the
difference in net asset value per share at the beginning and the
end of the period for a hypothetical investment in that class of
shares (without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends
and capital gains distributions. The cumulative total return at
net asset value of the Fund's Class A shares for the one year
period ended December 31, 1996 and for the period from May 1, 1995
through December 31, 1996, were 10.13% and 27.24%, respectively.
The cumulative total returns at net asset value for Class B shares
for the one year period ended December 31, 1996 and for the period
from May 1, 1995 through December 31, 1996, were 9.28% and 25.77%
respectively. The cumulative total return of Class C shares at net
asset value for the period from March 11, 1996 (date of first
public offering of Class C shares) through December 31, 1996 was
7.74%. The cumulative total returns at net asset value on an
investment in Class M shares of the Fund for the one and five year
periods ended December 31, 1996 and for the period from June 3,
1986 through December 31, 1996, were 9.58%, 117.14% and 181.39%,
respectively.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B, Class C
or Class M shares. However, when comparing total return of an
investment in Class A, Class B, Class C or Class M shares of the
Fund with that of other alternatives, investors should understand
that as the Fund invests in high yield securities, its shares are
subject to greater market risks than shares of funds having other
investment objectives and that the Fund is designed for investors
who are willing to accept greater risk of loss in the hopes of
realizing greater gains.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B, Class C or Class M
shares by Lipper Analytical Services, Inc. ( Lipper ), a widely-
recognized independent service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to
investment objectives. The performance of the Fund's classes are
ranked against (i) all other funds (excluding money market funds),
(ii) all other high current yield or fixed income funds and (iii)
all other such funds in a specific size category. The Lipper
performance rankings are based on total returns that include the
reinvestment of capital gain distributions and income dividends but
do not take sales charges or taxes into consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B, Class C and Class M shares by
Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds in broad investment categories:
domestic stock funds, international stock funds, taxable bond funds
and municipal bond funds, based on risk-adjusted total investment
returns. Investment return measures a fund's or class' one, three,
five and ten-year average annual total returns (depending on the
inception of the fund or class) in excess of 90-day U.S. Treasury
bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class' performance below 90-
day U.S. Treasury bill returns. Risk and investment return are
combined to produce star rankings reflecting performance relative
to the average fund in the fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The
current star ranking is the fund's or class' 3-year ranking or its
combined 3- and 5-year ranking (weighted 60%/40%, respectively, or
its combined 3-, 5- and 10-year ranking (weighted 40%, 30% and 30%,
respectively), depending on the inception of the fund or class.
Rankings are subject to change monthly.
The Fund may also compare its performance to that of other
funds in its Morningstar Category. In addition to its star
ranking, Morningstar also categorizes and compares a fund's 3-year
performance based on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories
(domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparisons by
Morningstar are based on the same risk and return measurements as
its star rankings but do not consider the effect of sales charges.
The total return on an investment in the Fund's Class A, Class
B, Class C or Class M shares may be compared with performance for
the same period of comparable indices, including but not limited to
The First Boston Convertible Securities Index and the Goldman Sachs
100 Convertible Index. Both indices serve as a standard of
comparison and measurement of market opportunities for convertible
funds and illustrates the unique and dynamic characteristics of the
convertible securities market. The First Boston Convertible
Securities index is calculated at each month end. The Goldman
Sachs 100 Convertible Index is comprised of 100 convertible
securities. Index performance does not reflect any commissions or
expenses that would be incurred if an investor individually
purchased or sold the securities represented in an Index.
Investors may also wish to compare the return on the Fund's
Class A, Class B, Class C or Class M shares to the returns on fixed
income investments available from banks and thrift institutions,
such as certificates of deposit, ordinary interest-paying checking
and savings accounts, and other forms of fixed or variable time
deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed by
the FDIC or any other agency and will fluctuate daily, while bank
depository obligations may be insured by the FDIC and may provide
fixed rates of return, and Treasury bills are guaranteed as to
principal and interest by the U.S. Government.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the OppenheimerFunds' services to those of
other mutual fund families selected by the rating or ranking
services and may be based upon the opinions of the rating or
ranking service itself, based on its research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
The performance of the Fund's Class A, Class B, Class C or
Class M shares may also be compared in publications to (i) the
performance of various market indices or to other investments for
which reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B, Class C and Class M
shares of the Fund under Rule 12b-1 of the Investment Company Act,
pursuant to which the Fund makes payments to the Distributor in
connection with the distribution and/or servicing of the shares of
that class, as described in the Prospectus. Each Plan has been
approved by a vote of (i) the Board of Trustees of the Fund,
including a majority of the Independent Trustees, cast in person at
a meeting called for the purpose of voting on that Plan, and (ii)
the holders of a "majority" (as defined in the Investment Company
Act) of the shares of each class. For the Distribution and Service
Plan for Class C shares, that vote was cast by the Manager as the
sole initial holder of Class C shares of the Fund.
In addition, under the Plans, the Manager and the Distributor,
in their sole discretion, from time to time, may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund), to make payments
to brokers, dealers or other financial institutions (each is
referred to as a Recipient under the Plans) for distribution and
administrative services they perform, at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make to Recipients from
their own resources.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as such continuance is
specifically approved at least annually by the Fund's Board of
Trustees, including the Independent Trustees, by a vote cast in
person at a meeting called for the purpose of voting on such
continuance. Each Plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the
holders of a majority (as defined in the Act) of the outstanding
shares of that class. No Plan may be amended to increase
materially the amount of payments to be made unless such amendment
is approved by the class affected by the amendment. In addition,
because Class B shares of the Fund automatically convert into Class
A shares after six years, the Fund is required by a Securities and
Exchange Commission rule to obtain the approval of Class B as well
as Class A shareholders for a proposed amendment to the Class A
Plan that would materially increase the amount to be paid by Class
A shareholders under the Class A Plan. Such approval must be by a
majority (as defined in the Act), of the Class A and Class B
shares voting separately by class. All material amendments must be
approved by the Board and the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which each payment was made and the identity
of each Recipient that received any payment. Those reports,
including the allocations on which they are based, will be subject
to the review and approval of the Independent Trustees in the
exercise of their fiduciary duty. Each Plan further provides that
while it is in effect, the selection and nomination of those
Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This
does not prevent the involvement of others in such selection and
nomination if the final decision on selection or nomination is
approved by a majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers, did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Trustees. Initially, the
Board of Trustees has set the fees at the maximum rate and set no
minimum amount of the assets.
For the fiscal year ended December 31, 1996, payments under
the Plan for Class A shares totaled $95,189, all of which was paid
by the Distributor to Recipients, including $7,115 paid to MML
Investor Services, Inc., an affiliate of the Distributor. Any
unreimbursed expenses incurred by the Distributor with respect to
Class A shares for any fiscal year may not be recovered in
subsequent years. Payments received by the Distributor under the
Plan for Class A shares will not be used to pay any interest
expense, carrying charge, or other financial costs, or allocation
of overhead by the Distributor.
For the fiscal year ended December 31, 1996, payments under
the Plan for Class M shares totaled $1,958,186, all of which was
paid by the Distributor to Recipients, including $4,590 paid to MML
Investor Services, Inc., an affiliate of the Distributor. Any
unreimbursed expenses incurred by the Distributor with respect to
Class M shares for any fiscal year may not be recovered in
subsequent years. Payments received by the Distributor under the
Plan for Class M shares will not be used to pay any interest
expense, carrying charge, or other financial costs, or allocation
of overhead by the Distributor.
The Class B and Class C Plans allows the service fee payments
to be paid by the Distributor to Recipients in advance for the
first year Class B and Class C shares are outstanding, and
thereafter on a quarterly basis, as described in the Prospectus.
The services rendered by Recipients in connection with personal
services and the maintenance of Class B and Class C shareholder
accounts may include but shall not be limited to, the following:
answering routine inquiries from the Recipient's customers
concerning the Fund, assisting in the establishment and maintenance
of accounts or sub-accounts in the Fund and processing share
redemption transactions, making the Fund's investment plans and
dividend payment options available, and providing such other
information and services in connection with the rendering of
personal services and/or the maintenance of accounts, as the
Distributor or the Fund may reasonably request. The advance
payment is based on the net asset value of the Class B and Class C
shares sold. An exchange of shares does not entitle the Recipient
to an advance service fee payment. In the event Class B or Class
C shares are redeemed during the first year that the shares are
outstanding, the Recipient will be obligated to repay a pro rata
portion of the advance payment for those shares to the Distributor.
Payments made under the Class B Plan during the fiscal year ended
December 31, 1996 totaled $1,121,523, of which $920,281 was
retained by the Distributor. Payments made under the Class C Plan
during the period from March 11, 1996 through December 31, 1996
totaled $147,851, of which $113,638 was retained by the
Distributor.
Although the Class B and Class C Plans permit the Distributor
to retain both the asset-based sales charges and the service fees
on such shares, or to pay Recipients the service fee on a quarterly
basis, without payment in advance, the Distributor presently
intends to pay the service fee to Recipients in the manner
described above. A minimum holding period may be established from
time to time under the Class B Plan and the Class C Plan by the
Board. Initially, the Board has set no minimum holding period.
All payments under the Class B Plan and the Class C Plan are
subject to the limitations imposed by the Conduct Rules of the
National Association of Securities Dealers, Inc., on payments of
asset-based sales charges and service fees.
Asset-based sales charge payments are designed to permit an
investor to purchase shares of the Fund without paying a front-end
sales load and at the same time permit the Distributor to
compensate Recipients in connection with the sale of Class B and
Class C shares of the Fund. The Distributor retains the asset-
based sales charge on Class B shares. As to Class C shares, the
Distributor retains the asset-based sales charge during the first
year shares are outstanding, and pays the asset-based sales charge
as an ongoing commission to the dealer on Class C shares
outstanding for a year or more. Under the Class B and Class C
Plans, the asset-based sales charge is paid to compensate the
Distributor for its services, described below, to the Fund.
The Class B and Class C Plans provide for the Distributor to
be compensated at a flat rate, whether the Distributor s
distribution expenses are more or less than the amounts paid by the
Fund during that period. Such payments are made in recognition
that the Distributor (i) pays sales commissions to authorized
brokers and dealers at the time of sale and pays service fees as
described in the Prospectus, (ii) may finance such commissions
and/or the advance of the service fee payment to Recipients under
those Plans, or may provide such financing from its own resources,
or from an affiliate, (iii) employs personnel to support
distribution of shares, and (iv) may bear the costs of sales
literature, advertising and prospectuses (other than those
furnished to current shareholders), state blue sky registration
fees and certain other distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B, Class C and
Class M Shares. The availability of four classes of shares permits
an investor to choose the method of purchasing shares that is more
beneficial to the investor depending on the amount of the purchase,
the length of time the investor expects to hold shares and other
relevant circumstances. Any salesperson or other person entitled
to receive compensation for selling Fund shares may receive
different compensation with respect to one class of shares than
another.
The four classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B, Class C and Class M shares and the
dividends payable on Class B, Class C and Class M shares will be
reduced by incremental expenses borne by those classes, including
the asset-based sales charge to which Class B, Class C and Class M
shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B, Class C and Class
M shares recognizes two types of expenses. General expenses that
do not pertain specifically to any class are allocated pro rata to
the shares of each class, based on the percentage of the net assets
of such class to the Fund's total assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to unaffiliated
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution and/or Service Plan
fees, (ii) incremental transfer and shareholder servicing agent
fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a
specific class rather than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values
per share of Class A, Class B, Class C and Class M shares of the
Fund are determined as of the close of business of The New York
Stock Exchange (the "Exchange") on each day that the Exchange is
open, by dividing the value of the Fund's net assets attributable
to that class by the number of shares of that class that are
outstanding. The Exchange normally closes at 4:00 P.M. New York
time, but may close earlier on some days (for example, in case of
weather emergencies or on days falling before a holiday). The
Exchange's most recent annual holiday schedule (which is subject to
change) states that it will close on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It may also close on other
days. The Fund may invest a substantial portion of its assets in
foreign securities primarily listed on foreign exchanges or in
foreign over-the counter markets that may trade on Saturdays or
customary U.S. business holidays on which the Exchange is closed.
Because the Fund's net asset value will not be calculated on those
days, the Fund's net asset values per share of Class A, Class B and
Class C shares of the Fund may be significantly affected at times
when shareholders cannot purchase or redeem shares.
The Fund's Board of Trustees has established procedures for
the valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a U.S. securities exchange or on the
Automated Quotation System ( NASDAQ ) of The Nasdaq Stock Market,
Inc. for which last sale information regularly reported are valued
at the last reported sale prices on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day, or
closing bid prices that day); (ii) securities traded on a foreign
securities exchange are valued generally at the last sales price
available to the pricing service approved by the Fund's Board of
Trustees or to the Manager as reported by the principal exchange on
which the security is traded, or at the mean between "bid" and
"asked" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) long-term debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "asked" prices determined by a portfolio pricing service
approved by the Fund's Board of Trustees or obtained by the Manager
from two active market makers in the security on the basis of
reasonable inquiry; (iv) debt instruments having a maturity of more
than 397 days when issued, and non-money market type instruments
having a maturity of 397 days or less when issued, which have a
remaining maturity of 60 days or less are valued at the mean
between "bid" and "asked" prices determined by a pricing service
approved by the Fund's Board of Trustees or obtained by the Manager
from two active market makers in the security on the basis of
reasonable inquiry; (v) money market debt securities that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi)
securities (including restricted securities) not having readily-
available market quotations are valued at fair value determined
under the Board's procedures. If the Manager is unable to locate
two market makers willing to give quotes (see (ii), (iii) and (iv)
above), the security may be priced at the mean between the "bid"
and "ask" prices provided by a single active market maker (which in
certain cases may be the bid price if no asked price is available).
In the case of U.S. Government Securities, mortgage-backed
securities, foreign securities and corporate bonds, when last sale
information is not generally available, such pricing procedures may
include "matrix" comparisons to the prices for comparable
instruments on the basis of quality, yield, maturity and other
special factors involved. The Manager may use pricing services
approved by the Board of Trustees to price U.S. Government
Securities, mortgage-backed securities, foreign government
securities and corporate bonds 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.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the Exchange. Events affecting the values of foreign securities
traded in securities markets that occur between the time their
prices are determined and the close of the Exchange will not be
reflected in the Fund's calculation of net asset value unless the
Board of Trustees or the Manager, under procedures established by
the Board of Trustees, determines that the particular event is
likely to effect a material change in the value of such security.
Foreign currency, including forward contracts, will be valued at
the closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service. The values
of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing
service.
Puts, calls and Futures are valued at the last sales price on
the principal exchange on which they are traded, or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
When the Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent credit is included in
the liability section. The credit is adjusted ("marked-to-market")
to reflect the current market value of the call or put. In
determining the Fund's gain on investments, if a call written by
the Fund is exercised, the proceeds are increased by the premium
received. If a call or put written by the Fund expires, the Fund
has a gain in the amount of the premium; if the Fund enters into a
closing purchase transaction, it will have a gain or loss depending
on whether the premium received was more or less than the cost of
the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment
is reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House transfer to buy shares. Dividends will
begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for
the purchase through the ACH system before the close of The New
York Stock Exchange. The Exchange normally closes at 4:00 P.M.,
but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a
reduced sales charge rate may be obtained for Class A shares and
Class M shares under Right of Accumulation and Letters of Intent
because of the economies of sales efforts and expenses realized by
the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain circumstances described in the
Prospectus because the Distributor incurs little or no selling
expenses. The term immediate family refers to one's spouse,
children, grandchildren, parents, grandparents, parents-in-law,
brothers and sisters, aunts, uncles, nieces, nephews, sons-and
daughters-in-law, siblings, a sibling's spouse and a spouse's
siblings.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer U.S. Government Trust
Oppenheimer Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Real Asset Fund
Oppenheimer Enterprise Fund
Oppenheimer Developing Market Fund
Oppenheimer Quest Capital Appreciation Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Life Span Balanced Fund
Oppenheimer Life Span Growth Fund
Oppenheimer Life Span Income Fund
Oppenheimer Bond Fund for Growth
Rochester Fund Municipals
Limited Term New York Municipal Fund*
and the following Money Market Funds :
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
* Until May 1, 1997, shares of this fund are currently not
exchangeable for shares of the other Oppenheimer funds.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as
a Letter ) is an investor's statement in writing to the
Distributor of the intention to purchase Class A shares and Class
M shares of the Fund (and Class A and Class B shares of other
Oppenheimer funds) during a 13-month period (the Letter of Intent
period ), which may, at the investor's request, include purchases
made up to 90 days prior to the date of the Letter. The Letter
states the investor's intention to make the aggregate amount of
purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in
the Letter. Purchases made by reinvestment of dividends or
distributions of capital gains and purchases made at net asset
value without sales charge do not count toward satisfying the
amount of the Letter. A Letter enables an investor to count the
Class A and Class B shares purchased under the Letter to obtain the
reduced sales charge rate on purchases of Class A shares and Class
M shares of the Fund (and Class A shares and Class B shares of
other Oppenheimer funds) that applies under the Right of
Accumulation to current purchases of Class A shares or Class M
shares. Each purchase of Class A shares or Class M shares under
the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares
in the amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in Terms of Escrow,
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual purchases. If
total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
(1) Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
(2) If the intended purchase amount specified under the
Letter is completed within the thirteen-month Letter of Intent
period, the escrowed shares will be promptly released to the
investor.
(3) If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
(4) By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
(5) The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class M
shares sold with a front-end sales charge (c) Class B shares of
other Oppenheimer funds acquired subject to a contingent deferred
sales charge, and (d) Class A shares or Class B shares acquired in
exchange for either (i) Class A shares of one of the other
Oppenheimer funds that were acquired subject to a Class A initial
or contingent deferred sales charge or (ii) Class B shares of one
of the other Oppenheimer funds that were acquired subject to a
contingent deferred sales charge.
(6) Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
How to Exchange Shares, and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in How To Sell
Shares, in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds. 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, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee
benefit plans that may purchase Class A shares without being
subject to the Class A contingent deferred sales charge, the term
"employee benefit plan" means any plan or arrangement, whether or
not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of Trustees has
the right to cause the involuntary redemption of the shares held in
any account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Trustees will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the Act, the requirements for any
notice to be given to the shareholders in question (not less than
30 days), or the Board may set requirements for granting permission
to the Shareholder to increase the investment, and set other terms
and conditions so that the shares would not be involuntarily
redeemed.
Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However,
the Board of Directors of the Fund may determine that it would be
detrimental to the best interests of the remaining shareholders of
the Fund to make payment of a redemption order wholly or partly in
cash. In that case the Fund may pay the redemption proceeds in
whole or in part by a distribution "in kind" of securities from the
portfolio of the Fund, in lieu of cash, in conformity with
applicable rules of the Securities and Exchange Commission. The
Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net
assets of the Fund during any 90-day period for any one
shareholder. If shares are redeemed in kind, the redeeming
shareholder might incur brokerage or other costs in selling the
securities for cash. The method of valuing securities used to make
redemptions in kind will be the same as the method the Fund uses to
value it portfolio securities described above under "Determination
of Net Asset Values Per Share" and that valuation will be made as
of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares, (ii) Class B shares, (iii) Class C shares that
were subject to the Class C contingent deferred sales charge when
redeemed, or (iv) Class M shares. The reinvestment may be made
without sales charge only in Class A shares of the Fund or any of
the other Oppenheimer funds into which shares of the Fund are
exchangeable as described below, at the net asset value next
computed after the Transfer Agent receives the reinvestment order.
The shareholder must ask the Distributor for that privilege at the
time of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code (the Code ), if the
redemption proceeds of Fund shares on which a sales charge was paid
are reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under How to Buy Shares for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans or pension or profit-sharing plans should be addressed
to Trustee, OppenheimerFunds Retirement Plans, c/o the Transfer
Agent at its address listed in How To Sell Shares in the
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored prototype pension, profit-sharing or 401(k) plans may not
directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are
subject to special requirements under the 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 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
Code requires that tax be withheld from any distribution even if
the shareholder elects not to have tax withheld. The Fund, the
Manager, the Distributor, the Trustee and the Transfer Agent assume
no responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customer. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives 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 the order was transmitted to
and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt the required redemption documents in proper
form, with the signature(s) of the registered owners guaranteed on
the redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning
shares of the Fund valued at $5,000 or more can authorize the
Transfer Agent to redeem shares (minimum $50) automatically on a
monthly, quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see How To Buy Shares ) may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. 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. Because of the sales charge
assessed on Class A and Class M share purchases, shareholders
should not make regular additional Class A or Class M share
purchases while participating in an Automatic Withdrawal Plan.
Class B and Class C shareholders should not establish withdrawal
plans because of the imposition of the contingent deferred sales
charge on such withdrawals (except where the contingent deferred
sales charge is waived as described in the Prospectus under
Waivers of Class B and Class C Contingent Deferred Sales
Charges ).
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below, as well as the Prospectus. These
provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically
apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in How to
Exchange Shares in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed
as necessary to meet withdrawal payments. Shares acquired without
a sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the Plan ) as agent for the investor (the
Planholder ) who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent and the Fund
shall incur no liability to the Planholder for any action taken or
omitted by the Transfer Agent in good faith to administer the Plan.
Certificates will not be issued for shares of the Fund purchased
for and held under the Plan, but the Transfer Agent will credit all
such shares to the account of the Planholder on the records of the
Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or AccountLink payments of the proceeds of
Plan withdrawals will normally be transmitted three business days
prior to the date selected for receipt of the payment (receipt of
payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, except with respect to exchanges of
Class M shares, which may be exchanged only for Class A shares as
described in the following paragraph, shares of a particular class
of Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. All Oppenheimer funds offer Class A, Class B and Class C
shares, except Oppenheimer Money Market Fund, Inc., Centennial
Money Market Trust, Centennial Tax-Exempt Trust, Centennial
Government Trust, Centennial New York Tax-Exempt Trust, Centennial
California Tax-Exempt Trust, Centennial America Fund, L.P., and
Daily Cash Accumulation Fund, Inc., which only offer Class A shares
and Oppenheimer Main Street California Municipal Fund, which only
offers Class A and Class B shares (Class B and Class C shares of
Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds sponsored 401(k) plans). A current list showing
which funds offer which classes can be obtained by calling the
Distributor at 1-800-525-7048.
The Fund is currently the only Oppenheimer fund which offers
Class M shares. Except as described herein there may be no
exchanges of any class of shares of any Oppenheimer fund into Class
M shares of the Fund. With respect to those accounts established on
or before March 8, 1996, Class M shares may be exchanged for Class
A shares of Oppenheimer funds. Except for Class A shares of either
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves
which were acquired upon the exchange of Class M shares of the
Fund, no exchanges of any class of shares of any Oppenheimer fund
into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). 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.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of any class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares.
The Class B contingent deferred sales charge is imposed on Class B
shares acquired by exchange if they are redeemed within 6 years of
the initial purchase of the exchanged Class B shares. The Class C
contingent deferred sales charge is imposed on Class C shares
acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in How To Buy Shares in the
Prospectus for the imposition of the Class B or the Class C
contingent deferred sales charge will be followed in determining
the order in which the shares are exchanged. Shareholders should
take into account the effect of any exchange on the applicability
and rate of any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares.
Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B ,Class C or Class
M shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of 10 or
more accounts. The Fund may accept requests for exchanges of up to
50 accounts per day from representatives of authorized dealers that
qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans, checkwriting, if available, and retirement plan
contributions will be switched to the new account unless the
Transfer Agent is instructed otherwise. If all telephone lines are
busy (which might occur, for example, during periods of substantial
market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange
requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the Redemption Date ). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. Reinvestment Privilege, above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares
held of record at the time of the previous determination of net
asset value. However, daily dividends on newly purchased shares
will not be declared or paid until such time as Federal Funds
(funds credited to a member bank's account at the Federal Reserve
Bank) are available from the purchase payment for such shares.
Normally, purchase checks received from investors are converted to
Federal Funds on the next business day. If all shares in an
account are redeemed, all dividends accrued on shares in the
account will be paid together with the redemption proceeds.
Dividends will be declared on shares repurchased by a dealer or
broker for three business days following the trade date (i.e., to
and including the day prior to settlement of the repurchase).
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, in order to enable
the investor to earn a return on otherwise idle funds.
Tax Status of the Fund's Dividends and Distributions. The Federal
income tax treatment of the Fund's dividends and distributions is
explained in the Prospectus under the caption Dividends,
Distributions and Taxes. Special provisions of the Code govern
the dividends-received deduction for corporate shareholders. Long-
term capital gains distributions are not eligible for the
deduction. In addition, the amount of dividends paid by the Fund
which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends (generally dividends from domestic
corporations) which the Fund derives from its portfolio investments
held for a minimum period, usually 46 days. A corporate
shareholder will not be eligible for the deduction on dividends
paid on shares held by the shareholder for 45 days or less. To the
extent that the Fund derives a substantial portion of its gross
income from option premiums, interest income or short-term gains
from the sale of securities, or dividends from foreign
corporations, its dividends will not qualify for the deduction.
Under the 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 to 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's distributions will meet those requirements, the
Fund's Board and Manager might determine that in a particular year
it would be in the best interest of the Fund not to distribute
income or capital gains at the mandated levels and to pay the
excise tax on the undistributed amounts, which would reduce the
amount available for distribution to shareholders.
The Code requires that a holder (such as the Fund) of a zero
coupon security accrue a portion of the discount at which the
security was purchased as income each year even though the Fund
receives no interest payment in cash on the security during the
year. The Fund may also from time to time receive payment-in-kind
securities in lieu of cash interest payments. As an investment
company, the Fund must pay out substantially all of its net
investment income each year. Accordingly, the Fund may be required
to pay out as an income distribution each year an amount which is
greater than the total amount of cash interest the Fund actually
received. Such distributions will be made from the cash assets of
the Fund or by liquidation of portfolio securities, if necessary.
If a distribution of cash necessitates the liquidation of portfolio
securities, the Fund may realize a gain or loss from such sales.
In the event the Fund realizes net capital gains from such
transactions, its shareholders may receive a larger capital gain
distribution than they would have had in the absence of such
transactions.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the
Fund's assets. The Custodian's responsibilities include
safeguarding and controlling the Fund's portfolio securities,
collecting income on the portfolio securities and handling the
delivery of such securities to and from the Fund. The Manager has
represented to the Fund that the banking relationships between the
Manager and the Custodian have been and will continue to be
unrelated to and unaffected by the relationship between the Fund
and the Custodian. It will be the practice of the Fund to deal
with the Custodian in a manner uninfluenced by any banking
relationship the Custodian may have with the Manager and its
affiliates. The Fund's cash balances with the Custodian in excess
of $100,000 are not protected by federal deposit insurance. Such
uninsured balances at times may be substantial.
Independent Auditors. Price Waterhouse LLP serves as the
Fund's independent accountants. The services provided by Price
Waterhouse LLP include auditing services and review and
consultations on various filings by the Fund with the Securities
and Exchange Commission and tax authorities. They also act as
auditors for certain other funds advised by the Manager and its
affiliates.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
=====================================================================
==========
To the Shareholders and Trustees of Oppenheimer Bond Fund for Growth
In our opinion, the accompanying statement of assets and liabilities,
including the statement of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Oppenheimer Bond Fund for Growth (the Fund) at December 31, 1996, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the
financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred
to as financial statements) are the responsibility of the Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1996 by correspondence with
the custodian, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse
Price Waterhouse LLP
Rochester, New York
January 24, 1997
5 Oppenheimer Bond Fund for Growth
<PAGE> 6
STATEMENT OF INVESTMENTS December 31, 1996
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE 1
=====================================================================
===========================================================
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS AND NOTES--65.8%
- ------------------------------------------------------------------------------------------------------------------
- --------------
BASIC MATERIALS--0.1%
- ------------------------------------------------------------------------------------------------------------------
- --------------
METALS--0.1%
GE Capital Corp., 2.5% Base Metals Cv. Nts., 2/14/97(1) $
500,000 $ 535,000
- ------------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER CYCLICALS--14.6%
- ------------------------------------------------------------------------------------------------------------------
- --------------
AUTOS & HOUSING--3.2%
Bluegreen Corp., 8.25% Cv. Sub. Debs., 5/15/12 3,635,000
3,107,925
- ------------------------------------------------------------------------------------------------------------------
- -------
Continental Homes Holding Corp., 6.875% Cv. Sub. Nts., 11/1/02
2,000,000 2,187,500
- ------------------------------------------------------------------------------------------------------------------
- -------
Engle Homes, Inc., 7% Cv. Sub. Nts., 3/1/03 2,750,000
2,385,625
- ------------------------------------------------------------------------------------------------------------------
- -------
MascoTech, Inc., 4.5% Cv. Sub. Debs., 12/15/03 7,630,000
6,332,900
- ------------------------------------------------------------------------------------------------------------------
- -------
Rouse Co., 5.75% Cv. Sub. Debs., 7/23/02 1,200,000
1,294,500
- ------------------------------------------------------------------------------------------------------------------
- -------
U.S. Home Corp., 4.875% Cv. Sub. Debs., 11/1/05 5,000,000
4,600,000
-----------
19,908,450
- ------------------------------------------------------------------------------------------------------------------
- --------------
LEISURE & ENTERTAINMENT--5.5%
Boston Chicken, Inc.:
4.5% Cv. Sub. Debs., 2/1/04(2) 3,000,000
3,791,250
Zero Coupon Sub. LYONs, 6.38%, 6/1/15(3) 6,000,000
1,908,240
- ------------------------------------------------------------------------------------------------------------------
- -------
Credit Suisse First Boston Corp., New York Branch,
3% Disney-Linked Certificate of Deposit, 10/3/01(1) 5,000,000
5,275,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Hilton Hotels Corp., 10% Cv. Debs, 12/15/06 5,454,000
5,535,810
- ------------------------------------------------------------------------------------------------------------------
- -------
Hudson Hotels Corp., 7.5% Cv. Sub. Debs., 7/1/01(1)(4)
7,500,000 7,200,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Marriott International, Inc., Zero Coupon Sub. LYONs, 4.25%, 3/25/11(3)(5)
7,000,000 3,934,840
- ------------------------------------------------------------------------------------------------------------------
- -------
Speedway Motorsports, Inc., 5.75% Cv. Sub. Debs., 9/30/03
2,400,000 2,294,088
- ------------------------------------------------------------------------------------------------------------------
- -------
WMS Industries, Inc., 5.75% Cv. Sub. Debs., 11/30/02
4,000,000 3,852,000
-----------
33,791,228
- ------------------------------------------------------------------------------------------------------------------
- --------------
MEDIA--2.1%
Graphic Industries, Inc., 7% Cv. Sub. Debs., 5/15/06 750,000
685,312
- ------------------------------------------------------------------------------------------------------------------
- -------
Hollinger, Inc., Zero Coupon Cv. Sub. LYONs, 6.48%, 10/5/13(3)
3,000,000 1,057,500
- ------------------------------------------------------------------------------------------------------------------
- -------
Rogers Communications, Inc.:
2% Cv. Sr. Debs., 11/26/05 3,800,000
2,109,000
Zero Coupon Cv. Sr. LYONs, 6.11%, 5/20/13(3) 1,855,000
725,769
- ------------------------------------------------------------------------------------------------------------------
- -------
Scandinavian Broadcasting System SA, 7.25% Cv. Sub. Debs., 8/1/05
3,000,000 2,820,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Scantron Corp., 6.75% Cv. Sub. Debs.,
6/1/11 (Cv. into Common Stock of John H. Harland Co.)(2)
1,205,000 1,567,886
- ------------------------------------------------------------------------------------------------------------------
- -------
Thomas Nelson, Inc., 5.75% Cv. Sub. Nts., 11/30/99 4,000,000
4,000,000
-----------
12,965,467
- ------------------------------------------------------------------------------------------------------------------
- --------------
RETAIL: GENERAL--0.5%
Travel Ports of America, Inc.:
8.5% Cv. Sr. Sub. Debs., 1/15/05(1)(4) 1,750,000
1,778,787
8.5% Cv. Sr. Sub. Debs., 1/15/05 (Reg. S)(1)(4) 950,000
965,628
-----------
2,744,415
</TABLE>
6 Oppenheimer Bond Fund for Growth
<PAGE> 7
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C>
RETAIL: SPECIALTY--3.3%
Baby Superstore, Inc., 4.875% Cv. Sub. Nts., 10/1/00 $2,250,000
$ 2,238,750
- ------------------------------------------------------------------------------------------------------------------
- -------
Ben Franklin Retail Stores, Inc., 7.5% Cv. Sub. Nts., 6/1/03(1)(6)
2,800,000 182,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Comtrad Holdings, Inc., 5% Cv. Nts., 7/8/99
(Cv. into Common Stock of CHS Electronics, Inc.)(1)(4)
4,000,000 4,466,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Home Depot, Inc., 3.25% Cv. Sub. Nts., 10/1/01 7,000,000
6,837,600
- ------------------------------------------------------------------------------------------------------------------
- -------
Lechters, Inc., 5% Cv. Sub. Debs., 9/27/01 2,000,000
1,290,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Michaels Stores, Inc., 6.75% Cv. Sub. Nts., 1/15/03 2,000,000
1,587,920
- ------------------------------------------------------------------------------------------------------------------
- -------
U.S. Office Products Co., 5.5% Cv. Sub. Nts., 5/15/03(5) 4,000,000
3,779,000
-----------
20,381,270
- ------------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER NON-CYCLICALS--12.3%
- ------------------------------------------------------------------------------------------------------------------
- --------------
BEVERAGES--0.4%
Chock Full O'Nuts Corp., 8% Cv. Sub. Debs., 9/15/06 2,580,000
2,438,100
- ------------------------------------------------------------------------------------------------------------------
- --------------
EDUCATION--1.1%
National Education Corp., 6.5% Cv. Sub. Debs., 5/15/11
7,497,000 6,924,154
- ------------------------------------------------------------------------------------------------------------------
- --------------
FOOD--1.4%
Grand Metropolitan PLC, 6.5% Cv. Nts., 1/31/00(5) 7,500,000
8,899,425
- ------------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/DRUGS--3.7%
ALZA Corp., 5% Cv. Sub. Debs., 5/1/06 7,000,000
6,803,860
- ------------------------------------------------------------------------------------------------------------------
- -------
Chiron Corp., 1.9% Cv. Sub. Nts., 11/17/00(5) 2,750,000
2,427,975
- ------------------------------------------------------------------------------------------------------------------
- -------
NABI, Inc., 6.5% Cv. Sub. Nts., 2/1/03(5) 5,000,000
4,609,650
- ------------------------------------------------------------------------------------------------------------------
- -------
Novartis AG, 2% Cv. Gtd. Bonds, 10/6/02(5) 4,000,000
4,300,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Sepracor, Inc., 7% Cv. Sub. Debs., 12/1/02(5) 4,500,000
4,702,500
-----------
22,843,985
- ------------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/SUPPLIES &
SERVICES--5.0%
American Medical Response, Inc., 5.25% Cv. Sub. Nts., 2/1/01(5)
3,000,000 3,243,750
- ------------------------------------------------------------------------------------------------------------------
- -------
Beverly Enterprises, Inc., 5.5% Cv. Sub. Debs., 8/1/18 6,165,000
6,511,781
- ------------------------------------------------------------------------------------------------------------------
- -------
GranCare, Inc., 6.5% Cv. Sub. Debs., 1/15/03 4,586,000
4,723,580
- ------------------------------------------------------------------------------------------------------------------
- -------
Healthsource, Inc., 5% Cv. Sub. Nts., 3/1/03(5) 6,500,000
5,188,690
- ------------------------------------------------------------------------------------------------------------------
- -------
Huntingdon International Holdings PLC, 7.5% Cv. Debs., 9/25/06(1)
1,710,000 1,376,550
- ------------------------------------------------------------------------------------------------------------------
- -------
Pharmaceutical Marketing Services, Inc.:
6.25% Cv. Sub. Debs., 2/1/03 2,375,000
1,911,875
6.25% Cv. Sub. Debs., 2/1/03(5) 450,000
362,250
- ------------------------------------------------------------------------------------------------------------------
- -------
Physicians Clinical Laboratory, Inc., 7.5% Cv. Sub. Debs., 8/15/00(1)(4)(6)
500,000 50,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Tenet Healthcare Corp., 6% Exchangeable Sub. Nts., 12/1/05
(Exchangeable into Common Stock of Vencor, Inc.) 4,000,000
4,202,520
- ------------------------------------------------------------------------------------------------------------------
- -------
TheraTx, Inc., 8% Cv. Sub. Nts., 2/1/02 1,300,000
1,196,000
- ------------------------------------------------------------------------------------------------------------------
- -------
UroMed Corp., 6% Cv. Sub. Nts., 10/15/03(5) 2,250,000
2,116,958
-----------
30,883,954
- ------------------------------------------------------------------------------------------------------------------
- --------------
TOBACCO--0.7%
Standard Commercial Corp., 7.25% Cv. Sub. Debs., 3/31/07
4,984,000 4,535,440
- ------------------------------------------------------------------------------------------------------------------
- --------------
ENERGY--4.1%
- ------------------------------------------------------------------------------------------------------------------
- --------------
ENERGY SERVICES &
PRODUCERS--2.4%
Cross Timbers Oil Co., 5.25% Cv. Sub. Nts., 11/1/03 2,004,000
2,197,346
- ------------------------------------------------------------------------------------------------------------------
- -------
Key Energy Group, Inc., 7.5% Cv. Sub. Debs., 7/1/03(1)
2,500,000 3,162,500
- ------------------------------------------------------------------------------------------------------------------
- -------
SEACOR Holdings, Inc., 5.375% Cv. Sub. Nts., 11/15/06(5)
3,500,000 4,079,005
- ------------------------------------------------------------------------------------------------------------------
- -------
SFP Pipeline Holdings, Inc., 11.16% Variable Rate Exchangeable Debs., 8/15/10
4,100,000 5,145,500
-----------
14,584,351
</TABLE>
7 Oppenheimer Bond Fund for Growth
<PAGE> 8
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C>
OIL-INTEGRATED--1.7%
Pennzoil Co., 4.75% Exchangeable Sr. Debs., 10/1/03
(Exchangeable into Common Stock of Chevron Corp.)(2)
$5,000,000 $ 5,780,050
- ------------------------------------------------------------------------------------------------------------------
- -------
USX Corp., 7% Cv. Sub. Debs., 6/15/17 5,000,000
4,987,500
-----------
10,767,550
- ------------------------------------------------------------------------------------------------------------------
- --------------
FINANCIAL--6.7%
- ------------------------------------------------------------------------------------------------------------------
- --------------
BANKS--1.3%
Bank of East Asia, Ltd., 2% Cv. Bonds, 7/19/03(5) 1,500,000
1,740,000
- ------------------------------------------------------------------------------------------------------------------
- -------
First Republic Bancorp, Inc., 7.25% Cv. Sub. Debs., 12/1/02
4,992,000 6,157,183
-----------
7,897,183
- ------------------------------------------------------------------------------------------------------------------
- --------------
DIVERSIFIED FINANCIAL--1.1%
Berkshire Hathaway, Inc., 1% Sr. Exchangeable Nts., 12/3/01
(Exchangeable into Common Stock of Salomon, Inc.)
5,000,000 4,657,850
- ------------------------------------------------------------------------------------------------------------------
- -------
Leasing Solutions, Inc., 6.875% Cv. Sub. Nts., 10/1/03 2,000,000
1,985,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Lomas Financial Corp., 9% Cv. Sr. Debs., 10/31/03(1)(6)
1,850,000 379,250
-----------
7,022,100
- ------------------------------------------------------------------------------------------------------------------
- --------------
INSURANCE--4.3%
Chubb Corp., 6% Cv. Exchangeable Sub. Gtd. Nts., 5/15/98
6,000,000 7,414,560
- ------------------------------------------------------------------------------------------------------------------
- -------
Penn Treaty America Corp., 6.25% Cv. Sub. Nts., 12/1/03(5)
500,000 539,220
- ------------------------------------------------------------------------------------------------------------------
- -------
Pioneer Financial Services, Inc., 6.5% Cv. Sub. Nts., 4/1/03 2,500,000
3,400,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Republic of Italy, 5% PENs, 6/28/01
(Exchangeable into ADSs of Istituto Nazionale delle Assicurazioni SpA)
7,000,000 7,008,750
- ------------------------------------------------------------------------------------------------------------------
- -------
Trenwick Group, Inc., 6% Cv. Debs., 12/15/99 8,000,000
8,440,000
-----------
26,802,530
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL--9.5%
- ------------------------------------------------------------------------------------------------------------------
- --------------
ELECTRICAL EQUIPMENT--1.0%
MagneTek, Inc., 8% Cv. Sub. Nts., 9/15/01 2,500,000
2,568,750
- ------------------------------------------------------------------------------------------------------------------
- -------
Recognition International, Inc., 7.25% Cv. Sub. Debs., 4/15/11
3,000,000 2,835,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Richardson Electronics Ltd., 7.25% Cv. Sub. Debs., 12/15/06
895,000 779,169
-----------
6,182,919
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL MATERIALS--1.7%
CEMEX, SA de CV, 4.25% Cv. Sub. Nts., 11/1/97
7,000,000 6,772,500
- ------------------------------------------------------------------------------------------------------------------
- -------
Empresas ICA Sociedad Controladora, SA de CV, 5% Cv. Sub. Debs., 3/15/04
3,000,000 2,130,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Polymax International Ltd., 2% Sec. Exchangeable Bonds, 2/27/06(5)
1,500,000 1,395,000
-----------
10,297,500
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL SERVICES--3.0%
OHM Corp., 8% Cv. Sub. Debs., 10/1/06 1,975,000
1,817,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Roy F. Weston, Inc., 7% Cv. Sub. Debs., 4/15/02 1,228,000
1,111,340
- ------------------------------------------------------------------------------------------------------------------
- -------
Thermo TerraTech, Inc.:
4.625% Cv. Sub. Debs., 5/1/03(5) 1,500,000
1,376,715
4.625% Cv. Sub. Debs., 5/1/03 1,798,000
1,645,727
- ------------------------------------------------------------------------------------------------------------------
- -------
United States Filter Corp., 4.5% Cv. Sub. Nts., 12/15/01 2,000,000
2,036,080
- ------------------------------------------------------------------------------------------------------------------
- -------
United Waste Systems, Inc., 4.5% Cv. Sub. Nts., 6/1/01(2)(5)
5,000,000 5,956,500
- ------------------------------------------------------------------------------------------------------------------
- -------
WMX Technologies, Inc., 2% Cv. Sub. Nts., 1/24/05(2)
4,466,000 4,180,489
-----------
18,123,851
</TABLE>
8 Oppenheimer Bond Fund for Growth
<PAGE> 9
<TABLE>
<CAPTION>
FACE MARKET
VALUE
AMOUNT SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- -------------
<S> <C> <C>
MANUFACTURING--3.3%
Alfa, SA de CV, 8% Cv. Sub. Nts., 9/15/00(5) $ 2,500,000
$ 2,756,250
- ------------------------------------------------------------------------------------------------------------------
- ------
Cooper Industries, Inc., 7.05% Cv. Sub. Debs., 1/1/15 3,500,000
3,742,130
- ------------------------------------------------------------------------------------------------------------------
- ------
Hexcel Corp., 7% Cv. Sub. Debs., 8/1/11 4,000,000
3,770,000
- ------------------------------------------------------------------------------------------------------------------
- ------
Raymond Corp., 6.5% Cv. Sub. Debs., 12/15/03 8,340,000
9,027,466
- ------------------------------------------------------------------------------------------------------------------
- ------
Robbins & Meyers, Inc., 6.5% Cv. Sub. Nts., 9/1/03 1,000,000
1,153,750
------------
20,449,596
- ------------------------------------------------------------------------------------------------------------------
- -------------
TRANSPORTATION--0.5%
CareLine, Inc., 8% Cv. Sr. Sub. Nts., 5/1/01
(Cv. into Common Stock of Laidlaw, Inc., Class B) 3,000,000
3,346,890
- ------------------------------------------------------------------------------------------------------------------
- -------------
TECHNOLOGY--17.1%
- ------------------------------------------------------------------------------------------------------------------
- -------------
COMPUTER HARDWARE--2.2%
SubMicron Systems Corp., 9% Cv. Sub. Nts., 12/15/97(1)(4)
450,000 199,053
- ------------------------------------------------------------------------------------------------------------------
- ------
Telxon Corp.:
5.75% Cv. Sub. Nts., 1/1/03 2,500,000
2,053,900
5.75% Cv. Sub. Nts., 1/1/03(5) 2,250,000
1,848,510
- ------------------------------------------------------------------------------------------------------------------
- ------
UNISYS Corp., 8.25% Cv. Sub. Nts., 8/1/00 10,000,000
9,700,000
------------
13,801,463
- ------------------------------------------------------------------------------------------------------------------
- -------------
COMPUTER SOFTWARE--2.1%
Baan Co., NV, 4.5% Cv. Sub. Nts., 12/23/01(5) 2,000,000
2,008,920
- ------------------------------------------------------------------------------------------------------------------
- ------
Learning Co., Inc., 5.5% Cv. Sr. Nts., 11/1/00 4,000,000
3,301,680
- ------------------------------------------------------------------------------------------------------------------
- ------
MacNeal-Schwendler Corp., 7.875% Cv. Sub. Debs., 8/18/04
5,267,000 4,819,305
- ------------------------------------------------------------------------------------------------------------------
- ------
National Data Corp., 5% Cv. Sub. Nts., 11/1/03 1,500,000
1,560,000
- ------------------------------------------------------------------------------------------------------------------
- ------
Spectrum Holobyte, Inc., 6.5% Cv. Sub. Nts., 9/15/02(5)
2,000,000 1,324,020
------------
13,013,925
- ------------------------------------------------------------------------------------------------------------------
- -------------
ELECTRONICS--10.2%
ADT Operations, Inc., Zero Coupon Sub. Exchangeable LYONs, 6.49%, 7/6/10(3)
13,500,000 8,808,750
- ------------------------------------------------------------------------------------------------------------------
- ------
California Microwave, Inc., 5.25% Cv. Sub. Nts., 12/15/03
2,000,000 1,635,000
- ------------------------------------------------------------------------------------------------------------------
- ------
Integrated Device Technology, Inc., 5.5% Cv. Sub. Nts., 6/1/02
2,000,000 1,764,060
- ------------------------------------------------------------------------------------------------------------------
- ------
Laidlaw, Inc., 6% ADT-Linked Cv. Debs., 1/15/99(5) 7,250,000
9,678,750
- ------------------------------------------------------------------------------------------------------------------
- ------
Park Electrochemical Corp., 5.5% Cv. Sub. Nts., 3/1/06 7,500,000
6,506,250
- ------------------------------------------------------------------------------------------------------------------
- ------
S3, Inc., 5.75% Cv. Sub. Nts., 10/1/03(5) 4,000,000
4,426,200
- ------------------------------------------------------------------------------------------------------------------
- ------
Thermo Electron Corp., 4.25% Cv. Sub. Debs., 1/1/03(5)
7,000,000 8,349,460
- ------------------------------------------------------------------------------------------------------------------
- ------
Thermo Optek Corp., 5% Cv. Sub. Debs., 10/15/00(5)
8,535,000 8,748,375
- ------------------------------------------------------------------------------------------------------------------
- ------
ThermoQuest Corp., 5% Cv. Sub. Debs., 8/15/00(5) 8,000,000
8,200,000
- ------------------------------------------------------------------------------------------------------------------
- ------
XILINX, Inc., 5.25% Cv. Sub. Nts., 11/1/02 4,500,000
4,551,075
------------
62,667,920
- ------------------------------------------------------------------------------------------------------------------
- -------------
TELECOMMUNICATIONS-
TECHNOLOGY--2.6%
BroadBand Technologies, Inc.:
5% Cv. Sub. Nts., 5/15/01(5) 1,250,000
947,263
5% Cv. Sub. Nts., 5/15/01 2,000,000
1,525,620
- ------------------------------------------------------------------------------------------------------------------
- ------
General Instrument Corp., 5% Cv. Jr. Sub. Nts., 6/15/00 9,000,000
9,631,980
- ------------------------------------------------------------------------------------------------------------------
- ------
Porta Systems Corp., Zero Coupon Cv. Sr. Sub. Nts., 11.6%, 1/2/98(1)(3)
1,380,996 586,923
- ------------------------------------------------------------------------------------------------------------------
- ------
United States Cellular Corp., Zero Coupon Cv. Sub. LYONs, 5.96%, 6/15/15(3)
9,700,000 3,298,000
------------
15,989,786
- ------------------------------------------------------------------------------------------------------------------
- -------------
UTILITIES--1.4%
- ------------------------------------------------------------------------------------------------------------------
- -------------
GAS UTILITIES--0.9%
Consolidated Natural Gas Co., 7.25% Cv. Sub. Debs., 12/15/15
5,000,000 5,282,750
- ------------------------------------------------------------------------------------------------------------------
- -------------
TELEPHONE UTILITIES--0.5%
Compania de Telefonos de Chile SA, 4.5% Cv. Sub. Debs., 1/15/03
2,500,000 3,141,575
------------
Total Convertible Corporate Bonds and Notes (Cost $396,304,600)
406,222,777
</TABLE>
9 Oppenheimer Bond Fund for Growth
<PAGE> 10
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
=====================================================================
===========================================================
<S> <C> <C>
COMMON STOCKS--4.1%
- ------------------------------------------------------------------------------------------------------------------
- -------
American Home Products Corp.(2) 20,040 $
1,174,845
- ------------------------------------------------------------------------------------------------------------------
- -------
Columbia/HCA Healthcare Corp.(2) 13,650
556,238
- ------------------------------------------------------------------------------------------------------------------
- -------
Fleet Financial Group, Inc.(2) 13,910
693,761
- ------------------------------------------------------------------------------------------------------------------
- -------
Ford Motor Co.(2) 6,530 208,960
- ------------------------------------------------------------------------------------------------------------------
- -------
General Signal Corp. 128,018
5,472,766
- ------------------------------------------------------------------------------------------------------------------
- -------
International Paper Co. 9,392 380,376
- ------------------------------------------------------------------------------------------------------------------
- -------
Orion Capital Corp. 30,001
1,833,811
- ------------------------------------------------------------------------------------------------------------------
- -------
Philip Morris Cos., Inc.(2) 22,000
2,486,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Progressive Bank, Inc. 26,382
600,190
- ------------------------------------------------------------------------------------------------------------------
- -------
Seagate Technology, Inc.(2)(7) 290,312
11,467,324
-----------
Total Common Stocks (Cost $17,975,593)
24,874,271
=====================================================================
===========================================================
PREFERRED STOCKS--11.0%
- ------------------------------------------------------------------------------------------------------------------
- --------------
BASIC MATERIALS--0.6%
- ------------------------------------------------------------------------------------------------------------------
- --------------
PAPER--0.6%
James River Corp. of Virginia:
Depositary Shares each representing 1/4 of a Share of $14.00 Cum. Cv.
Exchangeable Preferred Stock, Series N(1) 50,000
2,523,400
Depositary Shares each representing 1/4 of a Share of $14.00 Cum. Cv.
Exchangeable Preferred Stock, Series L 18,600
962,550
$3.375 Cum. Cv. Exchangeable, Series K 5,000
256,875
-----------
3,742,825
- ------------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER CYCLICALS--2.4%
- ------------------------------------------------------------------------------------------------------------------
- --------------
LEISURE & ENTERTAINMENT--0.7%
Tyco Toys, Inc., $0.4125 Depositary Shares each representing 1/25 of a
Share of Mandatorily Cv. Redeemable Preferred Stock, Series C, 7/1/00
465,000 4,708,125
- ------------------------------------------------------------------------------------------------------------------
- --------------
MEDIA--0.9%
SFX Broadcasting, Inc., $3.25 Cum. Cv. Exchangeable, Series D(5)
30,000 1,314,360
- ------------------------------------------------------------------------------------------------------------------
- -------
TCI Pacific Communications, Inc., 5% Cum. Sr. Exchangeable, Class A
47,000 4,294,625
-----------
5,608,985
- ------------------------------------------------------------------------------------------------------------------
- --------------
RETAIL: GENERAL--0.8%
Danskin, Inc., Depositary Shares each representing 1/100 of a
Share of 10% Cum. Cv. Exchangeable Preferred Stock(1)(4)
1,000 4,909,091
- ------------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER NON-CYCLICALS--0.8%
- ------------------------------------------------------------------------------------------------------------------
- --------------
TOBACCO--0.8%
RJR Nabisco Holdings Corp., $0.60125 Depositary Shares
each representing 1/10 of a Share of Series C PERCS, 5/15/97
783,900 5,291,325
- ------------------------------------------------------------------------------------------------------------------
- --------------
ENERGY--0.4%
- ------------------------------------------------------------------------------------------------------------------
- --------------
ENERGY SERVICES &
PRODUCERS--0.4%
ICO, Inc., Depositary Shares each representing 1/4 of a
Share of $6.75 Cv. Exchangeable Preferred Stock 95,000
2,161,250
- ------------------------------------------------------------------------------------------------------------------
- --------------
FINANCIAL--3.9%
- ------------------------------------------------------------------------------------------------------------------
- --------------
BANKS--1.0%
Mid Am, Inc., $1.8125 Cum. Cv., Series A 7,500
309,375
- ------------------------------------------------------------------------------------------------------------------
- -------
ONBANCorp, Inc., $1.6875 Cum. Cv., Series B 136,300
3,799,363
- ------------------------------------------------------------------------------------------------------------------
- -------
Sovereign Bancorp, Inc., $3.125 Cum. Cv., Series B(2) 27,500
1,907,812
-----------
6,016,550
</TABLE>
10 Oppenheimer Bond Fund for Growth
<PAGE> 11
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- ---------------
<S> <C> <C>
DIVERSIFIED FINANCIAL--1.8%
Capstead Mortgage Corp., $1.26 Cum. Cv., Series B 120,000
$ 2,070,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Phoenix Duff & Phelps Corp., $1.50 Cv., Series A 150,000
3,750,000
- ------------------------------------------------------------------------------------------------------------------
- -------
SunAmerica, Inc., 8.5% PERCS Units, 10/31/99 125,000
5,281,250
-----------
11,101,250
- ------------------------------------------------------------------------------------------------------------------
- --------------
INSURANCE--1.1%
Alexander & Alexander Services, Inc., $3.625 Cv.(1) 60,000
3,131,220
- ------------------------------------------------------------------------------------------------------------------
- -------
PennCorp Financial Group, Inc., $3.50 Cv., Series II(5) 60,000
3,517,500
-----------
6,648,720
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL--0.4%
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL SERVICES--0.2%
International Technology Corp., Depositary Shares each representing
1/100 of a Share of 7% Cum. Cv. Exchangeable Preferred Stock
65,000 1,096,875
- ------------------------------------------------------------------------------------------------------------------
- --------------
MANUFACTURING--0.2%
Alco Standard Corp., $5.04 Depositary Shares each representing
1/100 of a Share of Series BB ACES, 10/1/98 15,000
1,432,500
- ------------------------------------------------------------------------------------------------------------------
- --------------
TECHNOLOGY--2.5%
- ------------------------------------------------------------------------------------------------------------------
- --------------
AEROSPACE/DEFENSE--1.4%
Kaman Corp., $3.25 Depositary Shares each representing
1/4 of a Share of Cv. Preferred Stock, Series 2 60,000
3,270,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Loral Space & Communications, Ltd., 6% Cv.
Preferred Equivalent Obligations, 11/1/06(5) 100,000
5,681,200
-----------
8,951,200
- ------------------------------------------------------------------------------------------------------------------
- --------------
TELECOMMUNICATIONS-
TECHNOLOGY--1.1%
Mobile Telecommunication Technologies Corp.:
7.5% Cum. Cv., Series C(1)(7)(8) 5,000
4,212,500
$2.25 Cum. Cv. Exchangeable(5) 121,100
2,194,938
-----------
6,407,438
-----------
Total Preferred Stocks (Cost $64,940,495)
68,076,134
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
FACE AMOUNT
=====================================================================
===========================================================
<S> <C> <C>
OTHER CONVERTIBLE SECURITIES--14.5%
- ------------------------------------------------------------------------------------------------------------------
- --------------
BASIC MATERIALS--2.1%
- ------------------------------------------------------------------------------------------------------------------
- --------------
CHEMICALS--1.0%
Merrill Lynch & Co., Inc., 6.25% STRYPES (IMC Global, Inc.), 7/1/01(9)
150,000 6,018,750
- ------------------------------------------------------------------------------------------------------------------
- --------------
PAPER--1.1%
International Paper Capital Trust, 5.25% Cv. Preferred Securities,
7/20/25 (Cv. into Common Stock of International Paper Co.)
145,000 6,670,000
- ------------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER CYCLICALS--1.1%
- ------------------------------------------------------------------------------------------------------------------
- --------------
LEISURE & ENTERTAINMENT--0.6%
Wendy's Financing I, $2.50 TECONS, Series A, 9/15/26
(Cv. into Common Stock of Wendy's International, Inc.) 75,000
3,900,000
- ------------------------------------------------------------------------------------------------------------------
- --------------
MEDIA--0.5%
News Corp. Ltd., 5% Exchangeable TOPrS, 11/12/16
(Exchangeable for Ordinary Shares of British Sky Broadcasting Group PLC)(5)
30,000 2,833,110
- ------------------------------------------------------------------------------------------------------------------
- --------------
CONSUMER NON-CYCLICALS--0.4%
- ------------------------------------------------------------------------------------------------------------------
- --------------
HEALTHCARE/DRUGS--0.4%
Bear Stearns Cos. Inc., 5.5% CHIPS (Merck & Co., Inc.), 2/11/97(9)
10,000 476,250
- ------------------------------------------------------------------------------------------------------------------
- -------
Lehman Brothers Holdings, Inc., 6.5% YEELDS (Amgen Corp.), 1/15/97(9)
15,000 950,625
- ------------------------------------------------------------------------------------------------------------------
- -------
Salomon, Inc., 6.5% ELKS (Amgen Corp.), 2/1/97(9) 14,000
959,000
------------
2,385,875
</TABLE>
11 Oppenheimer Bond Fund for Growth
<PAGE> 12
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
SHARES OR MARKET
VALUE
FACE AMOUNT SEE
NOTE 1
- ------------------------------------------------------------------------------------------------------------------
- --------------
<S> <C> <C>
ENERGY--0.3%
- ------------------------------------------------------------------------------------------------------------------
- --------------
ENERGY SERVICES &
PRODUCERS--0.3%
Tosco Financing Trust, 5.75% Cv. Preferred Securities, 12/15/16
35,000 $ 1,811,250
- ------------------------------------------------------------------------------------------------------------------
- --------------
FINANCIAL--4.4%
- ------------------------------------------------------------------------------------------------------------------
- --------------
DIVERSIFIED FINANCIAL--2.7%
Credit Suisse First Boston Corp., 6% Equity-Linked Sr. Medium-Term Nts.
(Charles Schwab Corp.), 4/29/98(1)(9) $5,000,000
5,881,250
- ------------------------------------------------------------------------------------------------------------------
- -------
FINOVA Finance Trust, 5.5% Cv. TOPrS, 12/31/16
(Cv. into Common Stock of FINOVA Group, Inc.) 25,000
1,312,500
- ------------------------------------------------------------------------------------------------------------------
- -------
Merrill Lynch & Co., Inc., 7.25% STRYPES (SunAmerica, Inc.), 6/15/99(9)
145,000 9,642,500
-----------
16,836,250
- ------------------------------------------------------------------------------------------------------------------
- --------------
INSURANCE--1.7%
Allstate Corp., 6.76% Exchangeable Nts., 4/15/98
(Subject to Exchange into Common Stock of The PMI Group, Inc.)
100,000 4,725,000
- ------------------------------------------------------------------------------------------------------------------
- -------
Frontier Financing Trust, 6.25% Cv. TOPrS, 12/31/16
(Cv. into Common Stock of Frontier Insurance Group, Inc.)(5)
65,000 3,355,625
- ------------------------------------------------------------------------------------------------------------------
- -------
Merrill Lynch & Co., Inc., 6.5% STRYPES (MGIC Investment Corp.), 8/15/98(9)
17,000 1,143,250
- ------------------------------------------------------------------------------------------------------------------
- -------
St. Paul Capital LLC, $3.00 Cv. MIPS 25,000
1,384,375
-----------
10,608,250
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL--3.1%
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL MATERIALS--1.4%
Owens Corning Capital LLC, 6.5% Cv. MIPS(5) 155,000
8,854,375
- ------------------------------------------------------------------------------------------------------------------
- --------------
INDUSTRIAL SERVICES--0.2%
Browning-Ferris Industries, Inc., 7.25% ACES, 6/30/98 35,000
997,500
- ------------------------------------------------------------------------------------------------------------------
- --------------
MANUFACTURING--1.5%
Elsag Bailey Financing Trust, 5.5% Cv. TOPrS, 12/31/35
(Cv. into Common Stock of Elsag Bailey Process Automation NV)
50,000 1,943,750
- ------------------------------------------------------------------------------------------------------------------
- -------
Greenfield Capital Trust, $3.00 Cv. TIDES(5) 70,000
3,373,090
- ------------------------------------------------------------------------------------------------------------------
- -------
Lehman Brothers Holdings, Inc., 6% YEELDS
(Black & Decker Corp.), 8/31/98(1)(9) 126,646
4,274,303
-----------
9,591,143
- ------------------------------------------------------------------------------------------------------------------
- --------------
TECHNOLOGY--2.2%
- ------------------------------------------------------------------------------------------------------------------
- --------------
COMPUTER HARDWARE--1.1%
Credit Suisse First Boston Corp., 6% Equity-Linked Sr. Medium-Term Nts.
(Intel Corp.), 2/17/98(1)(9) $5,000,000
6,531,250
- ------------------------------------------------------------------------------------------------------------------
- --------------
COMPUTER SOFTWARE--0.3%
Vanstar Corp., 6.75% Trust Cv. Preferred Securities,
12/31/49 (Cv. into Common Stock of Vanstar Corp.)(5) 35,000
1,850,625
- ------------------------------------------------------------------------------------------------------------------
- --------------
TELECOMMUNICATIONS-TECHNOLOGY--0.8%
Bear Stearns Cos., 6% ELPS (ACC Corp.), 11/25/98(1)(9)
$5,000,004 4,644,004
- ------------------------------------------------------------------------------------------------------------------
- --------------
UTILITIES--0.9%
- ------------------------------------------------------------------------------------------------------------------
- --------------
GAS UTILITIES--0.3%
MCN Corp., 8.75% PRIDES, 4/30/99 75,500
2,085,687
- ------------------------------------------------------------------------------------------------------------------
- --------------
TELEPHONE UTILITIES--0.6%
Sprint Corp., 8.25% DECS (Cv. into Shares of
Common Stock of SNET Corp.), 3/31/00 100,000
3,587,500
-----------
Total Other Convertible Securities (Cost $84,226,789)
89,205,569
</TABLE>
12 Oppenheimer Bond Fund for Growth
<PAGE> 13
<TABLE>
<CAPTION>
MARKET VALUE
UNITS SEE NOTE 1
=====================================================================
==========================================================
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ------------------------------------------------------------------------------------------------------------------
- -------------
SubMicron Systems Corp. Wts., Exp. 12/00(1)(4) 27,000
$ 7,047
- ------------------------------------------------------------------------------------------------------------------
- ------
Travel Ports of America, Inc. Wts., Exp. 1/05(1)(4) 5,000
4,235
------------
Total Rights, Warrants and Certificates (Cost $0)
11,282
<CAPTION>
DATE STRIKE CONTRACTS
=====================================================================
==========================================================
<S> <C> <C> <C> <C>
PUT OPTIONS PURCHASED--0.0%
- ------------------------------------------------------------------------------------------------------------------
- -------------
Mobile Telecommunication Technologies Corp.
Put Opt. (Cost $806) Mar. 97 $10 25
5,780
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
=====================================================================
==========================================================
<S> <C> <C>
REPURCHASE AGREEMENT--4.2%
- ------------------------------------------------------------------------------------------------------------------
- -------------
Repurchase agreement with Goldman, Sachs & Co., 6.52%, dated
12/31/96, to be repurchased at $26,209,490 on 1/2/97, collateralized
BY U.S. TREASURY NTS., 5.5%--7.5%, 7/15/99--8/15/05, with a value of
$26,800,713 (Cost $26,200,000) $26,200,000
26,200,000
- ------------------------------------------------------------------------------------------------------------------
- -------------
TOTAL INVESTMENTS, AT VALUE (COST $589,648,283)
99.6% 614,595,813
- ------------------------------------------------------------------------------------------------------------------
- -------------
OTHER ASSETS NET OF LIABILITIES 0.4
2,513,357
-------- ------------
NET ASSETS 100.0%
$617,109,170
========
============
</TABLE>
1. Identifies issues considered to be illiquid--See Note 7 of Notes to
Financial Statements.
2. A sufficient amount of liquid assets has been designated to cover
outstanding written call options, as follows:
<TABLE>
<CAPTION>
FACE/SHARES EXPIRATION EXERCISE PREMIUM
MARKET VALUE
SUBJECT TO CALL DATE PRICE RECEIVED SEE
NOTE 1
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Home Products Corp. 20,000 1/97 $ 65.00 $ 49,398 $
2,500
----------------------------------------------------------------------------------------------------------
Boston Chicken, Inc. 10,000 1/97 35.00 22,199 13,750
Boston Chicken, Inc. 10,000 1/97 40.00 6,150 620
Boston Chicken, Inc. 30,000 4/97 40.00 44,710 39,360
Boston Chicken, Inc. 30,000 4/97 35.00 104,097 105,000
----------------------------------------------------------------------------------------------------------
Chevron Corp. 40,000 3/97 70.00 78,997 25,000
Chevron Corp. 40,000 1/97 70.00 56,698 5,000
----------------------------------------------------------------------------------------------------------
Columbia/HCA Healthcare Corp. 13,600 2/97 40.00 18,427
32,300
----------------------------------------------------------------------------------------------------------
Fleet Financial Group, Inc. 13,900 1/97 50.00 44,757 24,325
----------------------------------------------------------------------------------------------------------
Ford Motor Co. 6,500 3/97 32.50 7,588 7,313
----------------------------------------------------------------------------------------------------------
John H. Harland Co. 20,000 3/97 30.00 34,599 67,500
----------------------------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 22,000 3/97 105.00 103,837 283,250
----------------------------------------------------------------------------------------------------------
Seagate Technology, Inc. 79,200 1/97 35.00 354,012
376,200
Seagate Technology, Inc. 200,000 1/97 37.50 607,980
625,000
----------------------------------------------------------------------------------------------------------
Sovereign Bancorp, Inc. 20,000 1/97 12.50 9,800 15,000
----------------------------------------------------------------------------------------------------------
United Waste Systems, Inc. 50,000 3/97 40.00 49,498 18,750
----------------------------------------------------------------------------------------------------------
WMX Technologies, Inc. 50,000 2/97 35.00 58,373
31,250
---------- ----------
$1,651,120 $1,672,118
========== ==========
</TABLE>
3. For zero coupon bonds, the interest rate shown is the effective yield
on the date of purchase.
4. The security is being valued under procedures established by the
Board of Trustees to determine fair value in good faith.
5. Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended.
This security has been determined to be liquid under guidelines
established by the Board of Trustees. These securities amount to
$139,914,049 or 22.67% of the Fund's net assets at December 31, 1996.
6. Non-income producing security--issuer is in default.
7. Non-income producing security.
8. Dividend is paid in kind.
9. Redeemable in cash at the lesser of a multiple of the issue price or
an amount based on the price of the stated company's common stock at
maturity.
13 Oppenheimer Bond Fund for Growth
<PAGE> 14
STATEMENT OF INVESTMENTS (Continued)
- -------------------------------------------------------------------------------
All investments of foreign issuers are denominated in U.S. dollars.
Distribution of investments by country of issue, as a percentage of
total investments at value, is as follows:
<TABLE>
<CAPTION>
COUNTRY MARKET VALUE
PERCENT
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United States $550,495,824 89.6%
------------------------------------------------------------------------------------------------------------
Canada 16,917,909 2.8
------------------------------------------------------------------------------------------------------------
United Kingdom 13,109,085 2.1
------------------------------------------------------------------------------------------------------------
Mexico 11,658,750 1.9
------------------------------------------------------------------------------------------------------------
Italy 7,008,750 1.1
------------------------------------------------------------------------------------------------------------
Switzerland 4,300,000 0.7
------------------------------------------------------------------------------------------------------------
Chile 3,141,575 0.5
------------------------------------------------------------------------------------------------------------
Luxembourg 2,820,000 0.5
------------------------------------------------------------------------------------------------------------
Netherlands 2,008,920 0.3
------------------------------------------------------------------------------------------------------------
Hong Kong 1,740,000 0.3
------------------------------------------------------------------------------------------------------------
Indonesia 1,395,000 0.2
------------ -----
Total $614,595,813 100.0%
============ =====
</TABLE>
PORTFOLIO ACRONYMS:
<TABLE>
<S> <C>
ACES --Automatic Common Exchange Securities or Automatically Convertible Equity
Securities
ADS --American Depository Shares
CHIPS --Common-Linked Higher Income Participation Securities
DECS --Debt Exchangeable for Common Stock
ELKS --Equity-Linked Securities
ELPS --Equity-Linked Participation Securities
LYONs --Liquid Yield Option Notes
MIPS --Monthly Income Preferred Securities
PENs --Privatization Exchangeable Notes
PERCS --Preferred Equity Redemption Cumulative Stock or Premium Equity
Redemption Cumulative Security
PRIDES --Preferred Redeemable Increased Dividend Equity Securities
STRYPES --Structured Yield Product Exchangeable for Stock
TECONS --Term Convertible Securities
TIDES --Term Income Deferrable Equity Securities
TOPrS --Trust Originated Preferred Securities
YEELDS --Yield Enhanced Equity Linked Debt Securities
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Bond Fund for Growth
<PAGE> 15
STATEMENT OF ASSETS AND LIABILITIES December 31, 1996
<TABLE>
=====================================================================
====================================================
<S> <C>
ASSETS
Investments, at value (cost $589,648,283)--see accompanying statement
$614,595,813
------------
Cash 407,119
- ------------------------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 3,038,483
Interest and dividends 5,738,471
- ------------------------------------------------------------------------------------------------------------------
Other 18,679
------------
Total assets 623,798,565
=====================================================================
====================================================
LIABILITIES
Options written, at value (premiums received $1,651,120)--
see accompanying statement--Note 6 1,672,118
- ------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends 3,696,882
Accrued taxes--Note 1 815,241
Shares of beneficial interest redeemed 409,410
Trustees' fees 9,000
Other 86,744
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 6,689,395
=====================================================================
====================================================
NET ASSETS $617,109,170
============
=====================================================================
====================================================
COMPOSITION OF
NET ASSETS
Paid-in capital $592,940,290
- ------------------------------------------------------------------------------------------------------------------
Excess of distributions over net investment income
(4,113)
- ------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and options
(753,539)
- ------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and options
24,926,532
------------
Net assets $617,109,170
============
=====================================================================
====================================================
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $93,577,774 and 6,557,191 shares of beneficial interest outstanding)
$14.27
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $15.14
- ------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $211,176,011 and 14,775,642 shares of beneficial interest outstanding)
$14.29
- ------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $38,312,120 and 2,685,484 shares of beneficial interest outstanding)
$14.27
- ------------------------------------------------------------------------------------------------------------------
Class M Shares:
Net asset value and redemption price per share (based on net assets
of $274,043,265 and 19,204,115 shares of beneficial interest outstanding)
$14.27
Maximum offering price per share (net asset value plus sales charge
of 3.25% of offering price) $14.75
See accompanying Notes to Financial Statements.
</TABLE>
15 Oppenheimer Bond Fund for Growth
<PAGE> 16
STATEMENT OF OPERATIONS For the Year Ended December 31, 1996
<TABLE>
<S> <C>
=====================================================================
====================================================
INVESTMENT INCOME
Interest $23,555,538
- ------------------------------------------------------------------------------------------------------------------
Dividends 3,116,725
-----------
Total income 26,672,263
=====================================================================
====================================================
EXPENSES
Distribution and service plan fees--Note 4:
Class A 95,189
Class B 1,121,523
Class C 147,851
Class M 1,958,186
- ------------------------------------------------------------------------------------------------------------------
Management fees--Note 4 2,148,214
- ------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4:
Class A 47,679
Class B 128,905
Class C 13,923
Class M 293,581
- ------------------------------------------------------------------------------------------------------------------
Shareholder reports 199,998
- ------------------------------------------------------------------------------------------------------------------
Registration and filing fees 185,496
- ------------------------------------------------------------------------------------------------------------------
Accounting service fees--Note 4 133,487
- ------------------------------------------------------------------------------------------------------------------
Legal and auditing fees 72,248
- ------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 45,249
- ------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 39,104
- ------------------------------------------------------------------------------------------------------------------
Other 115,012
- ------------------------------------------------------------------------------------------------------------------
Interest 95,316
-----------
Total expenses 6,840,961
Less expenses paid indirectly--Note 1 (9,757)
-----------
Total net expenses 6,831,204
=====================================================================
====================================================
NET INVESTMENT INCOME
19,841,059
=====================================================================
====================================================
REALIZED AND
UNREALIZED GAIN
Net realized gain on:
Investments (including premiums on options exercised)
13,540,883
Closing and expiration of options written 465,614
-----------
Net realized gain 14,006,497
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 7,782,802
Options 82,788
-----------
Net change 7,865,590
-----------
Net realized and unrealized gain 21,872,087
=====================================================================
====================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$41,713,146
===========
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Bond Fund for Growth
<PAGE> 17
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995
=====================================================================
===============================================
<S> <C> <C>
OPERATIONS
Net investment income $ 19,841,059 $ 9,855,256
-------------------------------------------------------------------------------------------------------------
Net realized gain 14,006,497 9,472,765
-------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 7,865,590
21,458,658
------------- ------------
Net increase in net assets resulting from operations 41,713,146
40,786,679
=====================================================================
===============================================
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (2,123,534) (92,063)
Class B (4,911,332) (728,015)
Class C (648,607) --
Class M (12,157,589) (11,839,019)
-------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (2,201,758) (80,834)
Class B (4,975,362) (1,126,719)
Class C (903,669) --
Class M (6,479,192) (8,052,576)
=====================================================================
===============================================
BENEFICIAL INTEREST
TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 90,847,491 2,448,545
Class B 175,385,489 34,750,230
Class C 38,234,063 --
Class M 29,022,434 93,550,329
=====================================================================
===============================================
NET ASSETS
Total increase 340,801,580 149,616,557
-------------------------------------------------------------------------------------------------------------
Beginning of period 276,307,590 126,691,033
------------ ------------
End of period (including excess of distributions over
net investment income of $4,113 and $40,930, respectively) $617,109,170
$276,307,590
============ ============
See accompanying Notes to Financial Statements.
</TABLE>
17 Oppenheimer Bond Fund for Growth
<PAGE> 18
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
---------------------------
YEAR ENDED DECEMBER 31,
1996 1995(3)
=====================================================================
================
<S> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $13.96 $13.11
------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .73 .54
Net realized and unrealized gain (loss) .65 1.48
------ ------
Total income (loss) from investment operations 1.38 2.02
------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.72) (.68)
Distributions from net realized gain (.35) (.49)
------ ------
Total dividends and distributions to shareholders (1.07) (1.17)
------------------------------------------------------------------------------
Net asset value, end of period $14.27 $13.96
======= ======
=====================================================================
=========
TOTAL RETURN, AT NET ASSET VALUE(4) 10.13% 15.42%
=====================================================================
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $93,578 $2,502
------------------------------------------------------------------------------
Average net assets (in thousands) $41,617 $1,799
------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 5.11% 5.63%(5)
Expenses(6) 0.98% 1.05%(5)
Expenses (excluding interest)(6)(7) 0.97% 1.01%(5)
------------------------------------------------------------------------------
Portfolio turnover rate(8) 52.67% 57.51%
</TABLE>
1. Net of fees and expenses waived or reimbursed by Fielding Management
Company, Inc. (the former manager) which amounted to $.01 per share.
Without reimbursement, the ratios would have been 6.50%, 2.06% and
2.04%, respectively.
2. For the period from March 11, 1996 (inception of offering) to
December 31, 1996.
3. For the period from May 1, 1995 (inception of offering) to
December 31, 1995.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
investment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods of
less than one full year.
5. Annualized.
18 Oppenheimer Bond Fund for Growth
<PAGE> 19
<TABLE>
<CAPTION>
CLASS B CLASS C CLASS M
- -------------------------- ----------- --------------------------------------------------
YEAR
ENDED
YEAR ENDED DECEMBER 31, DEC. 31, YEAR ENDED DECEMBER 31,
1996 1995(3) 1996(2) 1996 1995 1994 1993 1992(1)
=====================================================================
====================================
<S> <C> <C> <C> <C> <C> <C> <C>
$13.98 $13.11 $14.03 $13.96 $12.20 $13.16 $11.43 $9.37
- ---------------------------------------------------------------------------------------------------------
.62 .45 .50 .65 .70 .68 .59 .69
.65 1.51 .59 .66 2.42 (.81) 1.79 2.15
------ ------ ------ -------- -------- ------ ------ -------
1.27 1.96 1.09 1.31 3.12 (.13) 2.38 2.84
- ---------------------------------------------------------------------------------------------------------
(.61) (.60) (.50) (.65) (.87) (.69) (.65) (.78)
(.35) (.49) (.35) (.35) (.49) (.14) -- --
------ ------ ------ -------- -------- ----- ---- ------
(.96) (1.09) (.85) (1.00) (1.36) (.83) (.65) (.78)
- ---------------------------------------------------------------------------------------------------------
$14.29 $13.98 $14.27 $14.27 $13.96 $12.20 $13.16 $11.43
====== ====== ====== ======== ======== ======= ======
======
=====================================================================
====================================
9.28% 15.09% 7.74% 9.58% 26.00% (1.12)% 21.23%
31.19%
=====================================================================
====================================
$211,176 $34,465 $38,312 $274,043 $239,341 $126,691 $69,375
$10,241
- ---------------------------------------------------------------------------------------------------------
$113,784 $15,184 $18,550 $264,936 $181,719 $106,829 $36,923 $
7,369
- ---------------------------------------------------------------------------------------------------------
4.31% 4.82%(5) 4.32%(5) 4.59% 5.12% 5.24% 4.70% 6.62%
1.75% 1.69%(5) 1.68%(5) 1.58% 1.58% 1.66% 1.78% 1.93%
1.73% 1.64%(5) 1.67%(5) 1.55% 1.56% 1.65% 1.75% 1.91%
- ---------------------------------------------------------------------------------------------------------
52.67% 57.51% 52.67% 52.67% 57.51% 52.82% 88.66%
80.09%
</TABLE>
6. Beginning in fiscal 1995, the expense ratios reflect the effect of gross
expenses paid indirectly by the Fund. Prior year expense ratios have not been
adjusted.
7. During the periods shown above, the Fund's interest expense was substantially
offset by the incremental interest income generated on bonds purchased with
borrowed funds.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases
and sales of investment securities (excluding short-term securities) for the
period ended December 31, 1996 were $501,201,833 and $222,718,231, respectively.
Per share information has been determined based on average shares outstanding
for the period.
See accompanying Notes to Financial Statements.
19 Oppenheimer Bond Fund for Growth
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
=====================================================================
=========
1. SIGNIFICANT
ACCOUNTING POLICIES
Oppenheimer Bond Fund for Growth (the Fund), formerly named The Bond
Fund For Growth, a portfolio of the Bond Fund Series, a
non-diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended. The Fund's
investment objective is to seek a high level of total return on its
assets through a combination of current income and capital
appreciation.
On January 4, 1996, Fielding Management
Company, Inc. (FMC), the Fund's investment adviser, Rochester Fund
Distributors, Inc. (RFD), the Fund's principal underwriter, and
Rochester Fund Services, Inc. (RFS), the Fund's shareholder servicing,
accounting and pricing agent, consummated a transaction with
OppenheimerFunds, Inc. (the Manager), which resulted in the sale to the
Manager of certain assets of FMC, RFD and RFS, including the transfer
of the investment advisory agreement and other contracts with the Fund
and the use of the name "The Rochester Funds."
On March 11, 1996, the Fund redesignated the Class
A shares as Class M shares, redesignated the Class Y shares as Class A
shares and introduced a new class of shares, designated as Class C.
The Fund offers Class A, Class B, Class C and
Class M shares. Class A and Class M shares are sold with a front-end
sales charge. Class B and Class C shares may be subject to a contingent
deferred sales charge. All four classes of shares have identical rights
to earnings, assets and voting privileges, except that each class has
its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with
respect to matters affecting a single class. Class B shares will
automatically convert to Class A shares six years after the date of
purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
-----------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of
the New York Stock Exchange on each trading day. Listed and unlisted
equity securities for which such information is regularly reported are
valued at the last sale price of the day or, in the absence of sales,
at values based on the closing bid or the last sale price on the prior
trading day. Long-term debt securities are valued at the mean between
the bid and asked price using dealer-supplied valuations provided the
Manager is satisfied that the firm rendering the quotes is reliable and
that the quotes reflect current market value. Short-term "money market
type" debt securities having a remaining maturity of 60 days or less
are valued at cost (or last determined market value) adjusted for
amortization to maturity of any premium or discount. Options are valued
based upon the last sale price on the principal exchange on which the
option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if
it is within the spread between the closing bid and asked prices.
If the last sale price is outside the spread, the closing bid is used.
Securities for which market quotations are not readily available are
valued at fair value under consistently applied procedures established
by the Board of Trustees to determine fair value in good faith.
-----------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high yield securities, which
may be subject to a greater degree of credit risk, greater market
fluctuations and risk of loss of income and principal, and may be more
sensitive to economic conditions than lower yielding, higher rated
fixed income securities. The Fund may not invest in securities with
bond ratings of less than C at the time of purchase nor may it invest
in securities in default at the time of purchase. At December 31, 1996,
securities with an aggregate market value of $611,250, representing
0.10% of the Fund's net assets, were in default.
-----------------------------------------------------------------------
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.
20 Oppenheimer Bond Fund for Growth
<PAGE> 21
=====================================================================
==========
1. SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income,
expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class.
------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income, including any net realized
gain on investments not offset by loss carryovers, to shareholders.
Therefore, no federal income or excise tax provision is required. As of
December 31, 1996, the Fund had an accrued tax liability of $815,241 for
net unrealized gains at the time of the 1995 acquisition of Rochester Tax
Managed Fund, Inc. (see Note 8).
------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS. The Fund intends to declare dividends
separately for Class A, Class B, Class C and Class M shares from net
investment income each day the New York Stock Exchange is open for
business and pay such dividends quarterly. Distributions from net
realized gains on investments, if any, will be declared at least once
each year.
------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement
and tax purposes. The character of the distributions made during the
year from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes. Also,
due to timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the income or
realized gain (loss) was recorded by the Fund.
During the year ended December 31, 1996, the Fund
adjusted the classification of net investment income and net realized
gain (loss) to reflect the differences between financial statement
amounts and distributions determined in accordance with income tax
regulations. During the year ended December 31, 1996, amounts have been
reclassified to reflect an increase in paid-in capital of $36,684,
a decrease in an accumulated net realized gain of $73,504 and an
increase in undistributed net investment income of $36,820.
------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Cost is determined and realized gains
and losses are based upon the specific identification method for both
financial statement and federal income tax purposes. Interest income is
recorded on the accrual basis. In computing net investment income, the
Fund accretes original issue discount. Market discount is accreted at
the time of sale (to the extent of the lesser of the accrued market
discount or the disposition gain) and is treated as income, rather than
capital gain.
Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
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.
21 Oppenheimer Bond Fund for Growth
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (Continued)
=====================================================================
==========
2. SHARES OF
BENEFICIAL INTEREST
The Agreement and Declaration of Trust permits the Fund to issue an
unlimited number of shares of beneficial interest of each class, par
value $.01 per share. Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996(1) YEAR
ENDED DECEMBER 31, 1995(2)
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES
AMOUNT
- ------------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C> <C> <C>
Class A:
Sold 6,494,619 $ 92,520,655 167,169 $
2,280,841
Dividends and distributions reinvested 249,431 3,554,945 12,344
172,794
Redeemed (366,014) (5,228,109) (358)
(5,090)
---------- ------------ ---------- ------------
Net increase 6,378,036 $ 90,847,491 179,155 $
2,448,545
========== ============ ==========
============
----------------------------------------------------------------------------------
- ---------------------------------
Class B:
Sold 12,294,846 $175,175,363 2,362,379 $
33,327,370
Dividends and distributions reinvested 577,315 8,234,848 114,523
1,597,930
Redeemed (561,285) (8,024,722) (12,136)
(175,070)
---------- ------------ ---------- ------------
Net increase 12,310,876 $175,385,489 2,464,766 $
34,750,230
========== ============ ==========
============
-----------------------------------------------------------------------------------
- ---------------------------------
Class C:
Sold 2,679,311 $ 38,154,738 -- $ --
Dividends and distributions reinvested 91,900 1,310,288 --
--
Redeemed (85,727) (1,230,963) -- --
---------- ------------- ----------- ------------
Net increase 2,685,484 $ 38,234,063 -- $
- --
========== ============ ==========
============
----------------------------------------------------------------------------------
- ---------------------------------
Class M:
Sold 5,031,985 $ 71,344,923 7,217,942 $
99,835,909
Dividends and distributions reinvested 1,047,016 14,881,567 1,158,342
16,067,613
Issued in connection with the acquisition of
Rochester Tax Managed Fund, Inc.--Note 8 -- -- 660,637
9,039,351
Redeemed (4,018,081) (57,204,056) (2,278,192)
(31,392,544)
---------- ------------ ---------- ------------
Net increase 2,060,920 $ 29,022,434 6,758,729 $
93,550,329
========== ============ ===========
============
</TABLE>
1. For the year ended December 31, 1996 for Class A, Class B and Class M
shares and for the period from March 11, 1996 (inception of offering) to
December 31, 1996 for Class C shares.
2. For the year ended December 31, 1995 for Class M shares and for the
period from May 1, 1995 (inception of offering) to December 31, 1995 for
Class A and Class B shares.
=====================================================================
==========
3. UNREALIZED GAINS AND
LOSSES ON INVESTMENTS
At December 31, 1996, net unrealized appreciation on investments and
options written of $24,926,532 was composed of gross appreciation of
$43,048,856, and gross depreciation of $18,122,324.
Unrealized appreciation (depreciation) at December
31, 1996 based on cost of investments for federal income tax purposes of
$589,657,433 was:
<TABLE>
<CAPTION>
AMOUNT
-------------------------------------------------------------------------------------------------------
<S> <C>
Gross unrealized appreciation $42,774,865
-------------------------------------------------------------------------------------------------------
Gross unrealized depreciation (17,836,486)
----------
Net unrealized appreciation $24,938,379
===========
</TABLE>
22 Oppenheimer Bond Fund for Growth
<PAGE> 23
=====================================================================
==========
4. MANAGEMENT FEES
AND OTHER TRANSACTIONS
WITH AFFILIATES
Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee
based on an annual rate of 0.625% of average daily net assets up to $50
million, 0.50% of average daily net assets on the next $250 million, and
0.4375% of average daily net assets in excess of $300 million. During
1996, the Fund paid $16,104 to FMC (the former manager) and $2,132,110
to the Manager for management and investment advisory services.
Accounting fees paid to the Manager were in
accordance with the accounting services agreement with the Fund which
provides for an annual fee of $12,000 for the first $30 million of net
assets and $9,000 for each additional $30 million of net assets. During
1996, the Fund paid $960 to RFS (the former accounting and pricing agent)
and $132,527 to the Manager for accounting and pricing services.
OppenheimerFunds Services (OFS), a division of the
Manager, is the transfer and shareholder servicing agent for the Fund.
The transfer and shareholder servicing agent fee paid by the Fund is
based on an annual maintenance fee of $24.12 for each Class A and Class M
shareholder account and $26.02 for each Class B and Class C shareholder
account. During 1996, the Fund paid a total of $3,246 to RFS (the former
shareholder servicing agent), with the remainder being paid to OFS.
For the year ended December 31, 1996, commissions
(sales charges paid by investors) on sales of Class A and Class M shares
totaled $1,744,103 and $1,939,722, of which $571,488 and $125,679,
respectively, was retained by OppenheimerFunds Distributor, Inc. (OFDI),
a subsidiary of the Manager, as general distributor, and by affiliated
broker/dealers. Sales charges advanced to broker/dealers by OFDI on sales
of the Fund's Class B and Class C shares totaled $6,595,119 and $372,493,
of which $74,499 and $5,323, respectively, were paid to an affiliated
broker/dealer. During the year ended December 31, 1996, OFDI received
contingent deferred sales charges of $142,078 and $10,119, respectively,
upon redemption of Class B and Class C shares as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
The Fund has adopted a Service Plan for Class A
shares to reimburse OFDI for a portion of its costs incurred in
connection with the personal service and maintenance of accounts that
hold Class A shares. Reimbursement is made monthly at an annual rate that
may not exceed 0.25% of the average annual net assets of Class A shares
of the Fund. OFDI uses the service fee to reimburse brokers, dealers,
banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class A
shares. During the year ended December 31, 1996, OFDI paid $7,115 to an
affiliated broker/dealer as reimbursement for Class A personal service
and maintenance expenses.
The Fund has adopted compensation type Distribution
and Service Plans for Class B and Class C shares to compensate OFDI for
its services and costs in distributing Class B and Class C shares and
servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares,
as compensation for sales commissions paid from its own resources at the
time of sale and associated financing costs. OFDI also receives a service
fee of 0.25% per year as compensation for costs incurred in connection
with the personal service and maintenance of accounts that hold shares of
the Fund, including amounts paid to brokers, dealers, banks and other
financial institutions. Both fees are computed on the average annual net
assets of Class B and Class C shares, determined as of the close of each
regular business day. During the year ended December 31, 1996, OFDI
retained $920,281 and $113,638, respectively, as compensation for Class B
and Class C sales commissions and service fee advances, as well as
financing costs. If the Plans are terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to OFDI for certain expenses it incurred before the Plans were
terminated. At December 31, 1996, OFDI had incurred unreimbursed expenses
of $6,713,841 for Class B and $494,297 for Class C.
The Fund has adopted a reimbursement type
Distribution and Service Plan for Class M shares to reimburse OFDI for
its services and costs in distributing Class M shares and servicing
accounts. Under the Plan, the Fund pays OFDI an annual asset-based sales
charge of 0.50% per year on Class M shares. OFDI also receives a service
fee of 0.25% per year to reimburse dealers for providing personal
services for accounts that hold Class M shares. OFDI may pay a portion of
the asset-based sales charge which it receives from the Fund to provide
additional compensation to broker/dealers who sell Class M shares. Both
fees are computed on the average annual net assets of Class M shares,
determined as of the close of each regular business day. During the year
ended December 31, 1996, OFDI paid $4,590 to an affiliated broker/dealer
as reimbursement for Class M personal service and maintenance expenses.
23 Oppenheimer Bond Fund for Growth
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (Continued)
=====================================================================
==========
5. BANK BORROWINGS
The Fund may borrow up to 5% of its total assets from a bank to purchase
portfolio securities, or for temporary and emergency purposes. The Fund
has entered into an agreement which enables it to participate with two
other Rochester Division funds managed by the Manager in an unsecured
line of credit with a bank, which permits borrowings up to $70 million,
collectively. Interest is charged to each fund, based on its
borrowings, at a rate equal to the New York Interbank Offer Rate (NIBOR)
plus 0.75%. Borrowings are payable on demand.
The Fund had no borrowings outstanding at December
31, 1996. For the year ended December 31, 1996, the average monthly loan
balance was $1,489,069 at an average interest rate of 6.233%. The maximum
amount of borrowings outstanding at any month-end was $5,720,000.
=====================================================================
==========
6. OPTION ACTIVITY
The Fund may buy put options or write covered call options on portfolio
securities in order to produce incremental earnings or protect against
changes in the value of portfolio securities.
The Fund generally purchases put options or writes
covered call options to hedge against adverse movements in the value of
portfolio holdings. When an option is written, the Fund receives a
premium and becomes obligated to sell or purchase the underlying security
at a fixed price, upon exercise of the option.
Options are valued daily based upon the last sale
price on the principal exchange on which the option is traded and
unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss upon the expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a
written call option or the cost of the security for a purchased put
option is adjusted by the amount of premium received or paid.
Securities designated to cover outstanding call
options are noted in the Statement of Investments where applicable.
Shares subject to call, expiration date, exercise price, premium received
and market value are detailed in a footnote to the Statement of
Investments. Options written are reported as a liability in the Statement
of Assets and Liabilities. Gains and losses are reported in the Statement
of Operations.
The risk in writing a call option is that the Fund
gives up the opportunity for profit if the market price of the security
increases and the option is exercised. The risk in buying an option is
that the Fund pays a premium whether or not the option is exercised. The
Fund also has the additional risk of not being able to enter into a
closing transaction if a liquid secondary market does not exist.
Written option activity for the year ended December 31, 1996 was as
follows:
<TABLE>
<CAPTION>
CALL OPTIONS
--------------------------
NUMBER OF AMOUNT
OPTIONS OF
PREMIUMS
- ------------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C>
Options outstanding at December 31, 1995 2,365 $
580,692
- ------------------------------------------------------------------------------------------------------------------
- -------
Options written 14,358 3,936,012
- ------------------------------------------------------------------------------------------------------------------
- -------
Options cancelled in closing purchase transactions (5,319)
(1,831,782)
- ------------------------------------------------------------------------------------------------------------------
- -------
Options expired prior to exercise (3,024)
(607,309)
- ------------------------------------------------------------------------------------------------------------------
- -------
Options exercised (1,828) (426,493)
------ -----------
Options outstanding at December 31, 1996 6,552 $
1,651,120
====== ===========
</TABLE>
24 Oppenheimer Bond Fund for Growth
<PAGE> 25
=====================================================================
==========
7. ILLIQUID AND
RESTRICTED SECURITIES
At December 31, 1996, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in
private placement transactions, are not registered under the Securities
Act of 1933, may have contractual restrictions on resale, and are valued
under methods approved by the Board of Trustees as reflecting fair
value. A security may be considered illiquid if it lacks a readily
available market or if its valuation has not changed for a certain period
of time. The Fund intends to invest no more than 15% of its net assets
(determined at the time of purchase and reviewed from time to time) in
illiquid or restricted securities. Certain restricted securities,
eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted
securities subject to this limitation at December 31, 1996 was
$62,274,991, which represents 10.09% of the Fund's net assets.
Information concerning these securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER
UNIT DEC. 31, 1996
- ------------------------------------------------------------------------------------------------------------------
- ---------
<S> <C> <C> <C>
Alexander & Alexander Services, Inc., $3.625 Cv. Preferred Stock 12/13/96 $
51.56 $ 52.19
- ------------------------------------------------------------------------------------------------------------------
- ---------
Bear Stearns Cos., 6% ELPS (ACC Corp.), 11/25/98 11/15/96
100.00% 92.88%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Ben Franklin Retail Stores, Inc., 7.5% Cv. Sub. Nts., 6/1/03 6/10/93--9/28/95
86.84% 6.50%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Credit Suisse First Boston Corp., New York Branch,
3% Disney Linked Certificate of Deposit, 10/3/01 9/19/96 100.00%
105.50%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Credit Suisse First Boston Corp., Equity-Linked Sr. Medium-Term Nts.:
6% (Intel Corp.), 2/17/98 2/9/96 100.00%
130.63%
6% (Charles Schwab Corp.), 4/29/98 4/24/96 100.00%
117.63%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Comtrad Holdings, Inc., 5% Cv. Nts., 7/8/99 (Cv. into
Common Stock of CHS Electronics, Inc.) 7/8/96 100.00%
111.65%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Danskin, Inc., Depositary Shares each representing 1/100 of a
Share of 10% Cum. Cv. Exchangeable Preferred Stock 8/14/95
$5,000.00 $ 4,909.09
- ------------------------------------------------------------------------------------------------------------------
- ---------
GE Capital Corp., 2.5% Base Metals Cv. Nts., 2/14/97 1/31/94
100.00% 107.00%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Hudson Hotels Corp., 7.5% Cv. Sub. Debs., 7/1/01 7/8/96 100.00%
96.00%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Huntingdon International Holdings PLC, 7.5% Cv. Debs., 9/25/06 8/8/96, 12/18/96
77.25% 80.50%
- ------------------------------------------------------------------------------------------------------------------
- ---------
James River Corp. of Virginia, Depositary Shares each
representing 1/4 of a Share of $14.00 Cum. Cv. Exchangeable
Preferred Stock, Series N 8/20/96 $ 45.50 $
50.47
- ------------------------------------------------------------------------------------------------------------------
- ---------
Key Energy Group, Inc., 7.5% Cv. Sub. Debs., 7/1/03 6/28/96
100.00% 126.50%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Lehman Brothers Holdings, Inc., 6% YEELDS
(Black & Decker Corp.), 8/31/98 9/5/96 $ 39.48 $
33.75
- ------------------------------------------------------------------------------------------------------------------
- ---------
Lomas Financial Corp., 9% Cv. Sr. Debs., 10/31/03 8/29/94, 6/13/95
26.82% 20.50%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Mobile Telecommunication Technologies Corp., 7.5% Cum. Cv.
Series C Preferred Stock 5/31/96 $ 992.50 $
842.50
- ------------------------------------------------------------------------------------------------------------------
- ---------
Physicians Clinical Laboratory, Inc., 7.5% Cv. Sub. Debs., 8/15/00 2/16/94
103.00% 10.00%
- ------------------------------------------------------------------------------------------------------------------
- ---------
Porta Systems Corp., Zero Coupon Cv. Sr. Sub. Nts.,
11.6%, 1/2/98 4/1/93--5/26/94 78.24%
42.50%
- ------------------------------------------------------------------------------------------------------------------
- ---------
SubMicron Systems Corp.:
9% Cv. Sub. Nts., 12/15/97 12/11/95 100.00%
44.23%
Warrants, Exp. 12/00 12/11/95 $ 0.00 $
.26
- ------------------------------------------------------------------------------------------------------------------
- ---------
Travel Ports of America, Inc.:
8.5% Cv. Sr. Sub. Debs., 1/15/05 2/13/95, 8/9/95 100.04%
101.65%
8.5% Cv. Sr. Sub. Debs., 1/15/05 (Reg. S) 6/14/95--8/13/96 111.44%
101.65%
Warrants, Exp. 1/05 2/13/95 $ 0.00 $
.85
</TABLE>
25 Oppenheimer Bond Fund for Growth
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (Continued)
=====================================================================
==========
8. ACQUISITION
On June 28, 1995, the Fund acquired all of the assets and liabilities of
Rochester Tax Managed Fund, Inc. (RTMF). The acquisition was
accomplished by a tax-free exchange of 660,637 Class M shares of the
Fund (valued at $9,039,351) for 760,094 shares of RTMF. The net assets
of RTMF were valued at $9,039,351 and included unrealized appreciation
of $4,275,694. Prior to the acquisition, RTMF did not distribute its net
investment income or realized gains and was taxed as a C corporation.
Accordingly, an accrued tax liability was assumed by the Fund on the
date of the acquisition (see Note 1). During the second half of 1995,
approximately $2,788,000 of accumulated earnings and profits resulting
from the June 28, 1995 acquisition of RTMF was distributed to
shareholders of the Fund. The aggregate net assets of the Fund after
the acquisition were $189,184,982.
26 Oppenheimer Bond Fund for Growth
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
Price Waterhouse LLP
1100 Bausch & Lomb Place
Rochester, NY 14604
Legal Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
PX0345.001.0397
<PAGE>
BOND FUND SERIES
OPPENHEIMER BOND FUND FOR GROWTH
FORM N1-A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements:
(1) Financial Highlights (see Part A, Prospectus):
Filed herewith
(2) Report of Independent Accountants (see Part B,
Statement of Additional Information): Filed
herewith
(3) Portfolio of Investments (see Part B, Statement of
Additional Information): Filed herewith
(4) Statement of Assets and Liabilities (see Part
B, Statement of Additional Information):
Filed herewith
(5) Statement of Operations (see Part B, Statement
of Additional Information): Filed herewith
(6) Statement of Changes in Net Assets (see Part B,
Statement of Additional Information): Filed
herewith
(7) Notes to Financial Statements (see Part B,
Statement of Additional Information): Filed
herewith
(b) Exhibits:
(1) Amendment to Amended and Restated Declaration of
Trust as filed with the Common of Massachusetts
on February 7, 1996, effective March 8, 1996
("Amended and Restated Declaration of Trust")-filed
with Registrant's Post Effective Amendment No. 16
filed March 11, 1996 - incorporated by reference.
(2) Bylaws - filed with Registrant's Post Effective
Amendment filed May 1, 1987 - incorporated by
reference
(3) Not Applicable
(4) (a) Specimen Share Certificate representing Class A
Shares of Oppenheimer Bond Fund for Growth, a
portfolio of the Registrant --filed with
Registrant's Post Effective Amendment No. 16 filed
March 11, 1996 - incorporated by reference.
(b) Specimen Share Certificate representing Class
B Shares of Oppenheimer Bond Fund for Growth, a
portfolio of the Registrant --filed with
Registrant's Post Effective Amendment No. 16 filed
March 11, 1996 - incorporated by reference.
(c) Specimen Share Certificate representing Class C
Shares of Oppenheimer Bond Fund for Growth, a
portfolio of the Registrant --filed with
Registrant's Post Effective Amendment No. 16 filed
March 11, 1996 - incorporated by reference.
(d)Specimen Share Certificate representing Class M
Shares of Oppenheimer Bond Fund for Growth, a
portfolio of the Registrant --filed with
Registrant's Post Effective Amendment No. 16 filed
March 11, 1996 - incorporated by reference.
(5) Investment Advisory Agreement dated January 4, 1996
with Oppenheimer Management Corporation - filed
with Post Effective Amendment No. 15 of the
Registrant filed January 11,1996 - incorporated by
reference
(6) (a) General Distributor's Agreement dated January
4,1996 with Oppenheimer Funds Distributor, Inc. -
filed with Post Effective Amendment No. 15 of the
Registrant filed January 11, 1996 - incorporated
by reference
(b) Form of OppenheimerFunds Distributor Inc.
Dealer Agreement - Filed with Post-Effective
Amendment No. 14 of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33- 17850) filed
September 30, 1994 - incorporated by
reference
(c) Form of OppenheimerFunds Distributor Inc.
Broker Agreement - Filed with Post-Effective
Amendment No. 14 of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33- 17850) filed
September 30, 1994 - incorporated
by reference
(d) Form of OppenheimerFunds Distributor Inc.
Agency Agreement - Filed with Post-Effective
Amendment No. 14 of Oppenheimer Main Street
Funds, Inc. (Reg. No. 33-17850) filed
September 30, 1994 - incorporated by
reference
(7) Not Applicable
(8) Acknowledgment of Assignment of Custodian Agreement
with Investors Bank & Trust Company - filed with
Registrant's Post Effective Amendment No. 9 filed
May 1, 1991 - incorporated by reference
(9) Form of Service Contract with Oppenheimer
Shareholder Services filed with Post Effective
Amendment No. 15 of the Registrant filed January
11,1996 - incorporated by reference
(10) Consent of Counsel - incorporated by reference to
the Registrant's Rule 24f-2 Notice filed on
February 28, 1996
(11) Independent Auditor's Consent - filed herewith
(12) Not Applicable
(13) Investment Representation Letter from
OppenheimerFunds, Inc. dated March 11, 1996
relating to Class C shares investment -filed with
Registrant's Post Effective Amendment No. 16 filed
March 11, 1996 - incorporated by reference.
(14) (a) Form of Individual Retirement Account (IRA)
Plan: previously filed with Post Effective
Amendment No. 21 to the Registration Statement of
Oppenheimer U.S. Government Trust (File No. 2-
76645), August 25, 1993, and incorporated herein
by reference
(b) Form of Standardized and Non-standardized
Profit Sharing and Money Purchase Pension Plan for
self-employed persons and corporations: previously
filed with Post Effective Amendment No. 3 to the
Registration Statement of Oppenheimer Global Growth
& Income Fund (File No. 33-33799), February 1,
1992, refiled with Post Effective Amendment No. 7
of Oppenheimer Global Growth & Income Fund (Reg.
No. 33-33799), December 1, 1994, pursuant to Item
102 of Regulation S-T and incorporated herein by
reference
(c) Form of Tax Sheltered Retirement Plan and
Custody Agreement for employees of public schools
and tax-exempt organizations: previously filed with
Post Effective Amendment No. 47 to the Registration
Statement of Oppenheimer Growth Fund (File No. 2-
45272), October 21, 1994 and incorporated herein
by reference
(d) Form of Simplified Employee Pension IRA:
previously filed with Post Effective Amendment No.
15 to the Registration Statement of Oppenheimer
Mortgage Income Fund (Reg. No. 33-6614), January
19,1995 and incorporated herein by reference
(e) Form of Prototype 401(k) Plan: previously
filed with Post Effective Amendment No. 7 to
the Registration Statement of Oppenheimer
Strategic Income & Growth Fund (Reg. No. 33-
47378), September 28, 1995 and incorporated
herein by reference
(15) (a) Amended and Restated Service Plan and
Agreement with Oppenheimer Funds Distributor, Inc.
dated January 4, 1996 for Class A Shares - filed
with Post Effective Amendment No. 15 of the
Registrant filed January 11, 1996 - incorporated
by reference
(b) Amended and Restated Distribution and Service
Plan and Agreement with Oppenheimer Funds
Distributor, Inc. dated January 4, 1996 for Class
B Shares - filed with Post Effective Amendment No.
15 of the Registrant filed January 11, 1996 -
incorporated by reference
(c) Form of Distribution and Service Plan and
Agreement with Oppenheimer Funds Distributor, Inc.
for Class C Shares - filed with Post Effective
Amendment No. 15 of the Registrant filed January
11, 1996 - incorporated by reference
(d) Form of Distribution and Service Plan and
Agreement with Oppenheimer Funds Distributor, Inc.
for Class M Shares - filed herewith
(16) Performance Computation Schedule - filed herewith
(17) (a) Financial Data Schedule for Class A Shares -
filed herewith
(b) Financial Data Schedule for Class B Shares -
filed herewith
(c) Financial Data Schedule for Class C Shares -
filed herewith
(d) Financial Data Schedule for Class M Shares -
filed herewith
(18) Oppenheimer Fund Multiple Class Plan under Rule
18f-3 dated January 5, 1996 - filed with Post
Effective Amendment. 15 of the Registrant filed
January 11, 1996 - incorporated by reference
--- Powers of Attorney - filed with Post Effective
Amendment No. 15 of the Registrant filed January
11, 1996 - incorporated by reference
Item 25. Persons Controlled by or under Common Control with
- -------- ---------------------------------------------------
Registrant
- -----------
The Board of Trustees of the Registrant is identical to the
Boards of Trustees of Rochester Fund Municipals ("RFM") and the
Limited Term New York Municipal Fund ("LTNYX") (collectively "The
Rochester Funds").
Item 26. Number of Holders of Securities
- -------- --------------------------------
Number of
Record Holders as of
Title of Class March 21, 1997
-------------- ---------------------
Shares of beneficial
interest, Class A 5,339
Shares of beneficial
interest, Class B 10,504
Shares of beneficial
interest, Class C 1,767
Shares of beneficial
interest, Class M 11,895
Item 27. Indemnification
- -------- ----------------
Registrant's Amended and Restated Agreement and Declaration of
Trust (the "Declaration of Trust"), which is referenced herein,
(see Exhibit 1), contains certain provisions relating to the
indemnification of Registrant's officers and trustees. Section 6.4
of Registrant's Declaration of Trust provides that Registrant shall
indemnify (from the assets of the Fund or Funds in question) each
of its trustees and officers (including persons who served at
Registrant's request as directors, officers or trustees of another
organization in which Registrant has any interest as a shareholder,
creditor or otherwise hereinafter referred to as a "Covered
Person") against all liabilities, including but not limited to,
amounts paid for satisfaction of judgments, in compromise or as
fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with
which such person may be or may have been threatened, while in
office or thereafter, by reason of being or having been such a
trustee or officer, director or trustee, except with respect to any
matter as to which it has been determined in one of the manners
described below, that such Covered Person (i) did not act in good
faith in the reasonable belief that such Covered Person's action
was in or not opposed to the best interest of Registrant or (ii)
had acted with willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct described
in (i) and (ii) being referred to hereafter as "Disabling Conduct".
Section 6.4 provides that a determination that the Covered
Conduct may be made by (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence
of Disabling Conduct, or (iii) a reasonable determination, based
upon a review of the facts, that the indemnity was not liable by
reason of Disabling Conduct by (a) a vote of a majority of a quorum
of trustees who are neither "interested persons" of Registrant as
defined in Section 2(a)(19) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written
opinion.
In addition, Section 6.4 provides that expenses, including
accountants' and counsel fees so incurred by any such Covered
Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time
in advance of the final disposition of any such action, suit or
proceeding, provided that the Covered Person shall have undertaken
to repay the amounts so paid to the Sub-trust in question if it is
ultimately determined that indemnification of such expenses is not
authorized under Article 6 and (i) the Covered Person shall have
provided security for such undertaking, (ii) Registrant shall be
insured against losses arising by reason of any lawful advances, or
(iii) a majority of a quorum of disinterested trustees who are not
a party to the proceeding, by an independent legal counsel in a
written opinion, based upon a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to
believe that the Covered Person ultimately will be found entitled
to indemnification.
Section 6.1 of Registrant's Agreement and Declaration of Trust
provides, among other things, that nothing in the Agreement and
Declaration of Trust shall protect any trustee or officer against
any liability to Registrant or the shareholders to which such
trustee or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of trustee or such
officer.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the
same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<PAGE>
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections with
OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset Management, Inc. ("ORAMI");
formerly Vice President of Equity
Derivatives at Salomon Brothers,
Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Senior
Vice President of HarbourView;
prior to March, 1996 he was the
senior equity portfolio manager for
the Panorama Series Fund, Inc. (the
"Company") and other mutual funds
and pension funds managed by G.R.
Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance Company;
was also responsible for managing the common
stock department and common stock
investments of Connecticut Mutual Life
Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly a Vice
President and Senior Portfolio Manager at
First of America Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney, Inc.
David Bernard,
Vice President Previously a Regional Sales Director for
Retirement Plan Services at Charles Schwab
& Co., Inc.
Rajeev Bhaman,
Assistant Vice President Formerly Vice President of Asian Equities
for Barclays de Zoete Wedd, Inc.
<PAGE>
Robert J. Bishop,
Vice President Assistant Treasurer of the Oppenheimer Funds
(listed below); previously a Fund Controller
for OppenheimerFunds, Inc. (the "Manager").
George Bowen,
Treasurer Senior Vice President &
Treasurer of the New York-based
Oppenheimer Funds; Vice President, Assistant
Secretary and Treasurer of the Denver-based
Oppenheimer Funds. Vice President and
Treasurer of OppenheimerFunds Distributor,
Inc. (the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of the Manager; Senior Vice
President, Treasurer, Assistant Secretary
and a director of Centennial Asset
Management Corporation ("Centennial"), an
investment adviser subsidiary of the
Manager; Vice President, Treasurer and
Secretary of Shareholder Services, Inc.
("SSI") and Shareholder Financial Services,
Inc. ("SFSI"), transfer agent subsidiaries
of the Manager; Director, Treasurer and
Chief Executive Officer of MultiSource
Services, Inc.; Vice President and Treasurer
of Oppenheimer Real Asset Management, Inc.;
President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main Street
Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of Educational
Services for H.D. Vest Investment
Securities, Inc.
Michael A. Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President of
Centennial.
Ruxandra Chivu,
Assistant Vice President None.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed Income for
State Street Research & Management Co.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President and
Director An officer and/or portfolio manager of
certain Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the New York-
based Oppenheimer Funds; Vice President and
Secretary of the Denver-based Oppenheimer
Funds; Secretary of the Oppenheimer Quest
and Oppenheimer Rochester Funds; Executive
Vice President, Director and General Counsel
of the Distributor; President and a Director
of Centennial; Chief Legal Officer and a
Director of MultiSource Services, Inc.;
President and a Director of Oppenheimer Real
Asset Management, Inc.; Executive Vice
President, General Counsel and Director of
SFSI and SSI; formerly Senior Vice President
and Associate General Counsel of the Manager
and the Distributor.
George Evans,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Scott Farrar,
Vice President Assistant Treasurer of the New York-based
and Denver-based Oppenheimer funds.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView Asset Management
Corporation, MultiSource Services, Inc. and
Centennial Asset Management Corporation;
Secretary, Vice President and Director of
Centennial Capital Corporation; Vice
President and Secretary of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio
manager of certain Oppenheimer funds.
Formerly Chairman of the Board and Director
of Rochester Fund Distributors, Inc.
("RFD"), President and Director of Fielding
Management Company, Inc. ("FMC"), President
and Director of Rochester Capital Advisors,
Inc. ("RCAI"), Managing Partner of Rochester
Capital Advisors, L.P., President and
Director of Rochester Fund Services, Inc.
("RFS"), President and Director of Rochester
Tax Managed Fund, Inc.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following positions:
An officer of certain Oppenheimer funds;
Secretary and General Counsel of Rochester
Capital Advisors, L.P. and Secretary of
Rochester Tax Managed Fund, Inc.
Jennifer Foxson,
Assistant Vice President None.
Paula C. Gabriele,
Executive Vice President Formerly Managing Director (1990-1996) for
Bankers Trust Co.
Robert G. Galli,
Vice Chairman Trustee of the New York-based Oppenheimer
Funds; Vice President and Counsel of OAC;
formerly he held the following positions:
Vice President and a director of HarbourView
and Centennial, a director of SFSI and SSI,
an officer of other Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President / Director of
Graphic and Print Communications for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy Consultant for
the Private Client Division of Merrill
Lynch.
Robert Grill,
Vice President Formerly Marketing Vice President for
Bankers Trust Company (1993-1996); Steering
Committee Member, Subcommittee Chairman for
American Savings Education Council (1995-
1996).
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Vice
President of Fixed Income Portfolio
Management at Bankers Trust.
Glenna Hale,
Director of Investor Marketing Formerly Vice President (1994-1997) of
Retirement Plans Services for
OppenheimerFunds Services.
Thomas B. Hayes,
Assistant Vice President None.
Barbara Hennigar,
Executive Vice President and
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the
Manager President and Director of SFSI; President
and Chief Executive Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with Robinson,
Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President
and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Managing Director of Global Equities at
Paine Webber's Mitchell Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director of Van Eck
Global.
Avram Kornberg,
Vice President Formerly a Vice President with Bankers
Trust.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for Columbus Circle
Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant Vice President Director of Board (since 2/96), Chinese
Finance Society; formerly Chairman (11/94-
2/96)), Chinese Finance Society; and
Director (6/94-6/95), Greater China Business
Networks.
Stephen F. Libera,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he was the
senior bond portfolio manager for Panorama
Series Fund, Inc., other mutual funds and
pension accounts managed by G.R. Phelps; was
also responsible for managing the public
fixed-income securities department at
Connecticut Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of the New
York-based and the Denver-based Oppenheimer
funds; President and a Director of OAC,
HarbourView and Oppenheimer Partnership
Holdings, Inc.; Director of ORAMI; Chairman
and Director of SSI; a Director of
Oppenheimer Real Asset Management, Inc.
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage Trading,
at S.N. Phelps & Co.,
Salomon Brothers, and Kidder Peabody.
Sally Marzouk,
Vice President None.
Michelle McCann,
Assistant Vice President Formerly Vice President, Quest for Value
Distributors, Oppenheimer Capital
Corporation.
Lisa Migan,
Assistant Vice President, None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Portfolio Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly Marketing Manager (July, 1995 -
November, 1996) for Chase Investment
Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly a Vice President with Cohane
Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly Senior
Investment Officer and Portfolio Manager
with Chemical Bank.
Russell Read,
Vice President Consultant for Prudential Insurance on
behalf of the General Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly a
Securities Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for Metropolitan
Life Insurance Company.
Michael S. Rosen
Vice President; President:
Rochester Division An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly Vice
President of RFS, President and Director of
RFD, Vice President and Director of FMC,
Vice President and director of RCAI, General
Partner of RCA, an officer and/or portfolio
manager of certain Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly Vice
President and Portfolio Manager/Security
Analyst for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar Dry Dock
Bank.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of Citicorp
Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly a Vice
President and Senior Portfolio Manager for
Dean Witter InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President
None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the New York-
based Oppenheimer Funds; formerly Chairman
of the Manager and the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Stoma,
Senior Vice President,
Director Retirement Plans Formerly Vice President of U.S. Group
Pension Strategy and Marketing for Manulife
Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March, 1996 he was an
equity portfolio manager for Panorama Series
Fund, Inc. and other mutual funds and
pension accounts managed by G.R. Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; President and a Director
of Centennial; formerly President and
Director of OAMC, and Chairman of the Board
of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund, Oppenheimer
Global Emerging Growth Fund and Oppenheimer
Enterprise Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the Distributor and
SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Jerry A. Webman,
Senior Vice President Director of New York-based
tax-exempt fixed income Oppenheimer Funds;
Formerly Managing Director and Chief
Fixed Income Strategist at
Prudential Mutual Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Vice President of
HarbourView; prior to March, 1996 he was an
equity portfolio manager for Panorama Series
Fund, Inc. and other mutual funds and
pension funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President of
HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President of
Centennial; Vice President, Finance and
Accounting and member of the Board of
Directors of the Junior League of Denver,
Inc.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the Manager;
Assistant Secretary of the Oppenheimer
Funds; Assistant Secretary of SSI, SFSI; an
officer
of other Oppenheimer Funds.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President of
Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer
Funds, the Denver-based Oppenheimer Funds, and the Quest/Rochester
Funds, set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Denver-based Oppenheimer Funds
- ------------------------------
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Quest/Rochester Funds
- ---------------------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Limited-Term New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, Quest funds, OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership
Holdings, Inc., and Oppenheimer Acquisition Corp. is Two World
Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds,
Shareholder Financial Services, Inc., Shareholder Services, Inc.,
OppenheimerFunds Services, Centennial Asset Management Corporation,
Centennial Capital Corp., and Oppenheimer Real Asset Management,
Inc. is 6803 South Tuscon Way, Englewood, Colorado 80112.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of Oppenheimer Bond Fund For Growth, Rochester
Fund Municipals and Limited Term New York Municipal Fund is 350
Linden Oaks, Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a)OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the
other registered open-end investment companies for which
OppenheimerFunds, Inc. is the investment adviser, as described in
Part A and B of this Registration Statement and listed in Item
28(b) above.
(b)The directors and officers of the Registrant's principal
underwriter are:
</TABLE>
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
George Clarence Bowen+ Vice President & Treasurer
Vice President and
Treasurer of the NY-
based Oppenheimer funds
/ Vice President,
Secretary and Treasurer
of the Denver-based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice President - None
Director - Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425 1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice President None
E. Drew Devereaux ++ Assistant Vice President None
Andrew John Donohue* Executive Vice Secretary of
President, General the New York-
Counsel and Director based Oppenheimer funds /
Vice President of the
Denver-based Oppen-heimer
funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; Chairman:
Rochester Division None
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Ronald R. Foster Senior Vice President None
139 Avant Lane
Cincinatti, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galletto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director - Regional Sales
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres West
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.,
Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution Div.
Apt. 4
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, President:
Rochester Division None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Wasington, DC 20007
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker ++ Vice President None
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
</TABLE>
* Two World Trade Center, New York, NY 10048-0203
+ 6803 South Tuscon Way, Englewood, CO 80112
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
All accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act and the General Rules
and Regulations promulgated thereunder, are in possession of
OppenheimerFunds, Inc. at its offices at 3410 South Galena Street,
Denver, Colorado 80231, except that records with regard to items
covered by Registrant's Custodian Agreement, are maintained by, or
under agreement with, its Custodian, Investors Bank & Trust
Company, 89 South Street, Boston, MA 02111.
Item 31. Management Services
- -------- -------------------
There are no management-related service contracts not discussed in
Parts A and B of this Form under which services are provided to the
Registrant and, therefore, this Item 31 is not applicable.
Item 32. Undertakings
- -------- -------------
(a)Not applicable.
(b)Not applicable.
(c)The Registrant hereby undertakes to furnish each person to whom
a Prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without
charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and
State of New York on the 10th day of April, 1997.
BOND FUND SERIES
By: Bridget A. Macaskill*
------------------------------------
Bridget A. Macaskill,
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- -----
<S> <C> <C>
/s/ Bridget A. Macaskill Chairman of the Board, April 10, 1996
President (Principal
- --------------------- Executive Officer) and
Bridget A. Macaskill* Trustee
/s/ George C. Bowen Treasurer (Principal April 10, 1996
- --------------------- Financial and Accounting
George C. Bowen* Officer)
/s/ John Cannon
- ---------------------
John Cannon* Trustee April 10, 1996
/s/ Paul Y. Clinton
- ---------------------
Paul Y. Clinton* Trustee April 10, 1996
/s/ Thomas W. Courtney
- ---------------------
Thomas W. Courtney* Trustee April 10, 1996
/s/ Lacy B. Herrmann
- ----------------------
Lacy B. Herrmann* Trustee April 10, 1996
/s/ George Loft
- ----------------------
George Loft* Trustee April 10, 1996
</TABLE>
*By: /s/ Robert G. Zack
------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
BON D FUND SERIES
OPP ENHEIMER BOND FUND FOR GROWTH
EXH IBIT INDEX
Form N-1A
Item No. Description
- ---------- ------------
24(b)(11) Independent Auditors Consent
24(b)(16) Performance Computation Schedule
24(b)(17)(a) Financial Data Schedule Class A
24(b)(17)(b) Financial Data Schedule Class B
24(b)(17)(c) Financial Data Schedule Class C
24(b)(17)(d) Financial Data Schedule Class M
EXHIBIT 11
Consent of Independent Accounts
We hereby consent to the use in the Statement of Additional
Information constituting part of this Post-Effective Amendment No.
17 to the registration statement on Form N-1A (the Registration
Statement ) of our report dated January 24, 1997, relating to the
financial statements and financial highlights of Bond Fund Series -
Oppenheimer Bond Fund for Growth, which appears in such Statement
of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this
Registration Statement. We also consent to the reference to us
under heading Financial Highlights in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Rochester, New York
April 10, 1997
Oppenheimer Bond Fund for Growth Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are
calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
06/27/95 0.1107796 0.0000000 13.700
09/27/95 0.2530837 0.0000000 14.600
12/27/95 0.3139476 0.4910000 13.870
03/26/96 0.1578739 0.0000000 14.080
06/25/96 0.1799340 0.0000000 14.130
09/24/96 0.1889631 0.0000000 14.230
12/31/96 0.1976655 0.3475000 14.270
Class B Shares
06/27/95 0.0863308 0.0000000 13.720
09/27/95 0.2251400 0.0000000 14.620
12/27/95 0.2907753 0.4910000 13.890
03/26/96 0.1313023 0.0000000 14.100
06/25/96 0.1531960 0.0000000 14.150
09/24/96 0.1619568 0.0000000 14.250
12/31/96 0.1684187 0.3475000 14.290
Class C Shares
03/26/96 0.0223516 0.0000000 14.080
06/25/96 0.1509363 0.0000000 14.130
09/24/96 0.1618685 0.0000000 14.220
12/31/96 0.1684751 0.3475000 14.270
Class M Shares
02/02/87 0.1360000 0.0000000 10.440
04/16/87 0.1000000 0.0000000 11.040
07/17/87 0.1160000 0.0000000 10.970
10/16/87 0.1300000 0.0000000 10.230
12/31/87 0.0520000 0.0800000 8.500
03/25/88 0.1300000 0.0000000 9.470
06/24/88 0.1300000 0.0000000 9.710
09/23/88 0.1300000 0.0000000 9.350
12/30/88 0.1452000 0.0000000 9.030
03/27/89 0.1300000 0.0000000 9.040
06/23/89 0.1300000 0.0000000 9.260
09/25/89 0.1300000 0.0000000 9.700
09/28/89 0.2062500 0.0000000 9.110
03/23/90 0.1400000 0.0000000 8.740
06/22/90 0.1500000 0.0000000 8.970
09/21/90 0.1450000 0.0000000 8.010
12/28/90 0.1200000 0.0000000 7.840
03/22/91 0.1200000 0.0000000 8.520
06/21/91 0.1400000 0.0000000 8.560
Oppenheimer Bond Fund for Growth
Page 2
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
Class M Shares (Continued)
09/23/91 0.1900000 0.0000000 8.960
12/30/91 0.2487500 0.0000000 9.320
03/25/92 0.1650000 0.0000000 10.140
06/24/92 0.1800000 0.0000000 10.050
09/24/92 0.1900000 0.0000000 10.770
12/30/92 0.2450000 0.0000000 11.370
03/23/93 0.1500000 0.0000000 12.060
06/23/93 0.1600000 0.0000000 11.880
09/27/93 0.1700000 0.0000000 12.920
12/30/93 0.1700000 0.0000000 13.110
03/25/94 0.1500000 0.0000000 13.550
06/24/94 0.1800000 0.0000000 12.720
09/27/94 0.1800000 0.0000000 13.100
12/30/94 0.1780000 0.1400000 12.200
03/28/95 0.1600000 0.0000000 12.810
06/27/95 0.1696983 0.0000000 13.700
09/27/95 0.2370737 0.0000000 14.600
12/27/95 0.3010995 0.4910000 13.870
03/26/96 0.1402294 0.0000000 14.080
06/25/96 0.1625322 0.0000000 14.130
09/24/96 0.1713124 0.0000000 14.220
12/31/96 0.1784435 0.3475000 14.270
Oppenheimer Bond Fund for Growth
Page 3
1. Average Annual Total Returns for the Periods Ended 12/31/96:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Inception
$1,037.91 1 $1,199.27 .6
(---------) - 1 = 3.79% (---------) - 1 = 11.52%
$1,000 $1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge of
5.00% for the first year and 4.00% for the inception year:
One Year Inception
$1,042.80 1 $1,217.75 .6
(---------) - 1 = 4.28% (---------) - 1 = 12.55%
$1,000 $1,000
Oppenheimer Bond Fund for Growth
Page 4
1. Average Annual Total Returns for the Periods Ended 12/31/96 (Continued):
Class M Shares
Examples, assuming a maximum sales charge of 3.25%:
One Year Five Year
$1,060.16 1 $2,100.76 .2
(---------) - 1 = 6.02% (---------) - 1 = 16.00%
$1,000 $1,000
Ten Year
$2,733.38 .1
(---------) - 1 = 10.58%
$1,000
Examples at NAV:
Class A Shares
One Year Inception
$1,101.24 1 $1,272.44 .6
(---------) - 1 = 10.12% (---------) - 1 = 15.55%
$1,000 $1,000
Class B Shares
One Year Inception
$1,092.80 1 $1,257.75 .6
(---------) - 1 = 9.28% (---------) - 1 = 14.75%
$1,000 $1,000
Class M Shares
One Year Five Year
$1,095.79 1 $2,171.45 .2
(---------) - 1 = 9.58% (---------) - 1 = 16.78%
$1,000 $1,000
Ten Year
$2,825.22 .1
(---------) - 1 = 10.94%
$1,000
Oppenheimer Bond Fund for Growth
Page 5
2. Cumulative Total Returns for the Periods Ended 12/31/96:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Inception
$1,037.91 - $1,000 $1,199.27 - $1,000
------------------ = 3.79% ------------------ = 19.93%
$1,000 $1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge
of 5.00% for the first and 4.00% for the inception Year:
One Year Inception
$1,042.80 - $1,000 $1,217.75 - $1,000
------------------ = 4.28% ------------------ = 21.78%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales charge
of 5.00% for the inception year:
Inception
$1,067.41 - $1,000
------------------ = 6.74%
$1,000
Class M Shares
Examples, assuming a maximum sales charge of 3.25%:
One Year Five Year
$1,060.16 - $1,000 $2,100.76 - $1,000
------------------ = 6.02% ------------------ = 110.08%
$1,000 $1,000
Ten Year
$2,733.38 - $1,000
------------------ = 173.34%
$1,000
Oppenheimer Bond Fund for Growth
Page 6
2. Cumulative Total Returns for the Periods Ended 12/31/96 (Continued):
Examples at NAV:
Class A Shares
One Year Inception
$1,101.24 - $1,000 $1,272.44 - $1,000
------------------ = 10.12% ------------------ = 27.24%
$1,000 $1,000
Class B Shares
One Year Inception
$1,092.80 - $1,000 $1,257.75 - $1,000
------------------ = 9.28% ------------------ = 25.78%
$1,000 $1,000
Class C Shares
Inception
$1,077.41 - $1,000
------------------ = 7.74%
$1,000
Class M Shares
One Year Five Year
$1,095.79 - $1,000 $2,171.45 - $1,000
------------------ = 9.58% ------------------ = 117.15%
$1,000 $1,000
Ten Year
$2,825.22 - $1,000
------------------ = 182.52%
$1,000
Oppenheimer Bond Fund for Growth
Page 7
3. Standardized Yield for the 30-Day Period Ended 12/31/96:
The Fund's standardized yields are calculated using the following formula
set forth in the SEC rules:
a - b 6
Yield = 2 { (-------- + 1 ) - 1 }
cd or ce
The symbols above represent the following factors:
a = Dividends and interest earned during the 30-day period.
b = Expenses accrued for the period (net of any expense
reimbursements).
c = The average daily number of Fund shares outstanding during
the 30-day period that were entitled to receive dividends.
d = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
e = The Fund's net asset value (excluding contingent deferred
sales charge) per share on the last day of the period.
Class A Shares
Example, assuming a maximum sales charge of 5.75%:
$ 429,039.16 - $ 73,447.35 6
2{(--------------------------- + 1) - 1} = 4.63%
6,145,408 x $15.14
Class B Shares
Example at NAV:
$ 974,179.01 - $295,944.58 6
2{(--------------------------- + 1) - 1} = 4.12%
13,929,415 x $14.29
Class C Shares
Example at NAV:
$ 174,740.71 - $ 52,492.06 6
2{(--------------------------- + 1) - 1} = 4.14%
2,503,127 x $14.27
Class M Shares
Example, assuming a maximum sales charge of 3.25%:
$1,304,713.73 - $337,359.23 6
2{(--------------------------- + 1) - 1} = 4.25%
18,670,480 x $14.75
Oppenheimer Bond Fund for Growth
Page 8
4. DIVIDEND YIELDS FOR THE 30-DAY PERIOD ENDED 12/31/96:
The Fund's dividend yields are calculated using the following formula:
Dividend Yield = { (a / 30) x 365 } / b or c
The symbols above represent the following factors:
a = The accrual dividend earned during the thirty day period.
b = The Fund's maximum offering price (including sales charge)
per share on the last day of the period.
c = The Fund's net asset value (excluding sales charge) per share
on the last day of the period.
Examples:
Class A Shares
Dividend Yield
at Maximum Offering $.0637623/30 x 365 / $15.14 = 5.12%
Dividend Yield
at Net Asset Value $.0637623/30 x 365 / $14.27 = 5.44%
Class B Shares
Dividend Yield
at Net Asset Value $.0551274/30 x 365 / $14.29 = 4.69%
Class C Shares
Dividend Yield
at Net Asset Value $.0552040/30 x 365 / $14.27 = 4.71%
Class M Shares
Dividend Yield
at Maximum Offering $.0580133/30 x 365 / $14.75 = 4.79%
Dividend Yield
at Net Asset Value $.0580133/30 x 365 / $14.27 = 4.95%
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<NAME> BOND FUND SERIES, OPPENHEIMER BOND FUND FOR GROWTH
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</TABLE>
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<CIK> 0000788959
<NAME> BOND FUND SERIES, OPPENHEIMER BOND FUND FOR GROWTH
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<NAME> CLASS B
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<S> <C>
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<ACCUMULATED-NII-CURRENT> (753,539)
<OVERDISTRIBUTION-NII> (4,113)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,926,532
<NET-ASSETS> 617,109,170
<DIVIDEND-INCOME> 3,116,725
<INTEREST-INCOME> 23,555,538
<OTHER-INCOME> 0
<EXPENSES-NET> 6,831,204
<NET-INVESTMENT-INCOME> 19,841,059
<REALIZED-GAINS-CURRENT> 14,006,497
<APPREC-INCREASE-CURRENT> 7,865,590
<NET-CHANGE-FROM-OPS> 41,713,146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,911,332)
<DISTRIBUTIONS-OF-GAINS> (4,975,362)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,294,846
<NUMBER-OF-SHARES-REDEEMED> (561,285)
<SHARES-REINVESTED> 577,315
<NET-CHANGE-IN-ASSETS> 340,801,580
<ACCUMULATED-NII-PRIOR> (126,552)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (40,930)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,148,214
<INTEREST-EXPENSE> 95,316
<GROSS-EXPENSE> 6,840,961
<AVERAGE-NET-ASSETS> 434,535,756
<PER-SHARE-NAV-BEGIN> 13.98
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> 0.65
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<AVG-DEBT-OUTSTANDING> 1,489,069
<AVG-DEBT-PER-SHARE> .03
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000788959
<NAME> BOND FUND SERIES, OPPENHEIMER BOND FUND FOR GROWTH
<SERIES>
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<NAME> CLASS C
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-11-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 589,648,283
<INVESTMENTS-AT-VALUE> 614,595,813
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<EXPENSES-NET> 6,831,204
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<REALIZED-GAINS-CURRENT> 14,006,497
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<DISTRIBUTIONS-OF-INCOME> (648,607)
<DISTRIBUTIONS-OF-GAINS> (903,669)
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<NET-CHANGE-IN-ASSETS> 340,801,580
<ACCUMULATED-NII-PRIOR> (126,552)
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<AVG-DEBT-OUTSTANDING> 1,489,069
<AVG-DEBT-PER-SHARE> .03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000788959
<NAME> BOND FUND SERIES, OPPENHEIMER BOND FUND FOR GROWTH
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<NAME> CLASS M
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 589,648,283
<INVESTMENTS-AT-VALUE> 614,595,813
<RECEIVABLES> 8,776,954
<ASSETS-OTHER> 425,798
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 623,798,565
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,689,395
<TOTAL-LIABILITIES> 6,689,395
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 592,940,290
<SHARES-COMMON-STOCK> 19,204,115
<SHARES-COMMON-PRIOR> 17,143,195
<ACCUMULATED-NII-CURRENT> (753,539)
<OVERDISTRIBUTION-NII> (4,113)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24,926,532
<NET-ASSETS> 617,109,170
<DIVIDEND-INCOME> 3,116,725
<INTEREST-INCOME> 23,555,538
<OTHER-INCOME> 0
<EXPENSES-NET> 6,831,204
<NET-INVESTMENT-INCOME> 19,841,059
<REALIZED-GAINS-CURRENT> 14,006,497
<APPREC-INCREASE-CURRENT> 7,865,590
<NET-CHANGE-FROM-OPS> 41,713,146
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,157,589)
<DISTRIBUTIONS-OF-GAINS> (6,479,192)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,031,985
<NUMBER-OF-SHARES-REDEEMED> (4,018,081)
<SHARES-REINVESTED> 1,047,016
<NET-CHANGE-IN-ASSETS> 340,801,580
<ACCUMULATED-NII-PRIOR> (126,552)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (40,930)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,148,214
<INTEREST-EXPENSE> 95,316
<GROSS-EXPENSE> 6,840,961
<AVERAGE-NET-ASSETS> 434,535,756
<PER-SHARE-NAV-BEGIN> 13.96
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 0.66
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.00)
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<AVG-DEBT-PER-SHARE> .03
</TABLE>
