Registration No. 33-58343
File No. 811-07265
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. 4 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /X/
Amendment No. 6 /X/
Oppenheimer Enterprise Fund
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
212-323-0200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ / On _______ pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/X/ On December 29, 1998, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On _______, pursuant to paragraph (a)(2)
of Rule 485.
If appropriate, check the following box:
/ /This post-effective amendment designates a new effective date for
apreviously filed
post-amendment.
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<PAGE>
Oppenheimer Enterprise Fund
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Prospectus dated December 29, 1998
Oppenheimer Enterprise Fund is a mutual fund that seeks capital
appreciation to make your investment grow. It emphasizes investments in
common stocks and other equity securities of "small-cap" companies.
This Prospectus contains important information about the Fund's
objective, its investment policies, strategies and risks. It also contains
important information about how to buy and sell shares of the Fund and other
account features. Please read this Prospectus carefully before you invest and
keep it for future reference about your account.
(OppenheimerFunds logo)
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the Fund's securities nor has it determined that this
Prospectus is accurate or complete. It is a criminal offense to represent
otherwise.
<PAGE>
Contents
About the Fund
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The Fund's Objective and Investment Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
Fees and Expenses of the Fund
About the Fund's Investments
How the Fund is Managed
About Your Account
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How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Phone Link
OppenheimerFunds Web Site
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Financial Highlights
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<PAGE>
About the Fund
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The Fund's Objective and Investment Strategies
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What Is the Fund's Investment Objective? The Fund's objective is capital
appreciation.
What Does the Fund Invest In? The Fund invests mainly in equity securities,
such as common and preferred stocks, convertible securities and other
securities having equity features. It focuses on equity securities of
small-capitalization U.S. and foreign companies that the portfolio manager
believes have favorable growth prospects. The Fund may also use hedging
instruments and certain derivative investments to try to manage investment
risks. These investments are more fully explained in "About the Fund's
Investments," below.
Who Is the Fund Designed For? The Fund is designed primarily for investors
seeking capital growth in their investment over the long term. Those
investors should be willing to assume the greater risks of short-term share
price fluctuations that are typical for an aggressive growth fund focusing on
small-cap stock investments. The Fund does not seek current income and the
income from its investments will likely be small, so it is not designed for
investors needing current income or preservation of capital. Because of its
focus on long-term growth, the Fund may be appropriate for some portion of a
retirement plan investment.
Main Risks of Investing in the Fund
All investments carry risks to some degree. The Fund's investments in
stocks are subject to changes in their value from a number of factors.
Investments in stocks can be volatile and are subject to changes in general
stock market movements (this is referred to as "market risk"). There may be
events or changes affecting particular industries that might be emphasized in
the Fund's portfolio (this is referred to as "industry risk") or the change
in value of a particular stock because of an event affecting the issuer.
Stocks of growth companies may provide greater opportunities for capital
appreciation but may be more volatile than other stocks. That volatility is
likely to be even greater for small-cap companies. The Fund can also buy
foreign securities that have special risks not associated with investments in
domestic securities, such as the effects of currency fluctuations on relative
prices.
These risks collectively form the risk profile of the Fund, and can
affect the value of the Fund's investments, its investment performance and
its price per share. These risks mean that you can lose money by investing in
the Fund. When you redeem your shares, they may be worth more or less than
what you paid for them.
The Fund's investment Manager, OppenheimerFunds, Inc., tries to reduce
risks by carefully researching securities before they are purchased, and in
some cases by using hedging techniques. The Fund attempts to reduce its
exposure to market risks by diversifying its investments, that is, by not
holding a substantial amount of stock of any one company and by not investing
too great a percentage of the Fund's assets in any one company. Also, the
Fund does not concentrate its investments in any one industry or group of
industries. However, changes in the overall market prices of securities can
occur at any time. The share price of the Fund will change daily based on
changes in market prices of securities and market conditions, and in response
to other economic events. There is no assurance that the Fund will achieve
its investment objective.
|X| Risks of Investing in Stocks. Because the Fund invests primarily in
equity securities of small-cap growth companies, the value of the Fund's
portfolio will be affected by changes in the stock markets and the special
economic and other factors that might primarily affect the prices of small
cap stocks in the market. Market risk will affect the Fund's net asset value
per share, which will fluctuate as the values of the Fund's portfolio
securities change. The prices of individual stocks do not all move in the
same direction uniformly or at the same time. Different stock markets may
behave differently from each other.
Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer
or its industry.
|X| Special Risks of Small-Cap Stocks. The Fund focuses its investments
on securities of companies having a market capitalization of up to $200
million, which generally are newer companies. While they may offer greater
opportunities for capital appreciation than larger, more established
companies, they involve substantially greater risks of loss and price
fluctuations than larger cap issuers. Small-cap companies may have limited
product lines or markets for their products, limited access to financial
resources and less depth in management skill than larger, more established
companies. Their stocks may be less liquid than those of larger issuers. That
means the Fund could have greater difficulty selling a security of a small
cap issuer at an acceptable price, especially in periods of market
volatility. That factor increases the potential for losses to the Fund. Also,
it may take a substantial period of time before the Fund realizes a gain on
an investment in a small-cap company, if it realizes any gain at all.
|X| Risks of Foreign Investing. The Fund may buy securities of
companies or governments in any country, including developed countries and
emerging markets. There is no limit on the amount of the Fund's assets that
may be invested in foreign securities. While foreign securities offer special
investment opportunities, there are also special risks.
The change in value of a foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of securities denominated in that
foreign currency. Foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to. The value of
foreign investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes, delays
in settlement of transactions, changes in governmental economic or monetary
policy in the U.S. or abroad, or other political and economic factors.
Securities in emerging market countries may be more difficult to sell and
their prices may be more volatile. There may be transaction costs and risks
from the conversion of certain European currencies to the Euro in January
1999.
|X| Risks in Using Derivative Investments. The Fund may use derivatives
to seek increased returns or to try to hedge investment risks. In general
terms, a derivative investment is one whose value depends on (or is derived
from) the value of an underlying asset, interest rate or index. Options,
futures, and forward contracts are examples of derivatives.
If the issuer of the derivative does not pay the amount due, the Fund
can lose money on the investment. Also, the underlying security or investment
on which the derivative is based, and the derivative itself, may not perform
the way the Manager expected it to perform. If that happens, the Fund's share
price could decline. The Fund has limits on the amount of particular types of
derivatives it can hold. However, using derivatives can cause the Fund to
lose money on its investment or increase the volatility of its share prices.
How Risky is the Fund Overall? The Fund focuses its investments on small cap
equity securities for long-term growth, and in the short term, they can be
volatile. The price of the Fund's shares can go up and down substantially.
The Fund generally does not use income-oriented investments to help cushion
the Fund's total return to some degree from changes in stock prices, except
for defensive purposes. In the Oppenheimer funds spectrum, the Fund is
generally a very aggressive investment vehicle, designed for investors
willing to assume greater risks. It is likely to be subject to greater
fluctuations in its share prices than funds that emphasize large
capitalization stocks, or funds that focus on both stocks and bonds.
An investment in the Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of
investing in the Fund, by showing changes in the Fund's performance (for its
Class A shares) from year to year since its inception and by showing how the
average annual total returns of the Fund's shares compare to those of a
broad-based market index. The Fund's past investment performance is not
necessarily an indication of how the Fund will perform in the future.
Annual Total Returns (Class A) (% as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total
returns]
For the period from 1/1/98 through 9/30/98, the cumulative return (not
annualized) for Class A shares was ____%. Sales charges are not included in
the calculations of return in this bar chart, and if those charges were
included, the returns would be less than those shown.
During the period shown in the bar chart, the highest return (not annualized)
for a calendar quarter was 22.39% (3rd Q,'97) and the lowest return (not
annualized) for a calendar quarter was -10.50% (1st Q,'97).
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Average Annual Total
Returns for the Past 1 Year Past 5 Years
periods (or life of class, if less)
ending December 31,
1997
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Class A Shares % %*
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Class B Shares % %*
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Class C Shares % %*
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S&P 500 Index % %*
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* Inception dates of all classes: 11/7/95. The index performance is shown
from 11/1/95.
The Fund's average annual total returns in the table include the applicable
sales charge for Classes A, B and C shares: for Class A, the current maximum
initial sales charge of 5.75%; for Class B, the contingent deferred sales
charges of 5% (1-year) and 3% (life of class); and for Class C, the 1%
contingent deferred sales charge for the 1-year period.
The returns measure the performance of a hypothetical $10,000 account and
assume that all dividends and capital gains distributions have been
reinvested in additional shares. Because the Fund invests primarily in
stocks, the Fund's performance is compared to the S&P 500 Index, an unmanaged
index of equity securities that is a measure of the general domestic stock
market. However, it must be remembered that the index performance reflects
the reinvestment of dividends but does not consider the effects of capital
gains or transaction costs, and the index represents the performance of
larger cap issuers, while the Fund focuses on small-cap stocks.
Fees and Expenses of the Fund
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services. Those
expenses are subtracted from the Fund's assets to calculate the Fund's net
asset value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales charges
and account transaction charges. The following tables are provided to help
you understand the fees and expenses you may pay if you buy and hold shares
of the Fund. The numbers below are based on the Fund's expenses during its
fiscal year ended August 31, 1998.
Shareholder Transaction Fees (charges paid directly from your investment):
(% of amount of transaction)
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Class A Shares Class B Shares Class C Shares
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Maximum Sales Charge
(Load) on purchases 5.75% None None
(as % of offering
price)
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Maximum Contingent
Deferred Sales Charge
(Load) (as % of the None1 5%2 1%3
lower of the original
offering price or
redemption proceeds)
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1. A contingent deferred sales charge may apply to redemptions of
investments of $1 million or more ($500,000 for retirement plan accounts)
of Class A shares. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent
deferred sales charge declines to 1% in the sixth year and is eliminated
after that.
3. Applies to shares redeemed within 12 months of purchase.
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
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Class A Shares Class B Shares Class C Shares
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Management Fees % % %
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Distribution and/or Service % 1.00% 1.00%
(12b-1) Fees
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Other Expenses % % %
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Total Annual Operating % % %
Expenses
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Numbers in the chart are based on the Fund's expenses in the last fiscal
year, ended 8/31/98. Expenses may vary in future years. "Other expenses"
include transfer agent fees, custodial expenses, and accounting and legal
expenses the Fund pays.
Examples. These examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in a class of shares of the Fund for
the time periods indicated and reinvest your dividends and distributions. The
first example assumes that you redeem all of your shares at the end of those
periods. The second example assumes that you keep your shares. Both examples
also assume that your investment has a 5% return each year and that the
class's operating expenses remain the same. Your actual costs may be higher
or lower because expenses will vary over time. Based on these assumptions
your expenses would be as follows:
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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years1
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Class A Shares $717 $1,016 $1,336 $2,242
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Class B Shares $729 $1,006 $1,410 $2,219
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Class C Shares $329 $706 $1,210 $2,595
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If shares are not 1 Year 3 Years 5 Years 10 Years1
redeemed:
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Class A Shares $717 $1,106 $1,336 $2,242
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Class B Shares $229 $706 $1,210 $2,219
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Class C Shares $229 $706 $1,210 $2,595
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In the first example, expenses include the initial sales charge for Class A
and the applicable Class B or Class C contingent deferred sales charges. In
the second example, the Class A expenses include the sales charge, but Class
B and Class C expenses do not include the contingent deferred sales charges.
1. Class B expenses for years 7 through 10 are based on Class A expenses,
since Class B shares automatically convert to Class A after 6 years.
About the Fund's Investments
The Fund's Principal Investment Policies. The Fund's goal is to seek capital
appreciation, and it focuses its investments on equity securities (primarily
common stocks) of small-cap companies that the Manager believes offer growth
opportunities. The composition of the Fund's portfolio will vary over time
based upon the evaluation of economic and market trends by the Manager. Under
normal market conditions,
|_| The Fund will invest at least 65% of its total assets in equity
securities of growth companies having a market capitalization of up
to $500 million (at the time the Fund buys the security).
|_| The Fund intends to emphasize equity securities of small-cap
growth companies with a market capitalization of up to $200 million,
in meeting that 65% goal.
|_| The balance of the Fund's assets may be invested in equity
securities of larger companies and in other investments, including
derivative and hedging instruments.
The Statement of Additional Information contains more detailed
information about the Fund's investment policies and risks.
|X| Small-Cap Stock Investments. The Fund currently emphasizes
investments in equity securities, primarily common stocks of U.S. and foreign
companies. The Manager looks for stocks of small companies that have growth
potential. Small-cap growth companies tend to be companies that may be
developing new products or services, that have relatively favorable
prospects, or that are expanding into new and growing markets. Current
examples include companies in the fields of telecommunications,
biotechnology, computer software, and new consumer products. Emerging growth
companies may be providing new products or services that can enable them to
capture a dominant or important market position. They may have a special area
of expertise or the capability to take advantage of changes in demographic
factors in a more profitable way than larger, more established companies.
Growth companies tend to retain a large part of their earnings for
research, development or investment in capital assets. Therefore, they do not
tend to emphasize paying dividends, and may not pay any dividends for some
time. They are selected for the Fund's portfolio because the Manager believes
the price of the stock will increase over the long term.
The Fund's investments are not limited only to small-cap issuers, and
the Fund can invest a portion of its assets (subject to the limitation
described above) in issuers of mid- and large capitalizations, if the Manager
believes they offer opportunities for growth.
What is "Market Capitalization?"
In general, the market capitalization is the value of a company determined by
the total market value of its issued and outstanding common stock.
Cyclical Opportunities. The Fund may also seek to take advantage of
changes in the business cycle by investing in companies that are sensitive to
those changes if the Manager believes they have growth potential. For
example, when the economy is expanding, companies in the consumer durables
and technology sectors may benefit and present long-term growth
opportunities. Other cyclical industries include insurance and forest
products, for example. The Fund focuses on seeking growth over the long term,
but may seek to take tactical advantage of short-term market movements or
events affecting particular issuers or industries.
Industry Focus. At times, the Fund may increase the relative emphasis
of its investments in a particular industry or group of industries. Stocks of
issuers in a particular industry may be affected by changes in economic
conditions that affect that industry more than others, or by changes in
government regulations, availability of basic resources or supplies, or other
events. To the extent that the Fund has a greater emphasis on investments in
a particular industry or group of industries, its share values may fluctuate
in response to events affecting those industries. To some extent that risk
may be limited by the Fund's policy of not concentrating more than 25% of its
assets in investments in any one industry or group of industries.
Other Equity Securities. While the Fund emphasizes investments in
common stocks, it may also buy preferred stocks and securities convertible
into common stock. They can include securities issued by domestic or foreign
companies. The Manager considers convertible securities to be "equity
equivalents" because of the conversion feature and because their rating has
less impact on the investment decision than in the case of other debt
securities.
|X| How Does the Manager Decide What Securities to Buy or Sell? In
selecting securities for the Fund, the Fund's portfolio manager looks for
high-growth companies using fundamental analysis of a company's financial
statements, interviews with management and analysis of the company's
operations and product development, as well as the industry of which the
issuer is part. The manager also evaluates research on particular industries,
market trends and general economic conditions. In seeking broad
diversification of the Fund's portfolio, the portfolio manager currently
searches for:
|_| Companies with small capitalizations, primarily under $200 million,
|_| Companies with management that has a proven ability to handle rapid
growth,
|_| Companies between their start-up and emerging growth phases,
|_| Companies with superior earnings and revenue growth.
|X| Can the Fund's Investment Objective and Policies Change? The
Fund's Board of Trustees may change non-fundamental investment policies
without shareholder approval, although significant changes will be described
in amendments to this Prospectus. Fundamental policies are those that cannot
be changed without the approval of a majority of the Fund's outstanding
voting shares. The Fund's objective is a fundamental policy. Investment
restrictions that are fundamental policies are listed in the Statement of
Additional Information. The Fund's investment policies and techniques are not
fundamental unless this Prospectus or the Statement of Additional Information
says that a particular policy is fundamental.
|X| Portfolio Turnover. The Fund may engage in short-term trading to
try to achieve its objective, and will likely have a portfolio turnover rate
in excess of 100% annually. Portfolio turnover affects brokerage costs the
Fund pays. If the Fund realizes capital gains when it sells its portfolio
investments, it must generally pay those gains out to shareholders,
increasing their taxable distributions. The Financial Highlights table below
shows the Fund's portfolio turnover rates during prior fiscal years.
Investment Strategies. To seek its objective, the Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks, although some are designed to help reduce investment
or market risks.
|X| Investing in Special Situations. The Fund at times may use
aggressive investment techniques. These include seeking to benefit from what
the portfolio manager perceives to be special situations, such as mergers,
reorganizations or other unusual event expected to affect a particular
issuer. However, there is a risk in investing in these special situations
that the change or event might not occur, which could have a negative impact
on the price of the security. The Fund's investment might not produce the
expected gains or could incur a loss for the portfolio.
|X| Investing in Small, Unseasoned Companies. The Fund can invest in
small, unseasoned companies. These are companies that have been in operation
less than three years, including the operations of any predecessors. These
securities may have limited liquidity and their prices may be very volatile.
The Fund currently intends to invest not more than 10% of its assets in these
securities.
|X| Illiquid and Restricted Securities. Investments may be illiquid
because of the absence of an active trading market. That may make it
difficult to value them or dispose of them promptly at an acceptable price. A
restricted security is one that has a contractual restriction on its resale
or which cannot be sold publicly until it is registered under the Securities
Act of 1933. The Fund will not invest more than 10% of its net assets in
illiquid or restricted securities. The Board can increase that limit to 15%.
Certain restricted securities that are eligible for resale to qualified
institutional purchasers are not subject to that limit. The Manager monitors
holdings of illiquid securities on an ongoing basis to determine whether to
sell any holdings to maintain adequate liquidity.
|X| Derivative Investments. The Fund can invest in a number of
different kinds of "derivative" investments. In the broadest sense,
exchange-traded options, futures contracts, and other hedging instruments the
Fund might use may be considered "derivative" investments. In addition to
using derivatives for hedging, the Fund might use other derivative
investments because they offer the potential for increased value.
Markets underlying securities and indices may move in a direction not
anticipated by the Manager. Interest rate and stock market changes in the
U.S. and abroad may also influence the performance of derivatives. As a
result of these risks the Fund could realize less principal or income from
the investment than expected. Certain derivative investments held by the
Fund may be illiquid.
|X| Hedging. The Fund can buy and sell certain kinds of futures
contracts, put and call options, forward contracts and options on futures and
broadly-based securities indices. These are all referred to as "hedging
instruments." The Fund does not currently use hedging extensively and does
not use hedging instruments for speculative purposes. It has limits on its
use of hedging.
Some of these strategies hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call
options, tend to increase the Fund's exposure to the securities market.
Forward contracts would be used to try to manage foreign currency risks on
the Fund's foreign investments. Foreign currency options would be used to
try to protect against declines in the dollar value of foreign securities the
Fund owns, or to protect against an increase in the dollar cost of buying
foreign securities. Writing covered call options may also provide income to
the Fund for liquidity purposes.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, the strategy could reduce the Fund's
return. The Fund could also experience losses if the price of its futures and
options positions were not correlated with its other investments or if it
could not close out a position because of an illiquid market.
Temporary Defensive Investments. In times of adverse market or economic
conditions, the Fund may invest up to 100% of its assets in temporary
defensive investments. Generally they would be cash equivalents (such as
commercial paper), money market instruments, short-term debt securities, U.S.
government securities, or repurchase agreements and may include other
investment grade debt securities. The Fund may also hold these types of
securities pending the investment of proceeds from the sale of Fund shares or
portfolio securities or to meet anticipated redemptions of Fund shares. To
the extent the Fund invests defensively in these securities, it may not
achieve its investment objective of capital appreciation.
Year 2000 Risks. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Fund invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Fund and
other investors. That failure could have a negative impact on handling
securities trades, pricing and accounting services. Data processing errors by
government issuers of securities could result in economic uncertainties, and
those issuers may incur substantial costs in attempting to prevent or fix
such errors, all of which could have a negative effect on the Fund's
investments and returns.
The Manager, the Distributor and the Transfer Agent have been working
on necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted in time for that event, although
there cannot be assurance of success. Additionally, the services they
provide depend on the interaction of their computer systems with those of
brokers, information services, the Fund's Custodian and other parties.
Therefore, any failure of the computer systems of those parties to deal with
the year 2000 may also have a negative affect on the services they provide to
the Fund. The extent of that risk cannot be ascertained at this time.
How the Fund Is Managed
The Manager. The Fund's investment adviser is the Manager, OppenheimerFunds,
Inc., which chooses the Fund's investments and handles its day-to-day
business. The Manager carries out its duties, subject to the policies
established by the Fund's 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 $85 billion as of
September 30, 1998, and with more than 4 million shareholder accounts. The
Manager is located at Two World Trade Center, 34th Floor, New York, New York
10048-0203.
|X| Portfolio Manager. The portfolio manager of the Fund is Jay W.
Tracey III. He has been principally responsible for the day-to-day management
of the Fund's portfolio since its inception in 1995. He is a Vice President
of the Fund and of the Manager, and is an officer and manager of other
Oppenheimer funds. He has been employed by the Manager since October 1991,
except during the period from February through September 1994, in which he
was a managing director of Buckingham Capital Management.
|X| Advisory Fees. Under the Investment Advisory Agreement, the Fund
pays the Manager an advisory fee at an annual rate that declines on
additional assets as the Fund grows: 0.75% of the first $200 million of net
assets of the Fund, 0.72% of the next $200 million, 0.69% of the next $200
million; 0.66% of the next $200 million; and 0.60% of average annual net
assets in excess of $800 million. The Fund's management fee for its last
fiscal year ended August 31, 1998 was 0.__% of average annual net assets for
each class of shares.
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About Your Account
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How to Buy Shares
How Are Shares Purchased? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Fund's Distributor, directly through the Distributor, or automatically
through an Asset Builder Plan under the OppenheimerFunds AccountLink
service. The Distributor may appoint certain servicing agents to accept
purchase (and redemption) orders. The Distributor, in its sole discretion,
may reject any purchase order for the Fund's shares.
|X| Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
|X| Buying Shares Through the Distributor. Complete an OppenheimerFunds
New Account Application and return it with a check payable to
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you don't list a dealer on the application, the
Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment with a financial advisor before
your make a purchase to be sure that the Fund is appropriate for you.
|X| Buying Shares by Federal Funds Wire. Shares purchased through the
Distributor may be paid for by Federal Funds wire. The minimum investment is
$2,500. Before sending a wire, call the Distributor's Wire Department at
1-800-525-7048 to notify the Distributor of the wire, and to receive further
instructions.
|X| Buying Shares Through OppenheimerFunds AccountLink. With
AccountLink, shares are purchased for your account on the regular business
day the Distributor is instructed by you to initiate the Automated Clearing
House transfer to buy the shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by telephone
instructions using OppenheimerFunds PhoneLink, also described below. Please
refer to "AccountLink," below for more details.
|X| Buying Shares Through Asset Builder Plans. You may purchase shares
of the Fund (and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an Asset
Builder Plan with AccountLink. Details are in the Asset Builder Application
and the Statement of Additional Information.
How Much Can You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as
little as $25. There are reduced minimum investments under special investment
plans. Investors may purchase shares in amounts up to $5,000 per account per
month. For accounts held in nominee or "street" name, that limit applies to
the amounts that may be purchased for the accounts of the underlying
customers whose shares are held in the nominee or street name account,
including participants in employee benefit or retirement plans held in the
name of a plan administrator or trustee.
|_| With Asset Builder Plans, 403(b) plans, Automatic Exchange Plans
and military allotment plans, you can make initial and subsequent investments
for as little as $25. Subsequent purchases of at least $25 can be made by
telephone through AccountLink.
|_| Under retirement plans, such as IRAs, pension and profit-sharing
plans and 401(k) plans, you can start your account with as little as $250. If
your IRA is started under an Asset Builder Plan, the $25 minimum applies.
Additional purchases may be as little as $25.
|_| The minimum investment requirement does not apply to reinvesting
dividends from the Fund or other Oppenheimer funds (a list of them appears in
the Statement of Additional Information, or you can ask your dealer or call
the Transfer Agent), or reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
At What Price Are Shares Sold? Shares are sold at their public offering
price (the net asset value per share plus any initial sales charge that
applies). The public offering price that applies to a purchase order is based
on the next calculation of the net asset value per share that is made after
the Distributor receives the purchase order at its offices in Denver,
Colorado, or after any agent appointed by the Distributor receives the order
and sends it to the Distributor.
|_| The net asset value of each class of shares is determined as of the
close of The New York Stock Exchange, on each day the Exchange is open for
trading (referred to in this Prospectus as a "regular business day"). The
Exchange normally closes at 4:00 P.M., New York time, but may close earlier
on some days. (All references to time in this Prospectus mean "New York
time").
The net asset value per share is determined by dividing the value of
the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. To determine net asset value, the Fund's Board
of Trustees has established procedures to value the Fund's securities, in
general based on market value. The Board has adopted special procedures for
valuing illiquid and restricted securities and obligations for which market
values cannot be readily obtained.
|_| To receive the offering price for a particular day, in most cases
the Distributor or its designated agent must receive your order by the time
of day The New York Stock Exchange closes. If your order is received on a day
when the Exchange is closed or after it has closed, the order will receive
the next offering price that is determined after your order is received.
|_| If you buy shares through a dealer, your dealer must receive the
order by the close of The New York Stock Exchange and transmit it to the
Distributor so that it is received before the Distributor's close of business
on a regular business day (normally 5:00 P.M.) to receive that day's offering
price. Otherwise, the order will receive the next offering price that is
determined.
- ------------------------------------------------------------------------------
What Classes of Shares Does the Fund Offer? The Fund offers investors three
different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you
buy shares, be sure to specify Class A, Class B or Class C shares. If you do
not choose a class, your investment will be made in Class A shares.
- ------------------------------------------------------------------------------
|X| Class A Shares. If you buy Class A shares, you pay an initial
sales charge (on investments up to $1 million for regular accounts or
$500,000 for certain retirement plans). The amount of that sales charge will
vary depending on the amount you invest. The sales charge rates are listed in
"How Can I Buy Class A Shares?" below.
|X| Class B Shares. If you buy Class B shares, you pay no sales charge
at the time of purchase, but you will pay an annual asset-based sales charge,
and if you sell your shares within six years of buying them, you will
normally pay a contingent deferred sales charge. That sales charge varies
depending on how long you own your shares, as described in "How Can I Buy
Class B Shares?" below.
- ------------------------------------------------------------------------------
|X| Class C Shares. If you buy Class C shares, you pay no sales charge
at the time of purchase, but you will pay an annual asset-based sales charge,
and if you sell your shares within 12 months of buying them, you will
normally pay a contingent deferred sales charge of 1%, as described in "How
Can I Buy Class C Shares?" below.
Which Class of Shares Should You Choose? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
best suited to your needs depends on a number of factors that you should
discuss with your financial advisor. Some factors to consider are how much
you plan to invest and how long you plan to hold your investment. If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on your
investment will vary your investment results over time.
The discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are
different. You should review these factors with your financial advisor. The
discussion below assumes that you will purchase only one class of shares, and
not a combination of shares of different classes.
|X| How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the appropriate
class of shares. Because of the effect of class-based expenses, your choice
will also depend on how much you plan to invest. For example, the reduced
sales charges available for larger purchases of Class A shares may, over
time, offset the effect of paying an initial sales charge on your investment,
compared to the effect over time of higher class-based expenses on shares of
Class B or Class C .
|_| Investing for the Short Term. If you have a relatively short-term
investment horizon (that is, you plan to hold your shares for not more than
six years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares. That is because of the effect of the Class B
contingent deferred sales charge if you redeem within six years, as well as
the effect of the Class B asset-based sales charge on the investment return
for that class in the short-term. Class C shares might be the appropriate
choice (especially for investments of less than $100,000), because there is
no initial sales charge on Class C shares, and the contingent deferred sales
charge does not apply to amounts you sell after holding them one year.
However, if you plan to invest more than $100,000 for the shorter term,
then as your investment horizon increases toward six years, Class C shares
might not be as advantageous as Class A shares. That is because the annual
asset-based sales charge on Class C shares will have a greater impact on your
account over the longer term than the reduced front-end sales charge
available for larger purchases of Class A shares.
And for investors who invest $1 million or more, in most cases Class A
shares will be the most advantageous choice, no matter how long you intend to
hold your shares. For that reason, the Distributor normally will not accept
purchase orders of $500,000 or more of Class B shares or $1 million or more
of Class C shares from a single investor.
|_| Investing for the Longer Term. If you are investing less than
$100,000 for the longer-term, for example for retirement, and do not expect
to need access to your money for seven years or more, Class B shares may be
appropriate.
Of course, these examples are based on approximations of the effect of
current sales charges and expenses projected over time, and do not detail all
of the considerations in selecting a class of shares. You should analyze your
options carefully with your financial advisor before making that choice.
|X| Are There Differences in Account Features That Matter to You? Some
account features may not be available to Class B or Class C shareholders.
Other features (such as Automatic Withdrawal Plans) may not be advisable
(because of the effect of the contingent deferred sales charge) for Class B
or Class C shareholders. Therefore, you should carefully review how you plan
to use your investment account before deciding which class of shares to buy.
Additionally, the dividends payable to Class B and Class C shareholders
will be reduced by the additional expenses borne by those classes that are
not borne by Class A shares, such as the Class B and Class C asset-based
sales charge described below and in the Statement of Additional Information.
Share certificates are not available for Class B and Class C shares, and if
you are considering using your shares as collateral for a loan, that may be a
factor to consider.
|X| How Does It Affect Payments to My Broker? A salesperson, such as a
broker, may receive different compensation for selling one class of shares
than for selling another class. It is important to remember that Class B and
Class C contingent deferred sales charges and asset-based sales charges have
the same purpose as the front-end sales charge on sales of Class A shares: to
compensate the Distributor for commissions it pays to dealers and financial
institutions for selling shares. The Distributor may pay additional
compensation from its own resources to securities dealers or financial
institutions based upon the value of shares of the Fund owned by the dealer
or financial institution for its own account or for its customers.
Special Sales Charge Arrangements and Waivers. The Statement of Additional
Information details the conditions for the waiver of sales charges that apply
in certain cases, and the special sales charge rates that apply to purchases
of shares of the Fund by certain groups, or under specified retirement plan
arrangements or in other special types of transactions.
How Can I Buy Class A Shares? Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales charge.
However, in some cases, described below, purchases are not subject to an
initial sales charge, and the offering price will be the net asset value. In
other cases, reduced sales charges may be available, as described below or in
the Statement of Additional Information. Out of the amount you invest, the
Fund receives the net asset value to invest for your account.
The sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor or allocated
to your dealer as commission. The Distributor reserves the right to reallow
the entire commission to dealers. The current sales charge rates and
commissions paid to dealers and brokers are as follows:
------------------------------------------------------------------------------
Front-End Sales Front-End Sales Commission as
Charge As a Charge As a Percentage of
Percentage of Percentage of Offering
Amount of Purchase Offering Price Net Price
Amount Invested
------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
------------------------------------------------------------------------------
$25,000 or more but 5.50% 5.82% 4.75%
less than $50,000
------------------------------------------------------------------------------
$50,000 or more but 4.75% 4.99% 4.00%
less than $100,000
------------------------------------------------------------------------------
$100,000 or more but 3.75% 3.90% 3.00%
less than $250,000
------------------------------------------------------------------------------
$250,000 or more but 2.50% 2.56% 2.00%
less than $500,000
------------------------------------------------------------------------------
$500,000 or more but 2.00% 2.04% 1.60%
less than $1 million
------------------------------------------------------------------------------
|X| Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds aggregating $1 million or more or for certain purchases by
particular types of retirement plans described in the Appendix to the
Statement of Additional Information. The Distributor pays dealers of record
commissions in an amount equal to 1.0% of purchases of $1 million or more
other than by those retirement accounts. For those retirement plan accounts,
the commission is 1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of purchases over $5 million, calculated on a calendar
year basis. In either case, the commission will be paid only on purchases
that were not previously subject to a front-end sales charge and dealer
commission.1
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called
the "Class A contingent deferred sales charge") may be deducted from the
redemption proceeds. That sales charge will be equal to 1.0% of the lesser
of (1) the aggregate net asset value of the redeemed shares (excluding 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 purchases of Class A shares of all Oppenheimer funds you
made that were subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable
when shares are redeemed, the Fund will first redeem shares that are not
subject to the sales charge, including shares purchased by reinvestment of
dividends and capital gains. Then the Fund will redeem other shares in the
order in which you purchased them. The Class A contingent deferred sales
charge is waived in certain cases described in "Waivers of Class A Sales
Charges" in the Statement of Additional Information.
The Class A contingent deferred sales charge is not charged on
exchanges of shares under the Fund's Exchange Privilege (described below).
However, if the shares acquired by exchange are redeemed within 18 calendar
months of the end of the calendar month in which the exchanged shares were
originally purchased, then the sales charge will apply.
How Can I Reduce Sales Charges for Class A Share Purchases? You may be
eligible to buy Class A shares at reduced sales charge rates under the Fund's
"Right of Accumulation" or a Letter of Intent, as described in "Reduced Sales
Charges" in the Statement of Additional Information.
|X| Waivers of Class A Sales Charges. The initial and contingent Class
A sales charges are not imposed in the circumstances described in "Reduced
Sales Charges" in the Statement of Additional Information. In order to
receive a waiver of the Class A contingent deferred sales charge, you must
notify the Transfer Agent when purchasing shares whether any of the special
conditions apply.
How Can I Buy Class B Shares? Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales charge
will be deducted from the redemption proceeds. The Class B contingent
deferred sales charge is paid to compensate the Distributor for its expenses
of providing distribution-related services to the Fund in connection with the
sale of Class B shares.
The contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original 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,
|_| shares purchased by the reinvestment of dividends or capital
gains distributions, or
|_| shares redeemed in the special circumstances described in the
Appendix to the Statement of Additional Information.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
(1) shares acquired by reinvestment of dividends and capital gains
distributions,
(2) shares held for over 6 years, and
(3) shares held the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
------------------------------------------------------------------------------
Years Since Beginning of Contingent Deferred Sales Charge
Month in which Purchase On Redemptions in That Year
Order Was Accepted (As % of Amount Subject to Charge)
------------------------------------------------------------------------------
0-1 5.0%
------------------------------------------------------------------------------
1-2 4.0%
------------------------------------------------------------------------------
2-3 3.0%
------------------------------------------------------------------------------
3-4 3.0%
------------------------------------------------------------------------------
4-5 2.0%
------------------------------------------------------------------------------
5-6 1.0%
------------------------------------------------------------------------------
6 and following None
------------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the sales charge,
all purchases are considered to have been made on the first regular business
day of the month in which the purchase was made.
|X| Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class A
shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class B
Distribution and Service Plan, described below. The conversion is based on
the relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares
that were acquired by the reinvestment of dividends and distributions on the
converted shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described in the
Statement of Additional Information.
How Can I Buy Class C Shares? Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% will be deducted from the redemption proceeds. The Class C
contingent deferred sales charge is paid to compensate the Distributor for
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
The contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original 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,
o shares purchased be the reinvestment of dividends or capital gains
distributions, or
o shares redeemed in the special circumstances described in the Appendix
to the Statement of Additional Information.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
(1) shares acquired by reinvestment of dividends and capital gains
distributions,
(2) shares held for over 12 months, and
(3) shares held the longest during the 12-month period.
Distribution and Service (12b-1) Plans.
|X| Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares. It reimburses the Distributor for a portion of its
costs incurred for services provided to accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate of up to 0.25% of the
average annual net assets of Class A shares of the Fund. The Distributor
currently 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.
|X| Distribution and Service Plans for Class B and Class C Shares. The
Fund has adopted Distribution and Service Plans for Class B and Class C
shares to pay the Distributor for its services and costs in distributing
Class B and Class C shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% per year on
Class B shares and on Class C shares. The Distributor also receives a
service fee of 0.25% per year under each plan.
The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.00% of the net assets per year of the respective class.
Because these fees are paid out of the Fund's assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost
you more than other types of sales charges.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C
shares. The Distributor pays the 0.25% service fees to dealers in advance
for the first year after the shares were sold by the dealer. After the
shares have been held for a year, the Distributor pays the service fees to
dealers on a quarterly basis.
The Distributor currently pays sales commission of 3.75% of the
purchase price of Class B shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total amount
paid by the Distributor to the dealer at the time of sales of Class B shares
is therefore 4.00% of the purchase price. The Distributor retains the Class
B asset-based sales charge.
The Distributor currently pays sales commissions of 0.75% of the
purchase price of Class C shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total amount
paid by the Distributor to the dealer at the time of sale of Class C shares
is therefore 1.00% of the purchase price. The Distributor 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.
Special Investor Services
AccountLink. You can use our AccountLink feature to link your Fund account
with an account at a U.S. bank or other financial institution. It must be an
Automated Clearing House (ACH) member. AccountLink lets you:
|_| transmit funds electronically to purchase shares by telephone
(through a service representative or by PhoneLink) or automatically
under Asset Builder Plans, or
|_| have the Transfer Agent send redemption proceeds or to transmit
dividends and distributions directly to your bank account. Please call
the Transfer Agent for more information.
You may purchase shares by telephone only after your account has been
established. To purchase shares in amounts up to $250,000* through a
telephone representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
AccountLink privileges should be requested on your Application or your
dealer's settlement instructions if you buy your shares through a dealer.
After your account is established, you can request AccountLink privileges by
sending signature-guaranteed instructions to the Transfer Agent. AccountLink
privileges will apply to each shareholder listed in the registration on your
account as well as to your dealer representative of record unless and until
the Transfer Agent receives written instructions terminating or changing
those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own the
account.
PhoneLink. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number, 1-800-533-3310.
|_| 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.
|_| Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds directly
to your AccountLink bank account. Please refer to "How to Sell Shares," below
for details.
Can I Submit Transaction Requests by Fax? You may send requests for certain
types of account transactions to the Transfer Agent by fax (telecopier).
Please call 1-800-525-7048 for information about which transactions may be
handled this way. Transaction requests submitted by fax are subject to the
same rules and restrictions as written and telephone requests described in
this Prospectus.
OppenheimerFunds Internet Web Site. You can obtain information about the
Fund, as well as your account balance, on the OppenheimerFunds Internet web
site, at http://www.oppenheimerfunds.com. Additionally, shareholders listed
in the account registration (and the dealer of record) may request certain
account transactions through a special section of that web site. To perform
account transactions, you must first obtain a personal identification number
(PIN) by calling the Transfer Agent at 1-800-533-3310. If you do not want to
have Internet account transaction capability for your account, please call
the Transfer Agent at 1-800-525-7048.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer fund account on a regular basis. Please call the Transfer Agent
or consult the Statement of Additional Information for details.
Reinvestment Privilege. If you redeem some or all of your Class A or Class B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A shares
that you purchased subject to an initial sales charge and to Class A or Class
B shares on which you paid a contingent deferred sales charge when you
redeemed them. This privilege does not apply to Class C shares. You must be
sure to ask the Distributor for this privilege when you send your payment.
Retirement Plans. You may buy shares of the Fund for your retirement plan
account. If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that can be
used by individuals and employers:
|_| Individual Retirement Accounts (IRAs), including regular IRAs, Roth
IRAs, rollover and Education IRAs.
|_| SEP-IRAs, which are Simplified Employee Pensions Plan IRAs for
small business owners or self-employed individuals.
|_| 403(b)(7) Custodial Plans, that are tax deferred plans for
employees of eligible tax-exempt organizations, such as schools, hospitals
and charitable organizations.
|_| 401(k) Plans, which are special retirement plans for businesses.
|_| Pension and Profit-Sharing Plans, designed for businesses and
self-employed individuals.
Please call the Distributor for OppenheimerFunds retirement plan
documents, which include applications and important plan information.
How to Sell Shares
You can sell (redeem) some or all of your shares on any regular
business day. Your shares will be sold at the next net asset value
calculated after your order is received and accepted by the Transfer Agent.
The Fund lets you sell your shares by writing a letter or by telephone. You
can also set up Automatic Withdrawal Plans to redeem shares on a regular
basis. If you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the death of
the owner or from a retirement plan account, please call the Transfer Agent
first, at 1-800-525-7048, for assistance.
|X| Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, the following redemption requests must be in writing and
must include a signature guarantee (although there may be other situations
that require a signature guarantee):
|_| You wish to redeem $50,000 or more and receive a check
|_| The redemption check is not payable to all shareholders listed on
the account statement
|_| The redemption check is not sent to the address of record on your
account statement
|_| Shares are being transferred to a Fund account with a different
owner or name
|_| Shares are being redeemed by someone (such as an Executor) other
than the owners
|X| Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including: a U.S. bank, trust company, credit union or savings association,
or by a foreign bank that has a U.S. correspondent bank, or by a U.S.
registered dealer or broker in securities, municipal securities or government
securities, or by a U.S. national securities exchange, a registered
securities association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business or as a fiduciary, you must also
include your title in the signature.
|X| Retirement Plan Accounts. There are special procedures to sell
shares in an OppenheimerFunds retirement plan account. Call the Transfer
Agent for a distribution request form. Special income tax withholding
requirements apply to distributions from retirement plans. You must submit a
withholding form with your redemption request to avoid delay in getting your
money and if you do not want tax withheld. If your employer holds your
retirement plan account for you in the name of the plan, you must ask the
plan trustee or administrator to request the sale of the Fund shares in your
plan account.
How Do I Sell Shares by Mail? Write a letter of instructions that includes:
|_| Your name
|_| The Fund's name
|_| Your Fund account number (from your account statement)
|_| The dollar amount or number of shares to be redeemed
|_| Any special payment instructions
|_| Any share certificates for the shares you are selling
|_| The signatures of all registered owners exactly as the account is
registered, and
|_| Any special documents requested by the Transfer Agent to assure
proper authorization of the person asking to sell the shares.
- ------------------------------------------------------------------------------
Use the following address for requests by mail:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217-5270
- ------------------------------------------------------------------------------
Send courier or express mail requests to:
- ------------------------------------------------------------------------------
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
How Do I Sell Shares by Telephone? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price on a regular business day, your call must be received by the Transfer
Agent by the close of The New York Stock Exchange that day, which is normally
4:00 P.M., but may be earlier on some days. You may not redeem shares held
in an OppenheimerFunds retirement plan account or under a share certificate
by telephone.
|_| To redeem shares through a service representative, call
1-800-852-8457
|_| To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.
Are There Limits on Amounts Redeemed by Telephone?
|X| Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone in any 7-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
|X| Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH transfer to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are waiting
to be transferred.
Can I Sell Shares Through My Dealer? The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. If your shares
are held in the name of your dealer, you must redeem them through your dealer.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
|_| Shares of the fund selected for exchange must be available for sale
in your state of residence.
|_| The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege.
|_| You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them. After the account is open 7
days, you can exchange shares every regular business day.
|_| You must meet the minimum purchase requirements for the fund you
purchase by exchange.
|_| Before exchanging into a fund, you should obtain and read its
prospectus.
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of another
fund. In some cases, sales charges may be imposed on exchange transactions.
For tax purposes, exchanges of shares involve a sale of the shares of the
fund you own and a purchase of the shares of the other fund, which may result
in a capital gain or loss. Please refer to "How to Exchange Shares" in the
Statement of Additional Information for more details.*
How Do I Submit Exchange Requests? Exchanges may be requested in writing or
by telephone:
|X| Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the Transfer
Agent at the address on the Back Cover.
|X| Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457, or by
using PhoneLink for automated exchanges by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
name(s) and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by calling
a service representative at 1-800-525-7048. That list can change from time
to time.
Are There Limitations on Exchanges? There are certain exchange policies you
should be aware of:
|_| Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on
which the Transfer Agent receives an exchange request that is in proper form.
It must be received by the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days. However, either
fund may delay the purchase of shares of the fund you are exchanging into up
to seven days if it determines it would be disadvantaged by a same-day
exchange.
|_| Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
it believes will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
|_| The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever it
is reasonably able to do so, it may impose these changes at any time.
|_| If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange
will be exchanged.
Shareholder Account Rules and Policies
|X| The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may be
suspended by the Board of Trustees at any time the Board believes it is in
the Fund's best interest to do so.
|X| Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any time.
If an account has more than one owner, the Fund and the Transfer Agent may
rely on the instructions of any one owner. Telephone privileges apply to each
owner of the account and the dealer representative of record for the account
unless the Transfer Agent receives cancellation instructions from an owner of
the account.
|X| The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the Fund will
not be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine.
|X| Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time to
time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
|X| Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions, and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction erroneously
or improperly.
|X| The redemption price for shares will vary from day to day because
the value of the securities in the Fund's portfolio fluctuates. The
redemption price, which is the net asset value per share, will normally
differ for each class of shares. The redemption value of your shares may be
more or less than their original cost.
|X| Payment for redeemed shares ordinarily is made in cash. It is
forwarded by check or through AccountLink (as elected by the shareholder)
within seven days after the Transfer Agent receives redemption instructions
in proper form. However, under unusual circumstances determined by the
Securities and Exchange Commission, payment may be delayed or suspended. For
accounts registered in the name of a broker-dealer, payment will normally be
forwarded within three business days after redemption.
|X| The Transfer Agent may delay forwarding a check or processing a
payment via AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days from the
date the shares were purchased. That delay may be avoided if you purchase
shares by federal funds wire or certified check, or arrange with your bank to
provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
|X| Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped. In some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
|X| Shares may be "redeemed in kind" under unusual circumstances (such
as a lack of liquidity in the Fund's portfolio to meet redemptions). This
means that the redemption proceeds will be paid with securities from the
Fund's portfolio.
|X| "Backup Withholding" of Federal income tax may be applied against
taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund your correct, certified Social
Security or Employer Identification Number when you sign your application, or
if you under-report your income to the Internal Revenue Service.
|X| To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to
ask that copies of those materials be sent personally to that shareholder.
Dividends and Tax Information
Dividends. The Fund intends to declare dividends separately for each class of
shares from net investment income annually and to pay dividends to
shareholders in December on a date selected by the Board of Trustees.
Dividends and distributions paid on Class A shares will generally be higher
than dividends for Class B and Class C shares, which normally have higher
expenses than Class A. The Fund has no fixed dividend rate and cannot
guarantee that it will pay any dividends or distributions.
Capital Gains. The Fund may realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term
or long-term capital gains in December of each year. The Fund may make
supplemental distributions of dividends and capital gains following the end
of its fiscal year. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.
What Choices Do I Have for Receiving Distributions? When you open your
account, specify on your application how you want to receive your dividends
and distributions. You have four options:
|X| Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional shares
of the Fund.
|X| Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains distributions in the Fund while receiving dividends
by check or having them sent to your bank account through AccountLink.
|X| Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank through AccountLink.
|X| Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in the same class of shares of another
Oppenheimer fund account you have established.
Taxes. If your shares are not held in a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the Fund.
Distributions are subject to federal income tax and may be subject to state
or local taxes. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Long-term capital gains
are taxable as long-term capital gains when distributed to shareholders, and
may be taxable at different rates depending on how long the Fund holds the
asset. It does not matter how long you have held your shares. Whether you
reinvest your distributions in additional shares or take them in cash, the
tax treatment is the same.
Every year the Fund will send you and the IRS a statement showing the
amount of any taxable distribution you received in the previous year. Any
long-term capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year.
|X| Avoid "Buying a Dividend". If you buy shares on or just before the
ex-dividend date or just before the Fund declares a capital gain
distribution, you will pay the full price for the shares and then receive a
portion of the price back as a taxable dividend or capital gain.
|X| Remember There May be Taxes on Transactions. Because the Fund's
share price fluctuates, you may have a capital gain or loss when you sell or
exchange your shares. A capital gain or loss is the difference between the
price you paid for the shares and the price you received when you sold them.
Any capital gain is subject to capital gains tax.
|X| Returns of Capital May Occur. In certain cases, distributions
made by the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders.
This information is only a summary of certain federal tax information
about your investment. You should consult with your tax adviser about the
effect of an investment in the Fund on your particular tax situation.
<PAGE>
Financial Highlights
The Financial Highlights Table is presented to help you understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned [or lost] on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG Peat Marwick LLP,
the Fund's independent auditors, whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information,
which is available on request.
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<PAGE>
Oppenheimer Enterprise Fund
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SEC File No. 811-07265
- ------------------------------------------------------------------------------
For More Information:
The following additional information about the Fund is available without
charge upon request:
Statement of Additional Information
This document includes additional information about the Fund's investment
policies, risks, and operations. It is incorporated by reference into
this Prospectus (which means it is legally part of this Prospectus).
Annual and Semi-Annual Reports
Additional information about the Fund's investments and performance is
available in the Fund's Annual and Semi-Annual Reports to shareholders.
The Annual Report includes a discussion of market conditions and
investment strategies that significantly affected the Fund's performance
during its last fiscal year.
- ---------------------------------------------------------------------------
How to Get More Information:
- ---------------------------------------------------------------------------
You can request the Statement of Additional Information, the Annual and
Semi-Annual Report, and other information about the Fund or your account:
By Telephone:
Call OppenheimerFunds Services toll-free:
1-800-525-7048
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
On the Internet:
You can read or down-load documents on the OppenheimerFunds web site:
http://www.oppenheimerfunds.com
You can also obtain copies of the Statement of Additional Information and
other Fund documents and reports by visiting the SEC's Public Reference
Room in Washington, D.C. (Phone 1-800-SEC-0330) or the SEC's Internet web
site at http://www.sec.gov. Copies may be obtained upon payment of a
duplicating fee by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009.
No one has been authorized to provide any information about the Fund or
to make any representations about the Fund other than what is contained
in this Prospectus. This Prospectus is not an offer to sell shares of the
Fund, nor a solicitation of an offer to buy shares of the Fund, to any
person in any state or other jurisdiction where it is unlawful to make
such an offer.
The Fund's shares are distributed by:
OppenheimerFunds Distributor, Inc.
PR0885.001.1298 Printed on recycled paper.
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<PAGE>
Oppenheimer Enterprise Fund
- ------------------------------------------------------------------------------
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated December 29, 1998
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated December 29, 1998. It should be read
together with the Prospectus. You can obtain the Prospectus by writing to the
Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver,
Colorado 80217, or by calling the Transfer Agent at the toll-free number
shown above, or by downloading it from the OppenheimerFunds Internet web site
at www.oppenheimerfunds.com.
Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks..
The Fund's Principal Investment Policies...........................
Other Investment Techniques and Strategies.........................
Investment Restrictions............................................
How the Fund is Managed ...............................................
Organization and History...........................................
Trustees and Officers..............................................
The Manager........................................................
Brokerage Policies of the Fund.........................................
Distribution and Service Plans.........................................
Performance of the Fund................................................
About Your Account
How To Buy Shares......................................................
How To Sell Shares.....................................................
How To Exchange Shares.................................................
Dividends, Capital Gains and Taxes.....................................
Additional Information About the Fund..................................
Financial Information About the Fund
Independent Auditors' Report...........................................
Financial Statements...................................................
Appendix A: Industry Classifications................................... A-1
Appendix B: Special Sales Charge Arrangements and Waivers.............. B-1
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<PAGE>
ABOUT THE FUND
- ------------------------------------------------------------------------------
Additional Information About the Fund's Investment Policies and Risks
The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those policies
and risks and the types of securities that the Fund's investment Manager,
OppenheimerFunds, Inc., will select for the Fund. Additional information is
also provided about the strategies that the Fund may use to try to achieve
its objective.
The Fund's Principal Investment Policies.
n Investments in Equity Securities. The Fund focuses its investments
in equity securities of small growth companies. Equity securities include
common stocks, preferred stocks, rights and warrants, and securities
convertible into common stock. The Fund's investment primarily include stocks
of companies having a market capitalization of up to $500 million, but the
Fund will focus its investments on issuers having a market capitalization of
up to $200 million.
The Fund can also hold a portion of its assets in securities of issuers
having a larger market capitalization. At times, in the Manager's view, the
market may favor or disfavor securities of issuers of a particular
capitalization range. Therefore the Fund may focus its equity investments in
securities of one or more capitalization ranges, based upon the Manager's
judgment of where are the best market opportunities to seek the Fund's
objective.
Current income is not a criterion used to select portfolio securities.
However, certain debt securities may be selected for the Fund's portfolio for
defensive purposes (including debt securities that the Manager believes may
offer some opportunities for capital appreciation when stocks are disfavored).
Small-cap growth companies may offer greater opportunities for capital
appreciation than securities of large, more established companies. However,
these securities also involve greater risks than securities of larger
companies. Securities of small capitalization issuers may be subject to
greater price volatility in general than securities of large-cap and mid-cap
companies. Therefore, to the degree that the Fund has investments in smaller
capitalization companies at times of market volatility, the Fund's share
price may fluctuate more. As noted below, the Fund limits such investments in
unseasoned small cap issuers.
o Convertible Securities. While convertible securities are a
form of debt security, in many cases their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as "equity
equivalents." As a result, the rating assigned to the security has less
impact on the Manager's investment decision with respect to convertible
securities than in the case of non-convertible fixed income securities. To
determine whether convertible securities should be regarded as "equity
equivalents," the Manager examines the following factors:
(1) whether, at the option of the investor, the convertible security can be
exchanged for a fixed number of shares of common stock of the
issuer,
(2) whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis
(considering the effect of conversion of the convertible
securities), and
(3) the extent to which the convertible security may be a defensive "equity
substitute," providing the ability to participate in any
appreciation in the price of the issuer's common stock.
o Rights and Warrants. The Fund may invest up to 5% of its
total assets in warrants or rights. That 5% limit does not apply to warrants
and rights the Fund has acquired as part of units of securities or that are
attached to other securities that the Fund buys. Warrants basically are
options to purchase equity securities at specific prices valid for a specific
period of time. Their prices do not necessarily move parallel to the prices
of the underlying securities. Rights are similar to warrants, but normally
have a short duration and are distributed directly by the issuer to its
shareholders. Rights and warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.
n Foreign Securities. The Fund may purchase equity securities issued
or guaranteed by foreign companies. "Foreign securities" include equity and
debt securities of companies organized under the laws of countries other than
the United States. They may be traded on foreign securities exchanges or in
the foreign over-the-counter markets.
Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations. That is
because they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business cycles
different from those of the U.S., or to reduce fluctuations in portfolio
value by taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. The Fund will hold foreign currency only in
connection with the purchase or sale of foreign securities.
G Risks of Foreign Investing. Investments in foreign securities may
offer special opportunities for investing but also present special additional
risks and considerations not typically associated with investments in
domestic securities. Some of these additional risks are:
o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency
rates or currency control regulations (for example, currency
blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards
in foreign countries comparable to those applicable to domestic
issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the
U.S.;
o less governmental regulation of foreign issuers, stock exchanges and
brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or
loss of certificates for portfolio securities;
o possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse
diplomatic developments; and
o unfavorable differences between the U.S. economy and foreign
economies.
In the past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other restrictions,
and it is possible that such restrictions could be re-imposed.
Emerging and developing markets abroad may also offer special
opportunities for growth investing but have greater risks than more developed
foreign markets, such as those in Europe and Canada, Australia, New Zealand
and Japan. There may be even less liquidity in their stock markets, and
settlements of purchases and sales of securities may be subject to additional
delays. They are subject to greater risks of limitations on the repatriation
of income and profits because of currency restrictions imposed by local
governments. Those countries may also be subject to the risk of greater
political and economic instability, which can greatly affect the volatility
of prices of securities in those countries.
-- Risks of Conversion to Euro. On January 1, 1999, eleven
countries in the European Monetary Union will adopt the euro as their
official currency. However, their current currencies (for example, the franc,
the mark, and the lire) will also continue in use until January 1, 2002.
After that date, it is expected that only the euro will be used in those
countries. A common currency is expected to confer some benefits in those
markets, by consolidating the government debt market for those countries and
reducing some currency risks and costs. But the conversion to the new
currency will affect the Fund operationally and also has potential risks,
some of which are listed below. Among other things, the conversion will
affect:
o issuers in which the Fund invests, because of changes in the
competitive environment from a consolidated currency market and greater
operational costs from converting to the new currency. This might
depress stock values.
o vendors the Fund depends on to carry out its business, such as its
Custodian (which holds the foreign securities the Fund buys), the
Manager (which must price the Fund's investments to deal with the
conversion to the euro) and brokers, foreign markets and securities
depositories. If they are not prepared, there could be delays in
settlements and additional costs to the Fund.
o exchange contracts and derivatives that are outstanding during the
transition to the euro. The lack of currency rate calculations between
the affected currencies and the need to update the Fund's contracts
could pose extra costs to the Fund.
The Manager is upgrading (at its expense) its computer and bookkeeping
systems to deal with the conversion. The Fund's Custodian has advised the
Manager of its plans to deal with the conversion, including how it will
update its record keeping systems and handle the redenomination of
outstanding foreign debt. The Fund's portfolio manager will also monitor the
effects of the conversion on the issuers in which the Fund invests. The
possible effect of these factors on the Fund's investments cannot be
determined with certainty at this time, but they may reduce the value of some
of the Fund's holdings and increase its operational costs.
n Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its last fiscal year.
For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund's portfolio turnover
rate will fluctuate from year to year, and the Fund expects to have a
portfolio turnover rate of more than 100% annually.
Increased portfolio turnover creates higher brokerage and transaction
costs for the Fund,
which may reduce its overall performance. Additionally, the realization of
capital gains from selling portfolio securities may result in distributions
of taxable long-term capital gains to shareholders, since the Fund will
normally distribute all of its capital gains realized each year, to avoid
excise taxes under the Internal Revenue Code.
Other Investment Techniques and Strategies. In seeking its objective, the
Fund may from time to time employ the types of investment strategies and
investments described below.
n Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have
been in operation for less than three years, including the operations of any
predecessors. Securities of these companies may be subject to volatility in
their prices. They may have a limited trading market, which may adversely
affect the Fund's ability to dispose of them and can reduce the price the
Fund might be able to obtain for them. Other investors that own a security
issued by a small, unseasoned issuer for which there is limited liquidity
might trade the security when the Fund is attempting to dispose of its
holdings of that security. In that case the Fund might receive a lower price
for its holdings than might otherwise be obtained. The Fund currently intends
to invest no more than 10% of its net assets in those securities.
n Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements. It may do so for liquidity purposes to meet
anticipated redemptions of Fund shares, or pending the investment of the
proceeds from sales of Fund shares, or pending the settlement of portfolio
securities, or for temporary defensive purposes, as described below.
In a repurchase transaction, the Fund buys a security from, and
simultaneously resells it to, an approved vendor for delivery on an
agreed-upon future date. Approved vendors include U.S. commercial banks, U.S.
branches of foreign banks, or broker-dealers that have been designated as
primary dealers in government securities. They must meet credit requirements
set by the Fund's Board of Trustees from time to time. The resale price
exceeds the purchase price by an amount that reflects an agreed-upon interest
rate effective for the period during which the repurchase agreement is in
effect.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. The Fund will
not enter into a repurchase agreement that causes more than 10% of its net
assets to be subject to repurchase agreements having a maturity beyond seven
days. There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements having maturities of seven days or less.
Repurchase agreements, considered "loans" under the Investment Company
Act, are collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the value of the collateral must equal or exceed the repurchase price
to fully collateralize the repayment obligation. However, if the vendor fails
to pay the resale price on the delivery date, the Fund may incur costs in
disposing of the collateral and may experience losses if there is any delay
in its ability to do so. The Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
n Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments. To enable the
Fund to sell its holdings of a restricted security not registered under the
Securities Act of 1933, the Fund may have to cause those securities to be
registered. The expenses of registering restricted securities may be
negotiated by the Fund with the issuer at the time the Fund buys the
securities. When the Fund must arrange registration because the Fund wishes
to sell the security, a considerable period may elapse between the time the
decision is made to sell the security and the time the security is registered
so that the Fund could sell it. The Fund would bear the risks of any downward
price fluctuation during that period.
The Fund may also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions might limit the Fund's ability to dispose of the
securities and might lower the amount the Fund could realize upon the sale.
The Fund has limitations that apply to purchases of restricted
securities, as stated in the Prospectus. Those percentage restrictions do not
limit purchases of restricted securities that are eligible for sale to
qualified institutional purchasers under Rule 144A of the Securities Act of
1933, if those securities have been determined to be liquid by the Manager
under Board-approved guidelines. Those guidelines take into account the
trading activity for such securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest in
a particular Rule 144A security, the Fund's holdings of that security may be
considered to be illiquid.
Illiquid securities include repurchase agreements maturing in more than
seven days and participation interests that do not have puts exercisable
within seven days.
n Loans of Portfolio Securities. To raise cash for liquidity purposes,
the Fund can lend its portfolio securities to brokers, dealers and other
types of financial institutions approved by the Fund's Board of Trustees.
These loans are limited to not more than 25% of the value of the Fund's total
assets. The Fund currently does not intend to engage in loans of securities
in the coming year, but if it does so, such loans will not likely exceed 5%
of the Fund's total assets.
There are some risks in connection with securities lending. The Fund
might experience a delay in receiving additional collateral to secure a loan,
or a delay in recovery of the loaned securities if the borrower defaults. The
Fund must receive collateral for a loan. Under current applicable regulatory
requirements (which are subject to change), on each business day the loan
collateral must be at least equal the value of the loaned securities. It must
consist of cash, bank letters of credit or securities of the U.S. Government
or its agencies or instrumentalities, or other cash equivalents in which the
Fund is permitted to invest. To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by the Fund if the demand
meets the terms of the letter. The terms of the letter of credit and the
issuing bank both must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the
dividends or interest on loaned securities. It also receives one or more of
(a) negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on any short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees in
connection with these loans. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five days' notice or in time to vote on any
important matter.
n Borrowing for Leverage. The Fund has the ability to borrow from
banks on an unsecured basis to invest the borrowed funds in portfolio
securities. This speculative technique is known as "leverage." The Fund may
borrow only from banks. Under current regulatory requirements, borrowings can
be made only to the extent that the value of the Fund's assets, less its
liabilities other than borrowings, is equal to at least 300% of all
borrowings (including the proposed borrowing). If the value of the Fund's
assets fails to meet this 300% asset coverage requirement, the Fund will
reduce its bank debt within three days to meet the requirement. To do so, the
Fund might have to sell a portion of its investments at a disadvantageous
time.
The Fund will pay interest on these loans, and that interest expense
will raise the overall expenses of the Fund and reduce its returns. If it
does borrow, its expenses will be greater than comparable funds that do not
borrow for leverage. Additionally, the Fund's net asset value per share might
fluctuate more than that of funds that do not borrow. Currently, the Fund
does not contemplate using this technique in the next year but if it does so,
it will not likely be to a substantial degree.
n Derivatives. The Fund may invest in a variety of derivative
investments to seek income for liquidity needs or for hedging purposes. Some
derivative investments the Fund may use are the hedging instruments described
below in this Statement of Additional Information. However, the Fund does not
use, and does not currently contemplate using, derivatives or hedging
instruments to a significant degree in the coming year.
Some of the derivative investments the Fund can use include debt
exchangeable for common stock of an issuer or "equity-linked debt securities"
of an issuer. At maturity, the debt security is exchanged for common stock
of the issuer or it is payable in an amount based on the price of the
issuer's common stock at the time of maturity. Both alternatives present a
risk that the amount payable at maturity will be less than the principal
amount of the debt because the price of the issuer's common stock may not be
as high as the Manager expected.
n Hedging. Although the Fund does not anticipate the extensive use of
hedging instruments, the Fund can use hedging instruments. Toto attempt to
protect against declines in the market value of the Fund's portfolio, to
permit the Fund to retain unrealized gains in the value of portfolio
securities which have appreciated, or to facilitate selling securities for
investment reasons, the Fund could:
o sell futures contracts,
o buy puts on such futures or on securities, or
o write covered calls on securities or futures. Covered calls may
also be used to increase the Fund's income, but the Manager
does not expect to engage extensively in that practice.
The Fund may use hedging to establish a position in the securities
market as a temporary substitute for purchasing particular securities. In
that case the Fund will normally seek to purchase the securities and then
terminate that hedging position. The Fund might also use this type of hedge
to attempt to protect against the possibility that its portfolio securities
would not be fully included in a rise in value of the market. To do so the
Fund could:
o buy futures, or
o buy calls on such futures or on securities.
The Fund's strategy of hedging with futures and options on futures will
be incidental to the Fund's activities in the underlying cash market. The
particular hedging instruments the Fund can use are described below. The
Fund may employ new hedging instruments and strategies when they are
developed, if those investment methods are consistent with the Fund's
investment objective and are permissible under applicable regulations
governing the Fund.
o Futures. The Fund may buy and sell futures contracts that relate to
(1) broadly-based stock indices (these are referred to as stock index
futures), (2) other broadly based securities indices (these are referred to
as financial futures), (3) debt securities (these are referred to as interest
rate futures), (4) foreign currencies (these are referred to as forward
contracts), and (5) commodities (these are referred to as commodity futures).
A broadly-based stock index is used as the basis for trading stock
index futures. They may in some cases be based on stocks of issuers in a
particular industry or group of industries. A stock index assigns relative
values to the common stocks included in the index and its value fluctuates in
response to the changes in value of the underlying stocks. A stock index
cannot be purchased or sold directly. Financial futures are similar contracts
based on the future value of the basket of securities that comprise the
index. These contracts obligate the seller to deliver, and the purchaser to
take, cash to settle the futures transaction. There is no delivery made of
the underlying securities to settle the futures obligation. Either party may
also settle the transaction by entering into an offsetting contract.
An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specified type of debt security to settle the
futures transaction. Either party could also enter into an offsetting
contract to close out the position.
No payment is paid or received by the Fund on the purchase or sale of a
future. Upon entering into a futures transaction, the Fund will be required
to deposit an initial margin payment with the futures commission merchant
(the "futures broker"). Initial margin payments will be deposited with the
Fund's Custodian bank in an account registered in the futures broker's name.
However, the futures broker can gain access to that account only under
specified conditions. As the future is marked to market (that is, its value
on the Fund's books is changed) to reflect changes in its market value,
subsequent margin payments, called variation margin, will be paid to or by
the futures broker daily.
At any time prior to expiration of the future, the Fund may elect to
close out its position by taking an opposite position, at which time a final
determination of variation margin is made and any additional cash must be
paid by or released to the Fund. Any loss or gain on the future is then
realized by the Fund for tax purposes. All futures transactions are effected
through a clearinghouse associated with the exchange on which the contracts
are traded.
o Put and Call Options. The Fund may buy and sell certain kinds of put
options ("puts") and call options ("calls"). The Fund may buy and sell
exchange-traded and over-the-counter put and call options, including index
options, securities options, currency options, commodities options, and
options on the other types of futures described above.
o Writing Covered Call Options. The Fund may write (that is,
sell) covered calls. If the Fund sells a call option, it must be covered.
That means the Fund must own the security subject to the call while the call
is outstanding, or, for certain types of calls, the call may be covered by
segregating liquid assets to enable the Fund to satisfy its obligations if
the call is exercised. Up to 25% of the Fund's total assets may be subject
to calls the Fund writes.
When the Fund writes a call, it receives cash (a premium). The Fund
agrees to sell the underlying security to a purchaser of a corresponding call
on the same security during the call period at a fixed exercise price
regardless of market price changes during the call period. The call period is
usually not more than nine months. The exercise price may differ from the
market price of the underlying security. The Fund has the risk of loss that
the price of the underlying security may decline during the call period. That
risk may be offset to some extent by the premium the Fund receives. If the
value of the investment does not rise above the call price, it is likely that
the call will lapse without being exercised. In that case the Fund would keep
the cash premium and the investment.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of the
Options Clearing Corporation ("OCC"), as to the investments on which the Fund
has written calls traded on exchanges or as to other acceptable escrow
securities. In that way, no margin will be required for such transactions.
OCC will release the securities on the expiration of the option or when the
Fund enters into a closing transaction.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. government securities dealer which
will establish a formula price at which the Fund will have the absolute right
to repurchase that OTC option. The formula price will generally be based on
a multiple of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying security
(that is, the option is "in the money"). When the Fund writes an OTC option,
it will treat as illiquid (for purposes of its restriction on holding
illiquid securities) the mark-to-market value of any OTC option it holds,
unless the option is subject to a buy-back agreement by the executing broker.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." The Fund
will then realize a profit or loss, depending upon whether the net of the
amount of the option transaction costs and the premium received on the call
the Fund wrote is more or less than the price of the call the Fund purchases
to close out the transaction. The Fund may realize a profit if the call
expires unexercised, because the Fund will retain the underlying security and
the premium it received when it wrote the call. Any such profits are
considered short-term capital gains for Federal income tax purposes, as are
the premiums on lapsed calls. When distributed by the Fund they are taxable
as ordinary income. If the Fund cannot effect a closing purchase transaction
due to the lack of a market, it will have to hold the callable securities
until the call expires or is exercised.
The Fund may also write calls on a futures contract without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund must cover the call by segregating an
equivalent dollar amount of liquid assets. The Fund will segregate
additional liquid assets if the value of the segregated assets drops below
100% of the current value of the future. Because of this segregation
requirement, in no circumstances would the Fund's receipt of an exercise
notice as to that future require the Fund to deliver a futures contract. It
would simply put the Fund in a short futures position, which is permitted by
the Fund's hedging policies.
o Writing Put Options. The Fund may sell put options. A put
option on securities gives the purchaser the right to sell, and the writer
the obligation to buy, the underlying investment at the exercise price during
the option period. The Fund will not write puts if, as a result, more than
50% of the Fund's net assets would be required to be segregated to cover such
put options.
If the Fund writes a put, the put must be covered by segregated liquid
assets. Writing a put covered by segregated liquid assets equal to the
exercise price of the put has the same economic effect to the Fund as writing
a covered call. The premium the Fund receives from writing a put represents
a profit, as long as the price of the underlying investment remains equal to
or above the exercise price of the put. However, the Fund also assumes the
obligation during the option period to buy the underlying investment from the
buyer of the put at the exercise price, even if the value of the investment
falls below the exercise price. If a put the Fund has written expires
unexercised, the Fund realizes a gain in the amount of the premium less the
transaction costs incurred. If the put is exercised, the Fund must fulfill
its obligation to purchase the underlying investment at the exercise price.
That price will usually exceed the market value of the investment at that
time. In that case, the Fund may incur a loss if it sells the underlying
investment. That loss will be equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the exercise
price and any transaction costs the Fund incurred.
When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will deposit in escrow liquid assets
with a value equal to or greater than the exercise price of the underlying
securities. The Fund therefore foregoes the opportunity of investing the
segregated assets or writing calls against those assets.
As long as the Fund's obligation as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through which the put was
sold. That notice will require the Fund to take delivery of the underlying
security and pay the exercise price. The Fund has no control over when it
may be required to purchase the underlying security, since it may be assigned
an exercise notice at any time prior to the termination of its obligation as
the writer of the put. That obligation terminates upon expiration of the
put. It may also terminate if, before it receives an exercise notice, the
Fund effects a closing purchase transaction by purchasing a put of the same
series as it sold. Once the Fund has been assigned an exercise notice, it
cannot effect a closing purchase transaction.
The Fund may decide to effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent the
underlying security from being put. Effecting a closing purchase transaction
will also permit the Fund to write another put option on the security, or to
sell the security and use the proceeds from the sale for other investments.
The Fund will realize a profit or loss from a closing purchase transaction
depending on whether the cost of the transaction is less or more than the
premium received from writing the put option. Any profits from writing puts
are considered short-term capital gains for Federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.
o Purchasing Calls and Puts. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When the Fund
buys a call (other than in a closing purchase transaction), it pays a
premium. The Fund then has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the call period
at a fixed exercise price. The Fund benefits only if it sells the call at a
profit or if, during the call period, the market price of the underlying
investment is above the sum of the call price plus the transaction costs and
the premium paid for the call and the Fund exercises the call. If the Fund
does not exercise the call or sell it (whether or not at a profit), the call
will become worthless at its expiration date. In that case the Fund will have
paid the premium but lost the right to purchase the underlying investment.
The Fund may buy puts whether or not it holds the underlying investment
in its portfolio. When the Fund purchases a put, it pays a premium and,
except as to puts on indices, has the right to sell the underlying investment
to a seller of a put on a corresponding investment during the put period at a
fixed exercise price. Buying a put on securities or Futures the Fund owns
enables the Fund to attempt to protect itself during the put period against a
decline in the value of the underlying investment below the exercise price by
selling the underlying investment at the exercise price to a seller of a
corresponding put. If the market price of the underlying investment is equal
to or above the exercise price and, as a result, the put is not exercised or
resold, the put will become worthless at its expiration date. In that case
the Fund will have paid the premium but lost the right to sell the underlying
investment. However, the Fund may sell the put prior to its expiration. That
sale may or may not be at a profit.
When the Fund purchases a call or put on an index or Future, it pays a
premium, but settlement is in cash rather than by delivery of the underlying
investment to the Fund. Gain or loss depends on changes in the index in
question (and thus on price movements in the securities market generally)
rather than on price movements in individual securities or futures contracts.
The Fund may buy a call or put only if, after the purchase, the value
of all call and put options held by the Fund will not exceed 5% of the Fund's
total assets.
o Buying and Selling Options on Foreign Currencies. The Fund
can buy and sell calls and puts on foreign currencies. They include puts and
calls that trade on a securities or commodities exchange or in the
over-the-counter markets or are quoted by major recognized dealers in such
options. The Fund would use these calls and puts to try to protect against
declines in the dollar value of foreign securities and increases in the
dollar cost of foreign securities the Fund wants to acquire.
If the Manager anticipates a rise in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased
cost of those securities may be partially offset by purchasing calls or
writing puts on that foreign currency. If the Manager anticipates a decline
in the dollar value of a foreign currency, the decline in the dollar value of
portfolio securities denominated in that currency may be partially offset by
writing calls or purchasing puts on that foreign currency. However, the
currency rates could fluctuate in a direction adverse to the Fund's position.
The Fund will then have incurred option premium payments and transaction
costs without a corresponding benefit.
A call the Fund writes on a foreign currency is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute
and immediate right to acquire that foreign currency without additional cash
consideration (or it can do so for additional cash consideration held in a
segregated account by its Custodian bank) upon conversion or exchange of
other foreign currency held in its portfolio.
The Fund may write a call on a foreign currency to provide a hedge
against a decline in the U.S. dollar value of a security which the Fund owns
or has the right to acquire and which is denominated in the currency
underlying the option. That decline may be one that occurs due to an expected
adverse change in the exchange rate. This is known as a "cross-hedging"
strategy. In those circumstances, the Fund covers the option by maintaining
cash, U.S. government securities or other liquid, high-grade debt securities
in an amount equal to the exercise price of the option, in a segregated
account with the Fund's Custodian bank.
o Risks of Hedging with Options and Futures. The use of hedging
instruments requires special skills and knowledge of investment techniques
that are different than what is required for normal portfolio management. If
the Manager uses a hedging instrument at the wrong time or judges market
conditions incorrectly, hedging strategies may reduce the Fund's return. The
Fund could also experience losses if the prices of its futures and options
positions were not correlated with its other investments.
The Fund's option activities may affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund may cause
the Fund to sell related portfolio securities, thus increasing its turnover
rate. The exercise by the Fund of puts on securities will cause the sale of
underlying investments, increasing portfolio turnover. Although the decision
whether to exercise a put it holds is within the Fund's control, holding a
put might cause the Fund to sell the related investments for reasons that
would not exist in the absence of the put.
The Fund may pay a brokerage commission each time it buys a call or
put, sells a call or put, or buys or sells an underlying investment in
connection with the exercise of a call or put. Those commissions may be
higher on a relative basis than the commissions for direct purchases or sales
of the underlying investments. Premiums paid for options are small in
relation to the market value of the underlying investments. Consequently, put
and call options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being more
sensitive to changes in the value of the underlying investment.
If a covered call written by the Fund is exercised on an investment
that has increased in value, the Fund will be required to sell the investment
at the call price. It will not be able to realize any profit if the
investment has increased in value above the call price.
An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no assurance
that a liquid secondary market will exist for any particular option. The
Fund could experience losses if it could not close out a position because of
an illiquid market for the future or option.
There is a risk in using short hedging by selling futures or purchasing
puts on broadly-based indices or futures to attempt to protect against
declines in the value of the Fund's portfolio securities. The risk is that
the prices of the futures or the applicable index will correlate imperfectly
with the behavior of the cash prices of the Fund's securities. For example,
it is possible that while the Fund has used hedging instruments in a short
hedge, the market may advance and the value of the securities held in the
Fund's portfolio may decline. If that occurred, the Fund would lose money on
the hedging instruments and also experience a decline in the value of its
portfolio securities. However, while this could occur for a very brief period
or to a very small degree, over time the value of a diversified portfolio of
securities will tend to move in the same direction as the indices upon which
the hedging instruments are based.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the price
of the portfolio securities being hedged and movements in the price of the
hedging instruments, the Fund may use hedging instruments in a greater dollar
amount than the dollar amount of portfolio securities being hedged. It might
do so if the historical volatility of the prices of the portfolio securities
being hedged is more than the historical volatility of the applicable index.
The ordinary spreads between prices in the cash and futures markets are
subject to distortions, due to differences in the nature of those markets.
First, all participants in the futures market are subject to margin deposit
and maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced, thus producing distortion.
Third, from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
market may cause temporary price distortions.
The Fund can use hedging instruments to establish a position in the
securities markets as a temporary substitute for the purchase of individual
securities (long hedging) by buying futures and/or calls on such futures,
broadly-based indices or on securities. It is possible that when the Fund
does so the market may decline. If the Fund then concludes not to invest in
securities because of concerns that the market may decline further or for
other reasons, the Fund will realize a loss on the hedging instruments that
is not offset by a reduction in the price of the securities purchased.
o Forward Contracts. Forward contracts are foreign currency exchange
contracts. They are used to buy or sell foreign currency for future delivery
at a fixed price. The Fund uses them to "lock in" the U.S. dollar price of a
security denominated in a foreign currency that the Fund has bought or sold,
or to protect against possible losses from changes in the relative values of
the U.S. dollar and a foreign currency. The Fund limits its exposure in
foreign currency exchange contracts in a particular foreign currency to the
amount of its assets denominated in that currency or a closely-correlated
currency. The Fund may also use "cross-hedging" where the Fund hedges
against changes in currencies other than the currency in which a security it
holds is denominated.
Under a forward contract, one party agrees to purchase, and another
party agrees to sell, a specific currency at a future date. That date may be
any fixed number of days from the date of the contract agreed upon by the
parties. The transaction price is set at the time the contract is entered
into. These contracts are traded in the inter-bank market conducted directly
among currency traders (usually large commercial banks) and their customers.
The Fund may use forward contracts to protect against uncertainty in
the level of future exchange rates. The use of forward contracts does not
eliminate the risk of fluctuations in the prices of the underlying securities
the Fund owns or intends to acquire, but it does fix a rate of exchange in
advance. Although forward contracts may reduce the risk of loss from a
decline in the value of the hedged currency, at the same time they limit any
potential gain if the value of the hedged currency increases.
When the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when it anticipates receiving
dividend payments in a foreign currency, the Fund may desire to "lock-in" the
U.S. dollar price of the security or the U.S. dollar equivalent of the
dividend payments. To do so, the Fund may enter into a forward contract for
the purchase or sale of the amount of foreign currency involved in the
underlying transaction, in a fixed amount of U.S. dollars per unit of the
foreign currency. This is called a "transaction hedge." The transaction hedge
will protect the Fund against a loss from an adverse change in the currency
exchange rates during the period between the date on which the security is
purchased or sold or on which the payment is declared, and the date on which
the payments are made or received.
The Fund may also use forward contracts to lock in the U.S. dollar
value of portfolio positions. This is called a "position hedge." When the
Fund believes that foreign currency may suffer a substantial decline against
the U.S. dollar, it may enter into a forward contract to sell an amount of
that foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in that foreign currency. When the Fund
believes that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward contract to buy that foreign
currency for a fixed dollar amount. Alternatively, the Fund may enter into a
forward contract to sell a different foreign currency for a fixed U.S. dollar
amount if the Fund believes that the U.S. dollar value of the foreign
currency to be sold pursuant to its forward contract will fall whenever there
is a decline in the U.S. dollar value of the currency in which portfolio
securities of the Fund are denominated. That is referred to as a "cross
hedge."
The Fund will cover its short positions in these cases by identifying
to its Custodian bank assets having a value equal to the aggregate amount of
the Fund's commitment under forward contracts. The Fund will not enter into
forward contracts or maintain a net exposure to such contracts if the
consummation of the contracts would obligate the Fund to deliver an amount of
foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency or another currency that is the
subject of the hedge.
However, to avoid excess transactions and transaction costs, the Fund
may maintain a net exposure to forward contracts in excess of the value of
the Fund's portfolio securities or other assets denominated in foreign
currencies if the excess amount is "covered" by liquid securities denominated
in any currency. The cover must be at least equal at all times to the amount
of that excess. As one alternative, the Fund may purchase a call option
permitting the Fund to purchase the amount of foreign currency being hedged
by a forward sale contract at a price no higher than the forward contract
price. As another alternative, the Fund may purchase a put option permitting
the Fund to sell the amount of foreign currency subject to a forward purchase
contract at a price as high or higher than the forward contact price.
The precise matching of the amounts under forward contracts and the
value of the securities involved generally will not be possible because the
future value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is
entered into and the date it is sold. In some cases the Manager may decide
to sell the security and deliver foreign currency to settle the original
purchase obligation. If the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver, the Fund may
have to purchase additional foreign currency on the "spot" (that is, cash)
market to settle the security trade. If the market value of the security
instead exceeds the amount of foreign currency the Fund is obligated to
deliver to settle the trade, the Fund may have to sell on the spot market
some of the foreign currency received upon the sale of the security. There
will be additional transaction costs on the spot market in those cases.
The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the Fund to
sustain losses on these contracts and to pay additional transactions costs.
The use of forward contracts in this manner may reduce the Fund's performance
if there are unanticipated changes in currency prices to a greater degree
than if the Fund had not entered into such contracts.
At or before the maturity of a forward contract requiring the Fund to
sell a currency, the Fund might sell a portfolio security and use the sale
proceeds to make delivery of the currency. In the alternative the Fund might
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract. Under that contract the Fund will
obtain, on the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund might close out a forward contract
requiring it to purchase a specified currency by entering into a second
contract entitling it to sell the same amount of the same currency on the
maturity date of the first contract. The Fund would realize a gain or loss
as a result of entering into such an offsetting forward contract under either
circumstance. The gain or loss will depend on the extent to which the
exchange rate or rates between the currencies involved moved between the
execution dates of the first contract and offsetting contract.
The costs to the Fund of engaging in forward contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because forward contracts are
usually entered into on a principal basis, no brokerage fees or commissions
are involved. Because these contracts are not traded on an exchange, the
Fund must evaluate the credit and performance risk of the counterparty under
each forward contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time to
time, and will incur costs in doing so. Foreign exchange dealers do not
charge a fee for conversion, but they do seek to realize a profit based on
the difference between the prices at which they buy and sell various
currencies. Thus, a dealer might offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange if the Fund
desires to resell that currency to the dealer.
o Regulatory Aspects of Hedging Instruments. When using futures and
options on futures, the Fund is required to operate within certain guidelines
and restrictions with respect to the use of futures as established by the
Commodities Futures Trading Commission (the "CFTC"). In particular, the Fund
is exempted from registration with the CFTC as a "commodity pool operator" if
the Fund complies with the requirements of Rule 4.5 adopted by the CFTC. The
Rule does not limit the percentage of the Fund's assets that may be used for
futures margin and related options premiums for a bona fide hedging
position. However, under the Rule, the Fund must limit its aggregate initial
futures margin and related options premiums to not more than 5% of the Fund's
net assets for hedging strategies that are not considered bona fide hedging
strategies under the Rule. Under the Rule, the Fund must also use short
futures and options on futures solely for bona fide hedging purposes within
the meaning and intent of the applicable provisions of the Commodity Exchange
Act.
Transactions in options by the Fund are subject to limitations
established by the option exchanges. The exchanges limit the maximum number
of options that may be written or held by a single investor or group of
investors acting in concert. Those limits apply regardless of whether the
options were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different exchanges or
through one or more brokers. Thus, the number of options that the Fund may
write or hold may be affected by options written or held by other entities,
including other investment companies having the same adviser as the Fund (or
an adviser that is an affiliate of the Fund's adviser). The exchanges also
impose position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.
Under the Investment Company Act, when the Fund purchases a future, it
must maintain cash or readily marketable short-term debt instruments in an
amount equal to the market value of the securities underlying the future,
less the margin deposit applicable to it. The account must be a segregated
account or accounts held by the Fund's Custodian bank.
o Tax Aspects of Certain Hedging Instruments. Certain foreign currency
exchange contracts in which the Fund may invest are treated as "section 1256
contracts" under the Internal Revenue Code. In general, gains or losses
relating to section 1256 contracts are characterized as 60% long-term and 40%
short-term capital gains or losses under the Code. However, foreign currency
gains or losses arising from section 1256 contracts that are forward
contracts generally are treated as ordinary income or loss. In addition,
section 1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market," and unrealized gains or losses are treated as though they
were realized. These contracts also may be marked-to-market for purposes of
determining the excise tax applicable to investment company distributions and
for other purposes under rules prescribed pursuant to the Internal Revenue
Code. An election can be made by the Fund to exempt those transactions from
this marked-to-market treatment.
Certain forward contracts the Fund enters into may result in
"straddles" for Federal income tax purposes. The straddle rules may affect
the character and timing of gains (or losses) recognized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of a
position making up a straddle is allowed only to the extent that the loss
exceeds any unrecognized gain in the offsetting positions making up the
straddle. Disallowed loss is generally allowed at the point where there is
no unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, the following gains or losses are
treated as ordinary income or loss:
(1) gains or losses attributable to fluctuations in exchange rates that
occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in
a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities, and
(2) gains or losses attributable to fluctuations in the value of a foreign
currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward
contracts and the date of disposition.
Currency gains and losses are offset against market gains and losses on
each trade before determining a net "Section 988" gain or loss under the
Internal Revenue Code for that trade, which may increase or decrease the
amount of the Fund's investment company income available for distribution to
its shareholders.
n Temporary Defensive Investments. When market conditions are
unstable, or the Manager believes it is otherwise appropriate to reduce
holdings in stocks, the Fund can invest in a variety of debt securities for
defensive purposes. The Fund can also purchase these securities for liquidity
purposes to meet cash needs due to the redemption of Fund shares, or to hold
while waiting reinvest cash received from the sale of other portfolio
securities. The Fund can buy:
o high-quality (rated in the top rating categories of
nationally-recognized rating organizations or deemed by the Manager
to be of comparable quality), short-term money market instruments,
including those issued by the U. S. Treasury or other government
agencies,
o commercial paper (short-term, unsecured, promissory notes of domestic
or foreign companies) rated in the top rating category of a
nationally recognizes rating organization,
o debt obligations of corporate issuers, rated investment grade (rated at
least Baa by Moody's Investors Service, Inc. or at least BBB by
Standard & Poor's Corporation, or a comparable rating by another
rating organization), or unrated securities judge by the Manager to
have a comparable quality to rated securities in those categories,
o preferred stocks,
o certificates of deposit and bankers' acceptances of domestic and
foreign banks and savings and loan associations, and
o repurchase agreements.
Short-term debt securities would normally be selected for defensive or
cash management purposes because they can normally be disposed of quickly,
are not generally subject to significant fluctuations in principal value and
their value will be less subject to interest rate risk than longer-term debt
securities.
Investment Restrictions
n What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be
changed only by the vote of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is defined
as the vote of the holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or
o more than 50% of the outstanding shares.
The Fund's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Fund's Board of
Trustees can change non-fundamental policies without shareholder approval.
However, significant changes to investment policies will be described in
supplements or updates to the Prospectus or this Statement of Additional
Information, as appropriate. The Fund's most significant investment policies
are described in the Prospectus.
n Does the Fund Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.
o The Fund cannot buy securities issued or guaranteed by any one
issuer if more than 5% of its total assets would be invested in securities of
that issuer or if it would then own more than 10% of that issuer's voting
securities. The limit does not apply to securities issued by the U.S.
Government or any of its agencies or instrumentalities.
o The Fund cannot invest in companies for the purpose of acquiring
control or management of them.
o The Fund cannot lend money. However, it can invest in publicly
distributed debt securities that the Fund's investment policies and
restrictions permit it to purchase. The Fund may also lend its portfolio
securities and enter into repurchase agreements.
o The Fund cannot concentrate investments. That means it cannot invest
25% or more of its total assets in companies in any one industry.
Obligations of the U.S. government, its agencies and instrumentalities are
not considered to be part of an "industry" for the purposes of this
restriction.
o The Fund cannot purchase securities on margin. However, the Fund
may make margin deposits in connection with any of the hedging instruments
permitted by any of its other fundamental policies.
o The Fund cannot invest in real estate or in interests in real
estate. However, the Fund can purchase readily-marketable securities of
companies holding real estate or interests in real estate.
o The Fund cannot make short sales of securities except "short sales
against-the-box."
o The Fund cannot underwrite securities of other companies. A
permitted exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling any securities held in its own
portfolio.
o The Fund cannot invest or hold securities of any issuer if officers
and Trustees of the Fund or the Manager individually beneficially own more
than 1/2 of 1% of the securities of that issuer and together own more than 5%
of the securities of that issuer.
o The Fund cannot invest in other open-end investment companies or
invest more than 5% of its net assets in closed-end investment companies,
including small business investment companies. The Fund cannot make any such
investment at commission rates in excess of normal brokerage commissions.
o The Fund cannot invest in interests in oil, gas or other mineral
exploration or development programs.
o The Fund cannot pledge, mortgage or hypothecate any of its assets.
However, this does not prohibit the escrow arrangements contemplated by the
put and call activities of the Fund or other collateral or margin
arrangements in connection with any of the hedging instruments permitted by
any of its other policies.
Another fundamental policy adopted by the Fund permits it to invest all
of its assets in the securities of a single open-end management investment
company for which the Manager, one of its subsidiaries or a successor is the
investment adviser or sub-adviser. That fund must have substantially the same
fundamental investment objective, policies and limitations as the Fund. This
policy would permit the Fund to adopt a "master-feeder" structure. Under that
structure, the Fund would be a "feeder" fund and would invest all of its
assets in a single pooled "master fund" in which other feeder funds could
also invest. This could enable the Fund to take advantage of potential
operational and cost efficiencies in the master-feeder structure. The Fund
has no present intention of adopting the master-feeder structure. If it did
so, the Prospectus and this Statement of Additional Information would be
revised accordingly.
Unless the Prospectus or this Statement of Additional Information
states that a percentage restriction applies on an on-going basis, it applies
only at the time the Fund makes an investment. The Fund need not sell
securities to meet the percentage limits if the value of the investment
increases in proportion to the size of the Fund.
For purposes of the Fund's policy not to concentrate its investments as
described above, the Fund has adopted the industry classifications set forth
in Appendix B to this Statement of Additional Information. This is not a
fundamental policy.
How the Fund is Managed
Organization and History. The Fund is an open-end, diversified management
investment company with an unlimited number of authorized shares of
beneficial interest. The Fund was organized as a Massachusetts business trust
in 1995.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
Although the Fund will not normally hold annual meetings of its shareholders,
it may hold shareholder meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Trustee or to take
other action described in the Fund's Declaration of Trust.
o Classes of Shares. The Board of Trustees has the power, without
shareholder approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has three classes of
shares: Class A, Class B, and Class C. All classes invest in the same
investment portfolio. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may have separate voting rights on matters in which interests of one
class are different from interests of another class, and
o votes as a class on matters that affect that class alone.
Shares are freely transferable, and each share of each class has one
vote at shareholder meetings, with fractional shares voting proportionally on
matters submitted to the vote of shareholders. Each share of the Fund
represents an interest in the Fund proportionately equal to the interest of
each other share of the same class.
The Trustees are authorized to create new series and classes of
shares. The Trustees may reclassify unissued shares of the Fund into
additional series or classes of shares. The Trustees also may divide or
combine the shares of a class into a greater or lesser number of shares
without changing the proportionate beneficial interest of a shareholder in
the Fund. Shares do not have cumulative voting rights or preemptive or
subscription rights. Shares may be voted in person or by proxy at
shareholder meetings.
|_| Meetings of Shareholders. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular annual
meetings of shareholders. The Fund will hold meetings when required to do so
by the Investment Company Act or other applicable law. It will also do so
when a shareholder meeting is called by the Trustees or upon proper request
of the shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Fund, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the record holders of 10% of its
outstanding shares. If the Trustees receive a request from at least 10
shareholders stating that they wish to communicate with other shareholders to
request a meeting to remove a Trustee, the Trustees will then either make the
Fund's shareholder list available to the applicants or mail their
communication to all other shareholders at the applicants' expense. The
shareholders making the request must have been shareholders for at least six
months and must hold shares of the Fund valued at $25,000 or more or
constituting at least 1% of the Fund's outstanding shares, whichever is
less. The Trustees may also take other action as permitted by the Investment
Company Act.
|_| Shareholder and Trustee Liability. The Fund's Declaration of
Trust contains an express disclaimer of shareholder or Trustee liability for
the Fund's obligations. It also provides for indemnification and
reimbursement of expenses out of the Fund's property for any shareholder held
personally liable for its obligations. The Declaration of Trust also states
that upon request, the Fund shall assume the defense of any claim made
against a shareholder for any act or obligation of the Fund and shall satisfy
any judgment on that claim. Massachusetts law permits a shareholder of a
business trust (such as the Fund) to be held personally liable as a "partner"
under certain circumstances. However, the risk that a Fund shareholder will
incur financial loss from being held liable as a "partner" of the Fund is
limited to the relatively remote circumstances in which the Fund would be
unable to meet its obligations.
The Fund's contractual arrangements state that any person doing
business with the Fund (and each shareholder of the Fund) agrees under its
Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand that may arise out of any dealings with
the Fund. The contracts further state that the Trustees shall have no
personal liability to any such person, to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations and occupations during
the past five years are listed below. Trustees denoted with an asterisk (*)
below are deemed to be "interested persons" of the Fund under the Investment
Company Act. All of the Trustees are Trustees or Directors of the following
New York-based Oppenheimer funds2:
Oppenheimer Growth Fund Oppenheimer International Growth Fund
Oppenheimer Global Fund Oppenheimer Municipal Bond Fund
Oppenheimer Money Market Fund, Inc. Oppenheimer New York Municipal Fund
Oppenheimer U.S. Government Trust Oppenheimer Multi-State Municipal
Oppenheimer Gold & Special Minerals Trust
Fund Oppenheimer Multi-Sector Income Trust
Oppenheimer Discovery Fund Oppenheimer World Bond Fund
Oppenheimer Enterprise Fund Oppenheimer Series Fund, Inc.
Oppenheimer Capital Appreciation Fund Oppenheimer Developing Markets Fund
Oppenheimer Multiple Strategies Fund Oppenheimer International Small
Oppenheimer Global Growth & Income Fund Company Fund
Oppenheimer California Municipal Fund
Ms. Macaskill and Messrs. Spiro, Donohue, Bowen, Zack, Bishop and
Farrar respectively hold the same offices with the other New York-based
Oppenheimer funds as with the Fund. As of December 1, 1998, the Trustees and
officers of the Fund as a group owned of record or beneficially less than 1%
of each class of shares of the Fund. The foregoing statement does not
reflect ownership of shares of the Fund held of record by an employee benefit
plan for employees of the Manager, other than the shares beneficially owned
under the plan by the officers of the Fund listed above. Ms. Macaskill and
Mr. Donohue are trustees of that plan.
Leon Levy, Chairman of the Board of Trustees, Age 73
280 Park Avenue, New York, NY 10017
General Partner of Odyssey Partners, L.P. (investment partnership) (since
1982) and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee, Age 65
19750 Beach Road, Jupiter Island, FL 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the
following positions: Vice Chairman of the Manager, OppenheimerFunds, Inc.
(October 1995 to December 1997); Vice President (June 1990 to March 1994) and
General Counsel of Oppenheimer Acquisition Corp., the Manager's parent
holding company; Executive Vice President (December 1977 to October 1995),
General Counsel and a director (December 1975 to October 1993) of the
Manager; Executive Vice President and a director (July 1978 to October 1993)
and General Counsel of the Distributor, OppenheimerFunds Distributor, Inc.;
Executive Vice President and a director (April 1986 to October 1995) of
HarbourView Asset Management Corporation; Vice President and a director
(October 1988 to October 1993) of Centennial Asset Management Corporation,
(HarbourView and Centennial are investment adviser subsidiaries of the
Manager); and an officer of other Oppenheimer funds.
Benjamin Lipstein, Trustee, Age 75
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
Bridget A. Macaskill, President and Trustee*, Age 50
Two World Trade Center, 34th Floor, New York, NY 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995)
and a Director (since December 1994) of the Manager; President and director
(since June 1991) of HarbourView Asset Management Corp.; Chairman and a
director of Shareholder Services, Inc. (since August 1994), and Shareholder
Financial Services, Inc. (since September 1995) (both are transfer agent
subsidiaries of the Manager); President (since September 1995) and a
director (since October 1990) of Oppenheimer Acquisition Corp.; President
(since September 1995) and a director (since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of the Manager; a
director (since July 1996) of Oppenheimer Real Asset Management, Inc., an
investment advisory subsidiary of the Manager; President and a director
(since October 1997) of OppenheimerFunds International Ltd., an offshore fund
management subsidiary of the Manager, and of Oppenheimer Millennium Funds
plc, an offshore investment company; President and a director or trustee of
other Oppenheimer funds; a director of Hillsdown Holdings plc (a U.K. food
company); formerly an Executive Vice President of the Manager and a director
(until 1998) of NASDAQ Stock Market, Inc.
Elizabeth B. Moynihan, Trustee, Age 69
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York
University), and the National Building Museum; a member of the Trustees
Council, Preservation League of New York State, and of the Indo-U.S.
Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee, Age 71
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil and gas producer), Texan
Cogeneration Company (cogeneration company), and Prime Retail, Inc. (real
estate investment trust); formerly President and Chief Executive Officer of
The Conference Board, Inc. (international economic and business research) and
a director of Lumbermens Mutual Casualty Company, American Motorists
Insurance Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee, Age 68
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; a member of the U.S.
Competitiveness Policy Council; a director of River Bank America (real estate
manager); Trustee, Financial Accounting Foundation (FASB and GASB); formerly
New York State Comptroller and trustee, New York State and Local Retirement
Fund.
Russell S. Reynolds, Jr., Trustee, Age 67
8 Sound Shore Drive, Greenwich, Connecticut 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate governance consulting); a director
of Professional Staff Limited (U.K); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Trustee*, Age 73
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Chairman Emeritus (since August 1991) and a director (since January 1969) of
the Manager; formerly Chairman of the Manager and the Distributor.
Pauline Trigere, Trustee, Age 86
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
Clayton K. Yeutter, Trustee, Age 68
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T. Industries,
Ltd. (tobacco and financial services), Caterpillar, Inc. (machinery),
ConAgra, Inc. (food and agricultural products), Farmers Insurance Company
(insurance), FMC Corp. (chemicals and machinery) and Texas Instruments, Inc.
(electronics); formerly (in descending chronological order) Counselor to the
President (Bush) for Domestic Policy, Chairman of the Republican National
Committee, Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.
Jay W. Tracey III, Vice President and Portfolio Manager, Age: 45
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Vice President of the Manager (since September 1994); Vice President and
portfolio manager of other Oppenheimer funds; formerly a Managing Director of
Buckingham Capital Management (February 1994 - September 1994) prior to which
he was a portfolio manager and Vice President of the Fund and other
Oppenheimer funds and a Vice President of the Manager (July 1991 - February
1994).
Andrew J. Donohue, Secretary, Age 48
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel
and a director of HarbourView Asset Management Corp., Shareholder Services,
Inc., Shareholder Financial Services, Inc. and Oppenheimer Partnership
Holdings, Inc. (since September 1995); President and a director of
Centennial Asset Management Corp. (since September 1995); President and a
director of Oppenheimer Real Asset Management, Inc. (since July 1996);
General Counsel (since May 1996) and Secretary (since April 1997) of
Oppenheimer Acquisition Corp.; Vice President of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
George C. Bowen, Treasurer, Age 62
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President (since September 1987) and Treasurer (since March 1985)
of the Manager; Vice President (since June 1983) and Treasurer (since March
1985) of the Distributor; Vice President (since October 1989) and Treasurer
(since April 1986) of HarbourView Asset Management Corp.; Senior Vice
President (since February 1992), Treasurer (since July 1991) and a director
(since December 1991) of Centennial Asset Management Corp.; Vice President
and Treasurer (since August 1978) and Secretary (since April 1981) of
Shareholder Services, Inc.; Vice President, Treasurer and Secretary of
Shareholder Financial Services, Inc. (since November 1989); Assistant
Treasurer of Oppenheimer Acquisition Corp. (since March 1998); Treasurer of
Oppenheimer Partnership Holdings, Inc. (since November 1989); Vice President
and Treasurer of Oppenheimer Real Asset Management, Inc. (since July 1996);
Treasurer of OppenheimerFunds International Ltd. and Oppenheimer Millennium
Funds plc (since October 1997); a trustee or director and an officer of other
Oppenheimer funds; formerly Treasurer of Oppenheimer Acquisition Corp. (June
1990 - March 1998).
Robert G. Zack, Assistant Secretary, Age 50
Two World Trade Center, 34th Floor, New York, NY 10048-0203
Senior Vice President (since May 1985) and Associate General Counsel (since
May 1981) of the Manager; Assistant Secretary of Shareholder Services, Inc.
(since May 1985), and Shareholder Financial Services, Inc. (since November
1989); Assistant Secretary of OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer, Age 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of
the Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund
Controller for the Manager.
Scott T. Farrar, Assistant Treasurer, Age 33
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996);
Assistant Treasurer of OppenheimerFunds International Ltd. and Oppenheimer
Millennium Funds plc (since October 1997); an officer of other Oppenheimer
funds; formerly an Assistant Vice President of the Manager/Mutual Fund
Accounting (April 1994-May 1996), and a Fund Controller for the Manager.
|X| Remuneration of Trustees. The officers of the Fund and certain
Trustees of the Fund (Ms. Macaskill and Mr. Spiro) who are affiliated with
the Manager receive no salary or fee from the Fund. The remaining Trustees
of the Fund received the compensation shown below. The compensation from the
Fund was paid during its fiscal year ended August 31, 1998. The compensation
from all of the New York-based Oppenheimer funds (including the Fund) was
received as a director, trustee or member of a committee of the boards of
those funds during the calendar year 1997.
<PAGE>
------------------------------------------------------------------------------
Total
Retirement Compensation
Benefits From all
Aggregate Accrued as Part New York based
Trustee's Name Compensation of Fund Oppenheimer
and Position from Fund Expenses Funds (20 Funds)1
------------------------------------------------------------------------------
Leon Levy $ $ $158,500
Chairman
------------------------------------------------------------------------------
Robert G. Galli $ $ None
Study Committee Member2
------------------------------------------------------------------------------
Benjamin Lipstein $ $ $137,000
Study Committee
Chairman,3
Audit Committee Member
------------------------------------------------------------------------------
Elizabeth B. Moynihan $ $ $96,500
Study Committee
Member
------------------------------------------------------------------------------
Kenneth A. Randall $ $ $88,500
Audit Committee Member
------------------------------------------------------------------------------
Edward V. Regan $ $ $87,500
Proxy Committee
Chairman, Audit
Committee Member
------------------------------------------------------------------------------
Russell S. Reynolds, $ $ $65,500
Jr.
Proxy Committee
Member
------------------------------------------------------------------------------
Pauline Trigere $ $ $58,500
------------------------------------------------------------------------------
Clayton K. Yeutter $ 4 $ $65,500
Proxy Committee
Member
- ----------------------------
1 For the 1997 calendar year.
2 Reflects fees from 1/1/98 to 8/31/98
3 Committee position held during a portion of the period shown.
4 Includes $_____ deferred under Deferred Compensation Plan described
below.
|X| Retirement Plan for Trustees. The Fund has adopted a retirement
plan that provides for payments to retired Trustees. Payments are up to 80%
of the average compensation paid during a Trustee's five years of service in
which the highest compensation was received. A Trustee must serve as trustee
for any of the New York-based Oppenheimer funds for at least 15 years to be
eligible for the maximum payment. Each Trustee's retirement benefits will
depend on the amount of the Trustee's future compensation and length of
service. Therefore the amount of those benefits cannot be determined at this
time, nor can we estimate the number of years of credited service that will
be used to determine those benefits.
|X| Deferred Compensation Plan for Trustees. The Board of Trustees has
adopted a Deferred Compensation Plan for disinterested trustees that enables
them to elect to defer receipt of all or a portion of the annual fees they
are entitled to receive from the Fund. Under the plan, the compensation
deferred by a Trustee is periodically adjusted as though an equivalent amount
had been invested in shares of one or more Oppenheimer funds selected by the
Trustee. The amount paid to the Trustee under the plan will be determined
based upon the performance of the selected funds.
Deferral of Trustees' fees under the plan will not materially affect
the Fund's assets, liabilities or net income per share. The plan will not
obligate the Fund to retain the services of any Trustee or to pay any
particular level of compensation to any Trustee. Pursuant to an Order issued
by the Securities and Exchange Commission, the Fund may invest in the funds
selected by the Trustee under the plan without shareholder approval for the
limited purpose of determining the value of the Trustee's deferred fee
account.
The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a
holding company controlled by Massachusetts Mutual Life Insurance Company.
The Manager and the Fund have a Code of Ethics. It is designed to detect and
prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
n The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities
for the Fund's portfolio and handles its day-to-day business. The portfolio
manager of the Fund is employed by the Manager and is the person who is
principally responsible for the day-to-day management of the Fund's
portfolio. Other members of the Manager's Equity Portfolio Team provide the
portfolio manager with counsel and support in managing the Fund's portfolio.
The agreement requires the Manager, at its expense, to provide the Fund
with adequate office space, facilities and equipment. It also requires the
Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Fund.
Those responsibilities include the compilation and maintenance of records
with respect to its operations, the preparation and filing of specified
reports, and composition of proxy materials and registration statements for
continuous public sale of shares of the Fund.
The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The advisory agreement lists examples of expenses paid by
the Fund. The major categories relate to interest, taxes, brokerage
commissions, fees to certain Trustees, legal and audit expenses, custodian
and transfer agent expenses, share issuance costs, certain printing and
registration costs and non-recurring expenses, including litigation costs.
The management fees paid by the Fund to the Manager are calculated at the
rates described in the Prospectus, which are applied to the assets of the
Fund as a whole. The fees are allocated to each class of shares based upon
the relative proportion of the Fund's net assets represented by that class.
------------------------------------------------------------------------------
Fiscal Year ended 8/31: Management Fees Paid to OppenheimerFunds, Inc.
------------------------------------------------------------------------------
1996 (10 months) $294,228
------------------------------------------------------------------------------
1997 $508,062
------------------------------------------------------------------------------
1998 $___________
------------------------------------------------------------------------------
<PAGE>
The investment advisory agreement contains an indemnity of the Manager.
In the absence of willful misfeasance, bad faith, gross negligence in the
performance of its duties or reckless disregard of its obligations and duties
under the investment advisory agreement, the Manager is not liable for any
loss resulting from a good faith error or omission on its part with respect
to any of its duties under the agreement.
The agreement permits the Manager to act as investment adviser for any
other person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as investment
adviser or general distributor. If the Manager shall no longer act as
investment adviser to the Fund, the Manager may withdraw the right of the
Fund to use the name "Oppenheimer" as part of its name.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties
of the Manager under the investment advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers to effect the Fund's
portfolio transactions. The Manager is authorized by the advisory agreement
to employ broker-dealers, including "affiliated" brokers, as that term is
defined in the Investment Company Act. The Manager may employ broker-dealers
as may, in the Manager's best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the "best
execution" of such transactions. "Best execution" means prompt and reliable
execution at the most favorable price obtainable. The Manager need not seek
competitive commission bidding. However, it is expected to be aware of the
current rates of eligible brokers and to minimize the commissions paid to the
extent consistent with the interests and policies of the Fund as established
by its Board of Trustees.
Under the investment advisory agreement, the Manager may select brokers
(other than affiliates) that provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its affiliates
have investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would charge, if the Manager makes a
good faith determination that the commission is fair and reasonable in
relation to the services provided. Subject to those considerations, as a
factor in selecting brokers for the Fund's portfolio transactions, the
Manager may also consider sales of shares of the Fund and other investment
companies for which the Manager or an affiliate serves as investment adviser.
Brokerage Practices Followed by the Manager. The Manager allocates brokerage
for the Fund subject to the provisions of the investment advisory agreement
and the procedures and rules described above. Generally, the Manager's
portfolio traders allocate brokerage based upon recommendations from the
Manager's portfolio managers. In certain instances, portfolio managers may
directly place trades and allocate brokerage. In either case, the Manager's
executive officers supervise the allocation of brokerage.
Transactions in securities other than those for which an exchange is the
primary market are generally done with principals or market makers. In
transactions on foreign exchanges, the Fund may be required to pay fixed
brokerage commissions and thereby not have the benefit of negotiated
commissions available in U.S. markets. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for certain
fixed-income agency transactions in the secondary market. Otherwise brokerage
commissions are paid only if it appears likely that a better price or
execution can be obtained by doing so.
In an option transaction, the Fund ordinarily uses the same broker for
the purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, the Manager tries to combine
concurrent orders to purchase or sell the same security by more than one of
the accounts managed by the Manager or its affiliates. The transactions under
those combined orders are averaged as to price and allocated in accordance
with the purchase or sale orders actually placed for each account.
Most purchases of debt obligations are principal transactions at net
prices. Instead of using a broker for those transactions, the Fund normally
deals directly with the selling or purchasing principal or market maker
unless the Manager determines that a better price or execution can be
obtained by using the services of a broker. Purchases of portfolio
securities from underwriters include a commission or concession paid by the
issuer to the underwriter. Purchases from dealers include a spread between
the bid and asked prices. The Fund seeks to obtain prompt execution of these
orders at the most favorable net price.
The investment advisory agreement permits the Manager to allocate
brokerage for research services. The research services provided by a
particular broker may be useful only to one or more of the advisory accounts
of the Manager and its affiliates. The investment research received for the
commissions of those other accounts may be useful both to the Fund and one or
more of the Manager's other accounts. Investment research may be supplied to
the Manager by a third party at the instance of a broker through which trades
are placed.
Investment research services include information and analysis on
particular companies and industries as well as market or economic trends and
portfolio strategy, market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.
The Board of Trustees permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research if the broker
represents to the Manager that: (i) the trade is not from or for the broker's
own inventory, (ii) the trade was executed by the broker on an agency basis
at the stated commission, and (iii) the trade is not a riskless principal
transaction. The Board of Trustees permits the Manager to use concessions on
fixed-price offerings to obtain research, in the same manner as is permitted
for agency transactions.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager to
obtain market information for the valuation of securities that are either
held in the Fund's portfolio or are being considered for purchase. The
Manager provides information to the Board about the commissions paid to
brokers furnishing such services, together with the Manager's representation
that the amount of such commissions was reasonably related to the value or
benefit of such services.
Other funds advised by the Manager have investment policies similar to
those of the Fund. Those other funds may purchase or sell the same securities
as the Fund at the same time as the Fund, which could affect the supply and
price of the securities. If two or more funds advised by the Manager purchase
the same security on the same day from the same dealer, the Manager may
average the price of the transactions and allocate the average among the
funds.
------------------------------------------------------------------------------
Fiscal Year Ended 8/31: Total Brokerage Commissions Paid by the Fund1
------------------------------------------------------------------------------
1996 (10 months) $24,405
------------------------------------------------------------------------------
1997 $15,954
------------------------------------------------------------------------------
1998 $2
------------------------------------------------------------------------------
1. Amounts do not include spreads or concessions on principal transactions
on a net trade basis.
2. In the fiscal year ended 8/31/98, the amount of transactions directed
to brokers for research services was $_________________ and the amount of
the commissions paid to broker-dealers for those services was $_______.
Distribution and Service Plans
The Distributor. Under its General Distributor's Agreement with the Fund,
the Distributor acts as the Fund's principal underwriter in the continuous
public offering of the Fund's classes of shares. The Distributor is not
obligated to sell a specific number of shares. Expenses normally
attributable to sales are borne by the Distributor. They exclude payments
under the Fund's Distribution and Service Plans but include advertising and
the cost of printing and mailing prospectuses (other than prospectuses
furnished to current shareholders).
The compensation paid to (or retained by) the Distributor from the sale
of shares or on the redemption of shares during the Fund's three most recent
fiscal years is shown in the table below.
------------------------------------------------------------------------------
Aggregate Class A Commissions Commissions Commissions
Fiscal Front-End Front-End on Class A on Class B on Class C
Year Sales Sales Shares Shares Shares
Ended Charges on Charges Advanced by Advanced by Advanced by
8/31: Class A Retained by Distributor1 Distributor1 Distributor1
Shares Distributor
------------------------------------------------------------------------------
19962 $552,815 $ $ $ $
------------------------------------------------------------------------------
1997 $160,348 $ $ $ $
------------------------------------------------------------------------------
1998 $ $ $ $ $
------------------------------------------------------------------------------
1. The Distributor advances commission payments to dealers for certain
sales of Class A shares and for sales of Class B and Class C shares from
its own resources at the time of sale.
2. Fiscal period of ten months.
<PAGE>
------------------------------------------------------------------------------
Class A Contingent Class B Contingent Class C Contingent
Fiscal Year Deferred Sales Deferred Sales Deferred Sales
Ended 8/31: Charges Retained by Charges Retained by Charges Retained by
Distributor Distributor Distributor
------------------------------------------------------------------------------
1998 $ $ $
------------------------------------------------------------------------------
For additional information about distribution of the Fund's shares,
including fees and expenses, please refer to "Distribution and Service
Plans," below.
Distribution and Service Plans. The Fund has adopted a Service Plan for
Class A shares and Distribution and Service Plans for Class B and Class C
shares Rule 12b-1 of the Investment Company Act. Under those plans the Fund
pays the Distributor for all or a portion of its costs incurred in connection
with the distribution and/or servicing of the shares of the particular
class.
Each plan has been approved by a vote of the Board of Trustees, including
a majority of the Independent Trustees3, cast in person at a meeting called
for the purpose of voting on that plan. Each plan has also been approved by
the holders of a "majority" (as defined in the Investment Company Act) of the
shares of the applicable class. The shareholder votes for the plans were
cast by the Manager as the sole initial holder of each class of shares of the
Fund.
Under the plans, the Manager and the Distributor, in their sole
discretion, from time to time, may use their own resources to make payments
to brokers, dealers or other financial institutions for distribution and
administrative services they perform, at no cost to the Fund. The Manager may
use its profits from the advisor fee it receives from the Fund. In their sole
discretion, the Distributor and the Manager may increase or decrease the
amount of payments they make from their own resources to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Fund's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose
of voting on continuing the plan. A plan may be terminated at any time by the
vote of a majority of the Independent Trustees or by the vote of the holders
of a "majority" (as defined in the Investment Company Act) of the outstanding
shares of that class.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount
of payments to be made under a plan must be approved by shareholders of the
class affected by the amendment. Because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund must
obtain the approval of both Class A and Class B shareholders for a proposed
material amendment to the Class A Plan that would materially increase
payments under the Plan. That approval must be by a "majority" (as defined
in the Investment Company Act) of the shares of each Class, voting separately
by class.
While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports on the plans to the Board of Trustees at least
quarterly for its review. The Reports shall detail the amount of all payments
made under a plan, the purpose for which the payments were made and the
identity of each recipient of a payment. The reports on the Class B Plan and
Class C Plan shall also include the Distributor's distribution costs for that
quarter and in the case of the Class B plan the amount of those costs for
previous fiscal periods that are unreimbursed. Those reports are subject to
the review and approval of the Independent Trustees.
Each Plan states that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund is
committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in the selection and nomination process as
long as the final decision as to selection or nomination is approved by a
majority of the Independent Trustees.
Under the plans, no payment will be made to any recipient in any quarter
in which the aggregate net asset value of all Fund shares held by the
recipient for itself and its customers does not exceed a minimum amount, if
any, that may be set from time to time by a majority of the Independent
Trustees. The Board of Trustees has set no minimum amount of assets to
qualify for payments under the plans.
o Class A Service Plan Fees. Under the Class A service plan, the
Distributor currently uses the fees it receives from the Fund to pay brokers,
dealers and other financial institutions (they are referred to as
"recipients") for personal services and account maintenance services they
provide for their customers who hold Class A shares. The services include,
among others, answering customer inquiries about the Fund, assisting in
establishing and maintaining accounts in the Fund, making the Fund's
investment plans available and providing other services at the request of the
Fund or the Distributor. While the plan permits the Board to authorize
payments to the Distributor to reimburse itself for services under the plan,
the Board has not yet done so. The Distributor makes payments to plan
recipients quarterly at an annual rate not to exceed 0.25% of the average
annual net assets consisting of Class A shares held in the accounts of the
recipients or their customers.
For the fiscal year ended August 31, 1998 payments under the Class A Plan
totaled $_________, all of which was paid by the Distributor to recipients.
That included $________ paid to an affiliate of the Distributor's parent
company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
The Distributor may not use payments received the Class A Plan to pay any of
its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.
o Class B and Class C Service and Distribution Plan Fees. Under each
plan, service fees and distribution fees are computed on the average of the
net asset value of shares in the respective class, determined as of the close
of each regular business day during the period. The plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund
under the plans during the period for which the fee is paid.
The Class B and the Class C Plans permit the Distributor to retain both
the asset-based sales charges and the service fees or to pay recipients the
service fee on a quarterly basis, without payment in advance. However, the
Distributor currently intends to pay the service fee to recipients in advance
for the first year after the shares are purchased. After the first year
shares are outstanding, the Distributor makes payments quarterly on those
shares. The advance payment is based on the net asset value of shares sold.
Shares purchased by exchange do not qualify for the service fee payment. If
Class B or Class C shares are redeemed during the first year after their
purchase, the recipient of the service fees on those shares will be obligated
to repay the Distributor a pro rata portion of the advance payment of the
service fee made on those shares.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. It pays the asset-based sales
charge as an ongoing commission to the recipient on Class C shares
outstanding for a year or more. If a dealer has a special agreement with the
Distributor, the Distributor will pay the Class B and/or Class C service fee
and the asset-based sales charge to the dealer quarterly in lieu of paying
the sales commissions and service fee in advance at the time of purchase.
The asset-based sales charges on Class B and Class C shares allow
investors to buy shares without a front-end sales charge while allowing the
Distributor to reimburse dealers that sell those shares. The Fund pays the
asset-based sales charges to the Distributor for its services rendered in
distributing Class B and Class C shares. The payments are made to the
Distributor in recognition that the Distributor:
o pays sales commissions to authorized brokers and dealers at the time of
sale and pays service fees as described above,
o may finance payment of sales commissions and/or the advance of the
service fee payment to recipients under the plans, or may provide such
financing from its own resources or from the resources of an
affiliate,
o employs personnel to support distribution of Class B and Class C
shares, and
o bears the costs of sales literature, advertising and prospectuses
(other than those furnished to current shareholders) and state "blue
sky" registration fees and certain other distribution expenses.
For the fiscal year ended August 31, 1998, payments under the Class B
plan totaled $___________ (including $___________ paid to an affiliate of the
Distributor's parent). The Distributor retained $__________________ of the
total amount. For the fiscal year ended August 31, 1998, payments under the
Class C plan totaled $_______________, (including $___________ paid to an
affiliate of the Distributor's parent). The Distributor retained
$_____________ of the total amount.
The Distributor's actual expenses in selling Class B and Class C shares
may be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and from the Fund under the plans. As of
August 31, 1998, the Distributor had incurred unreimbursed expenses under the
Class B plan in the amount of $_______________ (equal to ___% of the Fund's
net assets represented by Class B shares on that date) and unreimbursed
expenses under the Class C plan of $_____________ (equal to ___% of the
Fund's net assets represented by Class C shares on that date). If either the
Class B or the Class C plan is terminated by the Fund, the Board of Trustees
may allow the Fund to continue payments of the asset-based sales charge to
the Distributor for distributing shares before the plan was terminated.
All payments under the Class B and the Class C plans are subject to the
limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how
total returns are calculated is set forth below. The charts below show the
Fund's performance of the Fund's most recent fiscal year end. You can obtain
current performance information by calling the Fund's Transfer Agent at
1-800-525-7048 or by visiting the OppenheimerFunds Internet web site at
http://www.oppenheimerfunds.com.
The Fund's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by the Fund of its performance data
must include the average annual total returns for the advertised class of
shares of the Fund. Those returns must be shown for the 1, 5 and 10-year
periods (or the life of the class, if less) ending as of the most recently
ended calendar quarter prior to the publication of the advertisement (or its
submission for publication).
Use of standardized performance calculations enables an investor to
compare the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Fund's performance information as a basis for comparison with other
investments:
|_| Total returns measure the performance of a hypothetical account in
the Fund over various periods and do not show the performance of each
shareholder's account. Your account's performance will vary from the model
performance data if your dividends are received in cash, or you buy or sell
shares during the period, or you bought your shares at a different time and
price than the shares used in the model.
|_| An investment in the Fund is not insured by the FDIC or any other
government agency.
|_| The principal value of the Fund's shares and total returns are not
guaranteed and normally will fluctuate on a daily basis.
|_| When an investor's shares are redeemed, they may be worth more or
less than their original cost.
|_| Total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future returns.
The performance of each class of shares is shown separately, because
the performance of each class of shares will usually be different. That is
because of the different kinds of expenses each class bears. The total
returns of each class of shares of the Fund are affected by market
conditions, the quality of the Fund's investments, the maturity of debt
investments, the types of investments the Fund holds, and its operating
expenses that are allocated to the particular class.
|X| Total Return Information. There are different types of "total
returns" to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares and that the investment is redeemed at the end of the
period. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. The cumulative total
return measures the change in value over the entire period (for example, ten
years). An average annual total return shows the average rate of return for
each year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show actual
year-by-year performance. The Fund uses standardized calculations for its
total returns as prescribe the SEC. The methodology is discussed below.
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown without sales
charge, as described below). For Class B shares, payment of the applicable
contingent deferred sales charge is applied, depending on the period for
which the return is shown: 5.0% in the first year, 4.0% in the second year,
3.0% in the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth
year and none thereafter. For Class C shares, the 1% contingent deferred
sales charge is deducted for returns for the 1-year period.
|_| Average Annual Total Return. The "average annual total return" of
each class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in
value of a hypothetical initial investment of $1,000 ("P" in the formula
below) held for a number of years ("n" in the formula) to achieve an Ending
Redeemable Value ("ERV" in the formula) of that investment, according to the
following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
|_| Cumulative Total Return. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as
average annual total return, but it does not average the rate of return on an
annual basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
|_| Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B or Class C shares. Each
is based on the difference in net asset value per share at the beginning and the
end of the period for a hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and takes into
consideration the reinvestment of dividends and capital gains distributions.
<PAGE>
--------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 8/31/98
--------------------------------------------------------------
Cumulative Average Annual Total
Class of Total Returns Returns
Shares (Life of Class)
--------------------------------------------------------------
1-Year Life-of-Class
--------------------------------------------------------------
After Without After Without After Without
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
--------------------------------------------------------------
Class A 1 1
--------------------------------------------------------------
Class B 2 2
--------------------------------------------------------------
Class C 3 3
--------------------------------------------------------------
1. Inception of Class A: 11/7/95
2. Inception of Class B: 11/7/95
3. Inception of Class C: 11/7/95
Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer
Agent at the addresses or telephone numbers shown on the cover of this
Statement of Additional Information. The Fund may also compare its
performance to that of other investments, including other mutual funds, or
use rankings of its performance by independent ranking entities. Examples of
these performance comparisons are set forth below.
|_| Lipper Rankings. From time to time the Fund may publish the ranking
of the performance of its classes of shares by Lipper Analytical Services,
Inc. Lipper is a widely-recognized independent mutual fund monitoring
service. Lipper monitors the performance of regulated investment companies,
including the Fund, and ranks their performance for various periods based on
categories relating to investment objectives. Lipper currently ranks the
Fund's performance against all other micro-cap appreciation funds. The Lipper
performance rankings are based on total returns that include the reinvestment
of capital gain distributions and income dividends but do not take sales
charges or taxes into consideration. Lipper also publishes "peer-group"
indices of the performance of all mutual funds in a category that it monitors
and averages of the performance of the funds in particular categories.
|_| Morningstar Rankings. From time to time the Fund may publish the
star ranking of the performance of its classes shares by Morningstar, Inc.,
an independent mutual fund monitoring service. Morningstar ranks mutual
funds in broad investment categories: domestic stock funds, international
stock funds, taxable bond funds and municipal bond funds. The Fund is ranked
among domestic stock funds.
Morningstar star rankings are based on risk-adjusted total investment
return. Investment return measures a fund's (or class's) one, three, five and
ten-year average annual total returns (depending on the inception of the fund
or class) in excess of 90-day U.S. Treasury bill returns after considering
the fund's sales charges and expenses. Risk measures a fund's (or class's)
performance below 90-day U.S. Treasury bill returns. Risk and investment
return are combined to produce star rankings reflecting performance relative
to the average fund in a fund's category. Five stars is the "highest"
ranking (top 10% of funds in a category), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below average"
(next 22.5%) and one star is "lowest" (bottom 10%). The current star ranking
is the fund's (or class's) 3-year ranking or its combined 3- and 5-year
ranking (weighted 60%/40% respectively), or its combined 3-, 5-, and 10-year
ranking (weighted 40%, 30% and 30%, respectively), depending on the inception
date of the fund (or class). Rankings are subject to change monthly.
The Fund may also compare its performance to that of other funds in its
Morningstar category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments and investment style, rather than
how a fund defines its investment objective. Morningstar's four broad
categories (domestic equity, international equity, municipal bond and taxable
bond) are each further subdivided into categories based on types of
investments and investment styles. Those comparisons by Morningstar are
based on the same risk and return measurements as its star rankings but do
not consider the effect of sales charges.
|_| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements
and sales literature performance information about the Fund cited in
newspapers and other periodicals such as The New York Times, The Wall Street
Journal, Barron's, or similar publications. That information may include
performance quotations from other sources, including Lipper and Morningstar.
The performance of the Fund's classes of shares may be compared in
publications to the performance of various market indices or other
investments, and averages, performance rankings or other benchmarks prepared
by recognized mutual fund statistical services.
Investors may also wish to compare the returns on the Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed or insured by
the FDIC or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of return.
Repayment of principal and payment of interest on Treasury securities is
backed by the full faith and credit of the U.S. Government.
From time to time, the Fund may publish rankings or ratings of the
Manager or Transfer Agent, and of the investor services provided by them to
shareholders of the Oppenheimer funds, other than performance rankings of the
Oppenheimer funds themselves. Those ratings or rankings of shareholder and
investor services by third parties may include comparisons of their services
to those provided by other mutual fund families selected by the rating or
ranking services. They may be based upon the opinions of the rating or
ranking service itself, using its research or judgment, or based upon surveys
of investors, brokers, shareholders or others.
- ------------------------------------------------------------------------------
ABOUT YOUR ACCOUNT
- ------------------------------------------------------------------------------
How to Buy Shares
Additional information is presented below about the methods that can be
used to buy shares of the Fund. Appendix C contains more information about
the special sales charge arrangements offered by the Fund, and the
circumstances in which sales charges may be reduced or waived for certain
classes of investors.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25. Shares will be purchased on the regular business day
the Distributor is instructed to initiate the Automated Clearing House
("ACH") transfer to buy the shares. Dividends will begin to accrue on shares
purchased with the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for the purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at 4:00
P.M., but may close earlier on certain days. If Federal Funds are received
on a business day after the close of the Exchange, the shares will be
purchased and dividends will begin to accrue on the next regular business
day. The proceeds of ACH transfers are normally received by the Fund 3 days
after the transfers are initiated. The Distributor and the Fund are not
responsible for any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and reduction
in expenses realized by the Distributor, dealers and brokers making such
sales. No sales charge is imposed in certain other circumstances described
in Appendix C to this Statement of Additional Information because the
Distributor or dealer or broker incurs little or no selling expenses.
n Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together:
o Class A and Class B shares you purchase for your individual
accounts, or for your joint accounts, or for trust or custodial
accounts on behalf of your children who are minors, and
o current purchases of Class A and Class B shares of the Fund and
other Oppenheimer funds to reduce the sales charge rate that
applies to current purchases of Class A shares, and
o Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of
Class A shares, provided that you still hold your investment in
one of the Oppenheimer funds.
A fiduciary can count all shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the same
employer) that has multiple accounts. The Distributor will add the value, at
current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. The reduced sales charge will apply only to current purchases. You
must request it when you buy shares.
n The Oppenheimer Funds. The Oppenheimer funds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor and
currently include the following:
<PAGE>
Oppenheimer Municipal Bond Fund Oppenheimer Global Growth & Income Fund
Oppenheimer New York Municipal Fund Oppenheimer Gold & Special Minerals
Oppenheimer California Municipal Fund Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Strategic Income Fund
Oppenheimer Insured Municipal Fund Oppenheimer International Bond Fund
Oppenheimer Main Street California Oppenheimer Enterprise Fund
Municipal Fund Oppenheimer International Growth Fund
Oppenheimer Florida Municipal Fund Oppenheimer Developing Markets Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Real Asset Fund
Oppenheimer Pennsylvania Municipal Fund Oppenheimer International Small
Oppenheimer Discovery Fund Company Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Growth Fund Oppenheimer Quest Opportunity Value
Oppenheimer Equity Income Fund Fund
Oppenheimer Multiple Strategies Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer Total Return Fund, Inc. Oppenheimer Quest Value Fund, Inc.
Oppenheimer Main Street Income & Growth Oppenheimer Quest Global Value Fund,
Fund Inc.
Oppenheimer High Yield Fund Oppenheimer Quest Capital Value Fund,
Oppenheimer Champion Income Fund Inc.
Oppenheimer Bond Fund Oppenheimer MidCap Fund
Oppenheimer U.S. Government Trust Oppenheimer Convertible Securities Fund
Oppenheimer Limited-Term Government Fund Rochester Fund Municipals
Oppenheimer Global Fund Limited-Term New York Municipal Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation
Fund
Oppenheimer World Bond Fund
and the following money market funds:
Oppenheimer Money Market Fund, Inc. Centennial Government Trust
Oppenheimer Cash Reserves Centennial New York Tax Exempt Trust
Centennial Money Market Trust Centennial California Tax Exempt Trust
Centennial Tax Exempt Trust Centennial America Fund, L.P.
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except the money market funds. Under certain
circumstances described in this Statement of Additional Information,
redemption proceeds of certain money market fund shares may be subject to a
contingent deferred sales charge.
Letters of Intent. Under a Letter of Intent, if you purchase Class A shares
or Class A and Class B shares of the Fund and other Oppenheimer funds during
a 13-month period, you can reduce the sales charge rate that applies to your
purchases of Class A shares. The total amount of your intended purchases of
both Class A and Class B shares will determine the reduced sales charge rate
for the Class A shares purchased during that period. You can include
purchases made up to 90 days before the date of the Letter.
A Letter of Intent is an investor's statement in writing to the
Distributor of the intention to purchase Class A shares or Class A and Class
B shares of the Fund (and other Oppenheimer funds) during a 13-month period
(the "Letter of Intent period"). At the investor's request, this may include
purchases made up to 90 days prior to the date of the Letter. The Letter
states the investor's intention to make the aggregate amount of purchases of
shares which, when added to the investor's holdings of shares of those funds,
will equal or exceed the amount specified in the Letter. Purchases made by
reinvestment of dividends or distributions of capital gains and purchases
made at net asset value without sales charge do not count toward satisfying
the amount of the Letter.
A Letter enables an investor to count the Class A and Class B shares
purchased under the Letter to obtain the reduced sales charge rate on
purchases of Class A shares of the Fund (and other Oppenheimer funds) that
applies under the Right of Accumulation to current purchases of Class A
shares. Each purchase of Class A shares under the Letter will be made at the
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. However, if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the investor's
holdings of shares on the last day of that period, do not equal or exceed the
intended purchase amount, the investor agrees to pay the additional amount of
sales charge applicable to such purchases. That amount is described in "Terms
of Escrow," below (those terms may be amended by the Distributor from time to
time). The investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent subject to the
Terms of Escrow. Also, the investor agrees to be bound by the terms of the
Prospectus, this Statement of Additional Information and the Application used
for a Letter of Intent. If those terms are amended, as they may be from time
to time by the Fund, the investor agrees to be bound by the amended terms and
that those amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during the
Letter of Intent period exceed the intended purchase amount and exceed the
amount needed to qualify for the next sales charge rate reduction set forth
in the Prospectus, the sales charges paid will be adjusted to the lower rate.
That adjustment will be made only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be used
to purchase additional shares for the investor's account at the net asset
value per share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
The Transfer Agent will not hold shares in escrow for purchases of
shares of the Fund and other Oppenheimer funds by OppenheimerFunds prototype
401(k) plans under a Letter of Intent. If the intended purchase amount under
a Letter of Intent entered into by an OppenheimerFunds prototype 401(k) plan
is not purchased by the plan by the end of the Letter of Intent period, there
will be no adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer of
record and/or the investor to advise the Distributor about the Letter in
placing any purchase orders for the investor during the Letter of Intent
period. All of such purchases must be made through the Distributor.
-- 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 total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid if
the total amount purchased had been made at a single time. That sales charge
adjustment will apply to any shares redeemed prior to the completion of the
Letter. If the difference in sales charges is not paid within twenty days
after a request from the Distributor or the dealer, the Distributor will,
within sixty days of the expiration of the Letter, redeem the number of
escrowed shares necessary to realize such difference in sales charges. Full
and fractional shares remaining after such redemption will be released from
escrow. If a request is received to redeem escrowed shares prior to the
payment of such additional sales charge, the sales charge will be withheld
from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption
any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include:
(a) Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge,
(b) Class B shares of other Oppenheimer funds acquired subject to a
contingent deferred sales charge, and
(c) Class A or Class B shares acquired by exchange of either (1) Class A
shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge
or (2) Class B shares of one of the other Oppenheimer funds that
were acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares" and the escrow
will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan to buy shares
directly from a bank account, you must enclose a check (minimum $25) for the
initial purchase with your application. Shares purchased by Asset Builder
Plan payments from bank accounts are subject to the redemption restrictions
for recent purchases described in the Prospectus. Asset Builder Plans also
enable shareholders of Oppenheimer Cash Reserves to use their fund account to
make monthly automatic purchases of shares of up to four other Oppenheimer
funds.
If you make payments from your bank account to purchase shares of the
Fund, your bank account will be automatically debited, normally four to five
business days prior to the investment dates selected in the Application.
Neither the Distributor, the Transfer Agent nor the Fund shall be responsible
for any delays in purchasing shares resulting from delays in ACH
transmission.
Before initiating Asset Builder payments, obtain a prospectus of the
selected fund(s) from the Distributor or your financial advisor and request
an application from the Distributor, complete it and return it. The amount
of the Asset Builder investment may be changed or the automatic investments
may be terminated at any time by writing to the Transfer Agent. The Transfer
Agent requires a reasonable period (approximately 15 days) after receipt of
such instructions to implement them. The Fund reserves the right to amend,
suspend, or discontinue offering Asset Builder plans at any time without
prior notice.
Retirement Plans. Certain types of Retirement Plans are entitled to purchase
shares of the Fund without sales charge or at reduced sales charge rates, as
described in the Appendix to this Statement of Additional Information.
Certain special sales charge arrangements described in that Appendix apply to
Retirement Plans whose records are maintained on a daily valuation basis by
Merrill Lynch Pierce Fenner & Smith, Inc. or an independent record keeper
that has a contract or special arrangement with Merrill Lynch. If on the date
the plan sponsor signed the Merrill Lynch record keeping service agreement
the Plan has less than $3 million in assets (other than assets invested in
money market funds) invested in Applicable Investments, then the Retirement
Plan may purchase only Class B shares of the Oppenheimer funds. Any
Retirement Plans in that category that currently invest in Class B shares of
the Fund will have their Class B shares converted to Class A shares of the
Fund when the Plan's Applicable Investments reach $5 million.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the Fund's
shares on the cancellation date is less than on the purchase date. That loss
is equal to the amount of the decline in the net asset value per share
multiplied by the number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the Fund for
the loss, the Distributor will do so. The Fund may reimburse the Distributor
for that amount by redeeming shares from any account registered in that
investor's name, or the Fund or the Distributor may seek other redress.
Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has
different shareholder privileges and features. The net income attributable
to Class B or Class C shares and the dividends payable on Class B or Class C
shares will be reduced by incremental expenses borne solely by that class.
Those expenses include the asset-based sales charges to which Class B and
Class C are subject.
The availability of different classes of shares permits an investor to
choose the method of purchasing shares that is more appropriate for the
investor. That may depend on the amount of the purchase, the length of time
the investor expects to hold shares, and other relevant circumstances. Class
A shares in general are sold subject to an initial sales charge. While Class
B and Class C shares have no initial sales charge, the purpose of the
deferred sales charge and asset-based sales charge on Class B and Class C
shares is the same as that of the initial sales charge on Class A shares - to
compensate the Distributor and brokers, dealers and financial institutions
that sell shares of the Fund. A salesperson who is entitled to receive
compensation for selling Fund shares may receive different levels of
compensation for selling to one class of shares than another.
The Distributor will not accept any order in the amount of $500,000 or
more for Class B shares or $1 million or more for Class C shares on behalf of
a single investor (not including dealer "street name" or omnibus accounts).
That is because generally it will be more advantageous for that investor to
purchase Class A shares of the Fund.
-- Class B Conversion. The conversion of Class B shares to Class A
shares after six years is subject to the continuing availability of a private
letter ruling from the Internal Revenue Service, or an opinion of counsel or
tax adviser, to the effect that the conversion of Class B shares does not
constitute a taxable event for the 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.
-- Allocation of Expenses. The Fund pays expenses related to its
daily operations, such as custodian fees, Trustees' fees, transfer agency
fees, legal fees and auditing costs. Those expenses are paid out of the
Fund's assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are indirectly
borne by shareholders through their investment.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
Statements of Additional Information and other materials for current
shareholders, fees to unaffiliated Trustees, custodian expenses, share
issuance costs, organization and start-up costs, interest, taxes and
brokerage commissions, and non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of
such expenses include distribution and service plan (12b-1) fees, transfer
and shareholder servicing agent fees and expenses, share registration fees
and shareholder meeting expenses (to the extent that such expenses pertain
only to a specific class).
Determination of Net Asset Values Per Share. The net asset values per share
of each class of shares of the Fund are determined as of the close of
business of The New York Stock Exchange on each day that the Exchange is
open. The calculation is done by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that are
outstanding. The Exchange normally closes at 4:00 P.M., New York time, but
may close earlier on some other days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's most recent
annual announcement (which is subject to change) states that it will close on
New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. It may also close on other days.
Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and
holidays) or after 4:00 P.M. on a regular business day. Because the Fund's
net asset values will not be calculated on those days, the Fund's net asset
values per share may be significantly affected on such days when shareholders
may not purchase or redeem shares. For example, trading on European and Asian
stock exchanges and over-the-counter markets normally is completed before the
close of The New York Stock Exchange.
Changes in the values of securities traded on foreign exchanges or
markets as a result of events that occur after the prices of those securities
are determined, but before the close of The New York Stock Exchange, will not
be reflected in the Fund's calculation of its net asset values that day
unless the Board of Trustees determines that the event is likely to effect a
material change in the value of the security. The Manager may make that
determination, under procedures established by the Board.
n Securities Valuation. The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
o Equity securities traded on a U.S. securities exchange or on NASDAQ
are valued as follows:
(1) if last sale information is regularly reported, they are valued at the
last reported sale price on the principal exchange on which
they are traded or on NASDAQ, as applicable, on that day, or
(2) if last sale information is not available on a valuation date, they are
valued at the last reported sale price preceding the valuation
date if it is within the spread of the closing "bid" and
"asked" prices on the valuation date or, if not, at the
closing "bid" price on the valuation date.
o Equity securities traded on a foreign securities exchange generally
are valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by the
Board of Trustees, or
(2) at the last sale price obtained by the Manager from the report of the
principal exchange on which the security is traded at its last
trading session on or immediately before the valuation date, or
(3) at the mean between the "bid" and "asked" prices obtained from the
principal exchange on which the security is traded or, on the
basis of reasonable inquiry, from two market makers in the
security.
o 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.
o The following securities are valued at the mean between the "bid"
and "asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained by the Manager from two active market makers in
the security on the basis of reasonable inquiry:
(1) debt instruments that have a maturity of more than 397 days when
issued,
(2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60 days or
less.
o The following securities are valued at cost, adjusted for
amortization of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a remaining
maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.
o Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures. If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the
"bid" and "asked" prices provided by a single active market maker (which in
certain cases may be the "bid" price if no "asked" price is available).
In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale information
is not generally available, the Manager may use pricing services approved by
the Board of Trustees. The pricing service may use "matrix" comparisons to
the prices for comparable instruments on the basis of quality, yield,
maturity. Other special factors may be involved (such as the tax-exempt
status of the interest paid by municipal securities). The Manager will
monitor the accuracy of the pricing services. That monitoring may include
comparing prices used for portfolio valuation to actual sales prices of
selected securities.
The closing prices in the London foreign exchange market on a
particular business day that are provided to the Manager by a bank, dealer or
pricing service that the Manager has determined to be reliable are used to
value foreign currency, including forward contracts, and to convert to U.S.
dollars securities that are denominated in foreign currency.
Puts, calls, and futures are valued at the last sale price on the
principal exchange on which they are traded or on NASDAQ, as applicable, as
determined by a pricing service approved by the Board of Trustees or by the
Manager. If there were no sales that day, they shall be valued at the last
sale price on the preceding trading day if it is within the spread of the
closing "bid" and "asked" prices on the principal exchange or on NASDAQ on
the valuation date. If not, the value shall be the closing bid price on the
principal exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be valued by the
mean between "bid" and "asked" prices obtained by the Manager from two active
market makers. In certain cases that may be at the "bid" price if no "asked"
price is available.
When the Fund writes an option, an amount equal to the premium received
is included in the Fund's Statement of Assets and Liabilities as an asset. An
equivalent credit is included in the liability section. The credit is
adjusted ("marked-to-market") to reflect the current market value of the
option. In determining the Fund's gain on investments, if a call or put
written by the Fund is exercised, the proceeds are increased by the premium
received. If a call or put written by the Fund expires, the Fund has a gain
in the amount of the premium. If the Fund enters into a closing purchase
transaction, it will have a gain or loss, depending on whether the premium
received was more or less than the cost of the closing transaction. If the
Fund exercises a put it holds, the amount the Fund receives on its sale of
the underlying investment is reduced by the amount of premium paid by the
Fund.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below provides additional information about the
procedures and conditions for redeeming shares.
Reinvestment Privilege. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of:
o Class A shares that you purchased subject to an initial sales charge
or Class A shares on which a contingent deferred sales charge which was paid,
or
o Class B shares that were subject to the Class B contingent deferred
sales charge when redeemed.
The reinvestment may be made without sales charge only in Class A
shares of the Fund or any of the other Oppenheimer funds into which shares of
the Fund are exchangeable as described in "How to Exchange Shares" below.
Reinvestment will be at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the Transfer
Agent for that privilege at the time of reinvestment. This privilege does not
apply to Class C shares. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date of
such amendment, suspension or cessation.
Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on
that gain. If there has been a capital loss on the redemption, some or all
of the loss may not be tax deductible, depending on the timing and amount of
the reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are reinvested in
shares of the Fund or another of the Oppenheimer funds within 90 days of
payment of the sales charge, the shareholder's basis in the shares of the
Fund that were redeemed may not include the amount of the sales charge paid.
That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption proceeds.
Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, the Board of Trustees of
the Fund may determine that it would be detrimental to the best interests of
the remaining shareholders of the Fund to make payment of a redemption order
wholly or partly in cash. In that case, the Fund may pay the redemption
proceeds in whole or in part by a distribution "in kind" of securities from
the portfolio of the Fund, in lieu of cash.
The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, the Fund is obligated to redeem shares solely
in cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The Fund will value securities used to pay
redemptions in kind using the same method the Fund uses to value its
portfolio securities described above under "Determination of Net Asset Values
Per Share." That valuation will be made as of the time the redemption price
is determined.
Involuntary Redemptions. The Fund's Board of Trustees has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $500 or such lesser amount as
the Board may fix. The Board will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has
fallen below the stated minimum solely as a result of market fluctuations.
If the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days).
The Board may alternatively set requirements for the shareholder to increase
the investment, or set other terms and conditions so that the shares would
not be involuntarily redeemed.
Transfers of Shares. A transfer of shares to a different registration is not
an event that triggers the payment of sales charges. Therefore, shares are
not subject to the payment of a contingent deferred sales charge of any class
at the time of transfer to the name of another person or entity. It does not
matter whether the transfer occurs by absolute assignment, gift or bequest,
as long as it does not involve, directly or indirectly, a public sale of the
shares. When shares subject to a contingent deferred sales charge are
transferred, the transferred shares will remain subject to the contingent
deferred sales charge. It will be calculated as if the transferee shareholder
had acquired the transferred shares in the same manner and at the same time
as the transferring shareholder.
If less than all shares held in an account are transferred, and some
but not all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities described in
the Prospectus under "How to Buy Shares" for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in determining the
order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of this
Statement of Additional Information. The request must:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Fund's other redemption
requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign
the request.
Distributions from pension and profit sharing plans are subject to
special requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed and submitted to the
Transfer Agent before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the
Transfer Agent with a certified tax identification number, the Internal
Revenue Code requires that tax be withheld from any distribution even if the
shareholder elects not to have tax withheld. The Fund, the Manager, the
Distributor, and the Transfer Agent assume no responsibility to determine
whether a distribution satisfies the conditions of applicable tax laws and
will not be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized
dealers or brokers on behalf of their customers. Shareholders should contact
their broker or dealer to arrange this type of redemption. The repurchase
price per share will be the net asset value next computed after the
Distributor receives an order placed by the dealer or broker. However, if the
Distributor receives a repurchase order from a dealer or broker after the
close of The New York Stock Exchange on a regular business day, it will be
processed at that day's net asset value if the order was received by the
dealer or broker from its customers prior to the time the Exchange closes.
Normally, the Exchange closes at 4:00 P.M., but may do so earlier on some
days. Additionally, the order must have been transmitted to and received by
the Distributor prior to its close of business that day (normally 5:00
P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this
procedure, payment will be made within three business days after the shares
have been redeemed upon the Distributor's receipt of the required redemption
documents in proper form. The signature(s) of the registered owners on the
redemption documents must be guaranteed as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(having a value of at least $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares will
be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made by
check payable to all shareholders of record. Payments must also be sent to
the address of record for the account and the address must not have been
changed within the prior 30 days. Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this
basis.
Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account designated
on the Account Application or by signature-guaranteed instructions sent to
the Transfer Agent. Shares are normally redeemed pursuant to an Automatic
Withdrawal Plan three business days before the payment transmittal date you
select in the Account Application. If a contingent deferred sales charge
applies to the redemption, the amount of the check or payment will be reduced
accordingly.
The Fund cannot guarantee receipt of a payment on the date requested.
The Fund reserves the right to amend, suspend or discontinue offering these
plans at any time without prior notice. Because of the sales charge assessed
on Class A share purchases, shareholders should not make regular additional
Class A share purchases while participating in an Automatic Withdrawal Plan.
Class B and Class C shareholders should not establish withdrawal plans,
because of the imposition of the contingent deferred sales charge on such
withdrawals (except where the contingent deferred sales charge is waived as
described in "Waivers of Class B and Class C Sales Charges" below).
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions that apply to such plans, as stated
below. These provisions may be amended from time to time by the Fund and/or
the Distributor. When adopted, any amendments will automatically apply to
existing Plans.
-- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent to exchange a pre-determined amount of shares of the Fund for
shares (of the same class) of other Oppenheimer funds automatically on a
monthly, quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum amount that may be exchanged to each other fund account is
$25. Instructions should be provided on the OppenheimerFunds Application or
signature-guaranteed instructions. Exchanges made under these plans are
subject to the restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of Additional
Information.
-- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first. Shares acquired with reinvested dividends and
capital gains distributions will be redeemed next, followed by shares
acquired with a sales charge, to the extent necessary to make withdrawal
payments. Depending upon the amount withdrawn, the investor's principal may
be depleted. Payments made under these plans should not be considered as a
yield or income on your investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. Neither the
Fund nor the Transfer Agent shall incur any liability to the Planholder for
any action taken or not taken by the Transfer Agent in good faith to
administer the Plan. Share certificates will not be issued for shares of the
Fund purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the records of the
Fund. Any share certificates held by a Planholder may be surrendered
unendorsed to the Transfer Agent with the Plan application so that the shares
represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the
account may be paid in cash or reinvested.
Shares will be redeemed to make withdrawal payments at the net asset
value per share determined on the redemption date. Checks or AccountLink
payments representing the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment, according to the choice specified in writing by the Planholder.
Receipt of payment on the date selected cannot be guaranteed
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time after mailing such
notification for the requested change to be put in effect. The Planholder
may, at any time, instruct the Transfer Agent by written notice to redeem
all, or any part of, the shares held under the Plan. That notice must be in
proper form in accordance with the requirements of the then-current
Prospectus of the Fund. In that case, the Transfer Agent will redeem the
number of shares requested at the net asset value per share in effect and
will mail a check for the proceeds to the Planholder.
The Planholder may terminate a Plan at any time by writing to the
Transfer Agent. The Fund may also give directions to the Transfer Agent to
terminate a Plan. The Transfer Agent will also terminate a Plan upon its
receipt of evidence satisfactory to it that the Planholder has died or is
legally incapacitated. Upon termination of a Plan by the Transfer Agent or
the Fund, shares that have not been redeemed will be held in uncertificated
form in the name of the Planholder. The account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder, his or her executor or
guardian, or another authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued without
causing the withdrawal checks to stop. However, should such uncertificated
shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to
act as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged only
for shares of the same class of other Oppenheimer funds. Shares of
Oppenheimer funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. You can obtain a current list
showing which funds offer which classes by calling the Distributor at
1-800-525-7048.
o All of the Oppenheimer funds currently offer Class A, B and C shares
except Oppenheimer Money Market Fund, Inc., Centennial Money Market Trust,
Centennial Tax Exempt Trust, Centennial Government Trust, Centennial New York
Tax Exempt Trust, Centennial California Tax Exempt Trust, and Centennial
America Fund, L.P., which only offer Class A shares.
o Oppenheimer Main Street California Municipal Fund currently offers
only Class A and Class B shares.
o 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.
o Class Y shares of Oppenheimer Real Asset Fund may not be exchanged
for shares of any other Fund.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any money market fund offered by the Distributor. Shares of
any money market fund purchased without a sales charge may be exchanged for
shares of Oppenheimer funds offered with a sales charge upon payment of the
sales charge. They may also be used to purchase shares of Oppenheimer funds
subject to a contingent deferred sales charge.
Shares of Oppenheimer Money Market Fund, Inc. purchased with the
redemption proceeds of shares of other mutual funds (other than funds managed
by the Manager or its subsidiaries) redeemed within the 30 days prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge. To
qualify for that privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the shares of
Oppenheimer Money Market Fund, Inc. are purchased. If requested, they must
supply proof of entitlement to this privilege.
For accounts established on or before March 8, 1996 holding Class M
shares of Oppenheimer Convertible Securities Fund, Class M shares can be
exchanged only for Class A shares of other Oppenheimer funds. Exchanges to
Class M shares of Oppenheimer Convertible Securities Fund are permitted from
Class A shares of Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash
Reserves that were acquired by exchange of Class M shares. No other
exchanges may be made to Class M shares.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any of the other Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
-- How Exchanges Affect Contingent Deferred Sales Charges. No
contingent deferred sales charge is imposed on exchanges of shares of any
class purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares. The Class B contingent
deferred sales charge is imposed on Class B shares acquired by exchange if
they are redeemed within 6 years of the initial purchase of the exchanged
Class B shares. The Class C contingent deferred sales charge is imposed on
Class C shares acquired by exchange if they are redeemed within 12 months of
the initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B or the Class C contingent deferred sales charge
will be followed in determining the order in which the shares are exchanged.
Before exchanging shares, shareholders should take into account how the
exchange may affect any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares. Shareholders
owning shares of more than one Class must specify whether they intend to
exchange Class A, Class B or Class C shares.
-- Limits on Multiple Exchange Orders. The Fund reserves the right
to reject telephone or written exchange requests submitted in bulk by anyone
on behalf of more than one account. The Fund may accept requests for
exchanges of up to 50 accounts per day from representatives of authorized
dealers that qualify for this privilege.
-- Telephone Exchange Requests. When exchanging shares by
telephone, a shareholder must either have an existing account in the fund to
which the exchange is to be made. Otherwise, the investors must obtain a
Prospectus of that fund before the exchange request may be submitted. For
full or partial exchanges of an account made by telephone, any special
account features such as Asset Builder Plans and Automatic Withdrawal Plans
will be switched to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for example,
during periods of substantial market fluctuations), shareholders might not be
able to request exchanges by telephone and would have to submit written
exchange requests.
-- Processing Exchange Requests. Shares to be exchanged are
redeemed on the regular business day the Transfer Agent receives an exchange
request in proper form (the "Redemption Date"). Normally, shares of the fund
to be acquired are purchased on the Redemption Date, but such purchases may
be delayed by either fund up to five business days if it determines that it
would be disadvantaged by an immediate transfer of the redemption proceeds.
The Fund reserves the right, in its discretion, to refuse any exchange
request that may disadvantage it. For example, if the receipt of multiple
exchange requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the Fund,
the Fund may refuse the request.
In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a
share certificate that is not tendered with the request. In those cases,
only the shares available for exchange without restriction will be exchanged.
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that
the fund selected is appropriate for his or her investment and should be
aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of one
fund and a purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of redemption proceeds
in such cases. The Fund, the Distributor, and the Transfer Agent are unable
to provide investment, tax or legal advice to a shareholder in connection
with an exchange request or any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. The Fund has no fixed dividend rate and
there can be no assurance as to the payment of any dividends or the
realization of any capital gains. The dividends and distributions paid by a
class of shares will vary from time to time depending on market conditions,
the composition of the Fund's portfolio, and expenses borne by the Fund or
borne separately by a class. Dividends are calculated in the same manner, at
the same time, and on the same day for each class of shares. However,
dividends on Class B and Class C shares are expected to be lower than
dividends on Class A shares. That is because of the effect of the asset-based
sales charge on Class B and Class C shares. Those dividends will also differ
in amount as a consequence of any difference in the net asset values of Class
A, Class B, and Class C shares.
Dividends, distributions and proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund,
Inc. Reinvestment will be made as promptly as possible after the return of
such checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders
or their representatives for compliance with those laws in good faith.
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is briefly
highlighted in the Prospectus.
Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction for
corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. The amount of dividends paid by the Fund that
may qualify for the deduction is limited to the aggregate amount of
qualifying dividends that the Fund derives from portfolio investments that
the Fund has held for a minimum period, usually 46 days. A corporate
shareholder will not be eligible for the deduction on dividends paid on Fund
shares held for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or short-term
gains from the sale of securities or dividends from foreign corporations,
those dividends will not qualify for the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January 1
through December 31 of that year and 98% of its capital gains realized in the
period from November 1 of the prior year through October 31 of the current
year. If it does not, the Fund must pay an excise tax on the amounts not
distributed. It is presently anticipated that the Fund will meet those
requirements. However, the Board of Trustees and the Manager might determine
in a particular year that it would be in the best interests of shareholders
for the Fund not to make such distributions at the required levels and to pay
the excise tax on the undistributed amounts. That would reduce the amount of
income or capital gains available for distribution to shareholders.
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to qualify).
That qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without having to pay tax on them. This avoids
a double tax on that income and capital gains, since shareholders normally
will be taxed on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the shareholder
is otherwise exempt from tax). If the Fund qualifies as a "regulated
investment company" under the Internal Revenue Code, it will not be liable
for Federal income taxes on amounts paid by it as dividends and
distributions. The Fund qualified as a regulated investment company in its
last fiscal year. The Internal Revenue Code contains a number of complex
tests relating to qualification which the Fund might not meet in any
particular year. If it did not so qualify, the Fund would be treated for tax
purposes as an ordinary corporation and receive no tax deduction for payments
made to shareholders.
If prior distributions made by the Fund must be re-characterized as a
non-taxable return of capital at the end of the fiscal year as a result of
the effect of the Fund's investment policies, they will be identified as such
in notices sent to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the
same class of any of the other Oppenheimer funds listed above. Reinvestment
will be made without sales charge at the net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
To elect this option, the shareholder must notify the Transfer Agent in
writing and must have an existing account in the fund selected for
reinvestment. Otherwise the shareholder first must obtain a prospectus for
that fund and an application from the Distributor to establish an account.
Dividends and/or distributions from shares of certain other Oppenheimer funds
(other than Oppenheimer Cash Reserves) may be invested in shares of this Fund
on the same basis.
Additional Information About the Fund
The Distributor. The Fund's shares are sold through dealers, brokers and
other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as
the Fund's Distributor. The Distributor also distributes shares of the other
Oppenheimer funds and is sub-distributor for funds managed by a subsidiary of
the Manager.
The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is
a division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It acts on an "at-cost" basis. It
also acts as shareholder servicing agent for the other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the Transfer
Agent at the address and toll-free numbers shown on the back cover.
The Custodian. The Bank of New York is the Custodian of the Fund's assets.
The Custodian's responsibilities include safeguarding and controlling the
Fund's portfolio securities and handling the delivery of such securities to
and from the Fund. It will be the practice of the Fund to deal with the
Custodian in a manner uninfluenced by any banking relationship the Custodian
may have with the Manager and its affiliates. The Fund's cash balances with
the custodian in excess of $100,000 are not protected by Federal deposit
insurance. Those uninsured balances at times may be substantial.
Independent Auditors. KPMG Peat Marwick LLP are the independent auditors of
the Fund. They audit the Fund's financial statements and perform other
related audit services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
<PAGE>
A-1
Appendix A
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Industry Classifications
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Aerospace/Defense Food
Air Transportation Gas Utilities
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Information Technology
Building Materials Insurance
Cable Television Leasing & Factoring
Chemicals Leisure
Commercial Finance Manufacturing
Computer Hardware Metals/Mining
Computer Software Nondurable Household Goods
Conglomerates Oil - Integrated
Consumer Finance Paper
Containers Publishing/Printing
Convenience Stores Railroads
Department Stores Restaurants
Diversified Financial Savings & Loans
Diversified Media Shipping
Drug Stores Special Purpose Financial
Drug Wholesalers Specialty Retailing
Durable Household Goods Steel
Education Supermarkets
Electric Utilities Telecommunications - Technology
Electrical Equipment Telephone - Utility
Electronics Textile/Apparel
Energy Services & Producers Tobacco
Entertainment/Film Toys
Environmental Trucking
Wireless Services
<PAGE>
B-2
<PAGE>
B-12
APPENDIX B
Special Sales Charge Arrangements and Waivers
In certain cases, the initial sales charge that applies to purchases of
Class A shares of the Oppenheimer funds or the contingent deferred sales
charge that may apply to Class A, Class B or Class C shares may be waived.
That is because of the economies of sales efforts realized by the Distributor
or the dealers or other financial institutions offering those shares to
certain classes of investors or in certain transactions.
Not all waivers apply to all funds. For example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares
of those funds are not available for purchase by or on behalf of retirement
plans. Other waivers apply only to shareholders of certain funds that were
merged into or became Oppenheimer funds.
For the purposes of some of the waivers described below and in the
Prospectus and Statement of Additional Information of the applicable
Oppenheimer funds, the term "Retirement Plan" refers to the following types
of plans:
(1) plans qualified under Sections 401(a) or 401(k) of the Internal
Revenue Code,
(2) non-qualified deferred compensation plans,
(3) employee benefit plans1
(4) Group Retirement Plans2
(5) 403(b)(7) custodial plan accounts
(6) SEP-IRAs, SARSEPs or SIMPLE plans
The interpretation of these provisions as to the applicability of a
waiver or sales charge reduction in a particular case is determined solely by
the Distributor or the Transfer Agent of the fund. These provisions may be
changed at any time without prior notice by a fund.
- --------------
1. An "employee benefit plan" means any plan or arrangement, whether or
not it is "qualified" under the Internal Revenue Code, under which Class A
shares of an Oppenheimer fund or funds are purchased by a fiduciary or
other administrator for the account of participants who are employees of a
single employer or of affiliated employers. These may include, for
example, medical savings accounts, payroll deduction plans or similar
plans. The fund accounts must be registered in the name of the fiduciary
or administrator purchasing the shares for the benefit of participants in
the plan.
2. The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship,
members and employees of a partnership or association or other organized
group of persons (the members of which may include other groups), if the
group has made special arrangements with the Distributor and all members
of the group participating in (or who are eligible to participate in) the
plan purchase Class A shares of an Oppenheimer fund or funds through a
single investment dealer, broker or other financial institution designated
by the group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE
plans and 403(b) plans other than plans for public school employees. The
term "Group Retirement Plan also includes qualified retirement plans and
non-qualified deferred compensation plans and IRAs that purchase Class A
shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution that has made special arrangements
with the Distributor enabling those plans to purchase Class A shares at
net asset value but subject to the Class A contingent deferred sales
charge.
<PAGE>
- ------------------------------------------------------------------------------
Class A Contingent Deferred Sales Charge
- ------------------------------------------------------------------------------
n Purchases of Class A Shares That Are Not Subject to Initial Sales
Charge but May Be Subject to the Class A Contingent Deferred Sales Charge
(unless a waiver applies).
There is no initial sales charge on purchases of Class A shares of any
of the Oppenheimer funds in the cases listed below. However, those purchase
may be subject to the Class A contingent deferred sales charge if redeemed
within 18 months of the end of the calendar month of their purchase, as
described in the Prospectus (unless a waiver described elsewhere in this
Appendix applies to the redemption). Additionally, the Distributor will pay
the applicable commission on these purchases described in the Prospectus
under "Class A Contingent Deferred Sales Charge":
o Purchases of Class A shares aggregating $1 million or more.
o Purchases by a Retirement Plan that:
(1) buys shares costing $500,000 or more, or
(2) has, at the time of purchase, 100 or more eligible participants, or
(3) certifies to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
o Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:
(1) through a broker, dealer, bank or registered investment adviser that
has made special arrangements with the Distributor for those
purchases, or
(2) by a direct rollover of a distribution from a qualified Retirement Plan
if the administrator of that Plan has made special arrangements
with the Distributor for those purchases.
o Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements:
(1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith,
Inc. ("Merrill Lynch") on a daily valuation basis for the
Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets invested in (a)
mutual funds, other than those advised or managed by Merrill
Lynch Asset Management, L.P. ("MLAM"), that are made available
under a Service Agreement between Merrill Lynch and the mutual
fund's principal underwriter or distributor, and (b) funds
advised or managed by MLAM (the funds described in (a) and (b)
are referred to as "Applicable Investments").
(2) The record keeping for the Retirement Plan is performed on a daily
valuation basis by a record keeper whose services are provided
under a contract or arrangement between the Retirement Plan
and Merrill Lynch. On the date the plan sponsor signs the
record keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets (excluding assets
invested in money market funds) invested in Applicable
Investments.
(3) The record keeping for a Retirement Plan is handled under a service
agreement with Merrill Lynch and on the date the plan sponsor
signs that agreement, the Plan has 500 or more eligible
employees (as determined by the Merrill Lynch plan conversion
manager).
- ------------------------------------------------------------------------------
Waivers of Class A Sales Charges
- ------------------------------------------------------------------------------
|X| Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers.
Class A shares purchased by the following investors are not subject to any
Class A sales charges (and no commissions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its affiliates, and
retirement plans established by them for their employees. The term "immediate
family" refers to one's spouse, children, grandchildren, grandparents,
parents, parents-in-law, brothers and sisters, sons- and daughters-in-law, a
sibling's spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents, etc.) are
included.
|_| Registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose.
|_| Dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for retirement
plans for their employees.
|_| Employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and which are
identified as such to the Distributor) or with the Distributor. The purchaser
must certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's spouse
or minor children).
|_| Dealers, brokers, banks or registered investment advisors that
have entered into an agreement with the Distributor providing specifically
for the use of shares of the Fund in particular investment products made
available to their clients. Those clients may be charged a transaction fee by
their dealer, broker, bank or advisor for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into
an agreement for this purpose with the Distributor and who charge an
advisory, consulting or other fee for their services and buy shares for their
own accounts or the accounts of their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the
purchases are made through a broker or agent or other financial intermediary
that has made special arrangements with the Distributor for those purchases.
|_| Clients of investment advisors or financial planners (that have
entered into an agreement for this purpose with the Distributor) who buy
shares for their own accounts may also purchase shares without sales charge
but only if their accounts are linked to a master account of their investment
advisor or financial planner on the books and records of the broker, agent or
financial intermediary with which the Distributor has made such special
arrangements. Each of these investors may be charged a fee by the broker,
agent or financial intermediary for purchasing shares.
|_| Directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which is the
beneficial owner of such accounts.
|_| A unit investment trust that has entered into an appropriate
agreement with the Distributor.
o Dealers, brokers, banks, or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to defined
contribution employee retirement plans for which the dealer, broker or
investment adviser provides administration services.
o 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), in each case if
those purchases are made through a broker, agent or other financial
intermediary that has made special arrangements with the Distributor for
those purchases.
o 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.
o A qualified Retirement Plan that had agreed with the former Quest
for Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through DCXchange, a
sub-transfer agency mutual fund clearinghouse, if that arrangement was
consummated and share purchases commenced by December 31, 1996.
|X| Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions.
Class A shares issued or purchased in the following transactions are not
subject to sales charges (and no commissions are paid by the Distributor on
such purchases):
|_| Shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party.
|_| Shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor.
|_| Shares purchased and paid for with the proceeds of shares redeemed
in the prior 30 days from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid. This waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund, Inc. that
were purchased and paid for in this manner. This waiver must be requested
when the purchase order is placed for shares of the Fund, and the Distributor
may require evidence of qualification for this waiver.
|_| Shares purchased with the proceeds of maturing principal units of
any Qualified Unit Investment Liquid Trust Series.
o Shares purchased by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an affiliate acts
as sponsor.
|X| Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.
The Class A contingent deferred sales charge is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
|_| To make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value.
|_| Involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules and
Policies," in the Prospectus).
o For distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program.
o For distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes:
(1) Following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary. The death or disability
must occur after the participant's account was established.
(2) To return excess contributions.
(3) To return contributions made due to a mistake of fact.
(4) Hardship withdrawals, as defined in the plan.
(5) Under a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue
Code.
(7) To establish "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code.
(8) For retirement distributions or loans to participants or beneficiaries.
(9) Separation from service.
(10)Participant-directed redemptions to purchase shares of a mutual
fund other than a fund managed by the Manager or a subsidiary.
The fund must be one that is offered as an investment option
in a Retirement Plan in which Oppenheimer funds are also
offered as investment options under a special arrangement with the
Distributor.
(11) Plan termination or "in-service distributions," if the
redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA.
o For distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the
Oppenheimer funds as an investment option under the Plan.
o For distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this
waiver.
- ------------------------------------------------------------------------------
Waivers of Class B and Class C Sales Charges.
- ------------------------------------------------------------------------------
The Class B and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions or redeemed in certain
circumstances described below. In order to receive a waiver of the Class B
and Class C contingent deferred sales charge, you must notify the Transfer
Agent which conditions apply.
|X| 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:
|_| Redemptions from accounts 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.
For disability you must provide evidence of a determination of disability by
the Social Security Administration.
o Shares redeemed involuntarily, as described in ""Shareholder Account
Rules and Policies,"
in the Statement of Additional Information.
o 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).
o 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.
o Returns of excess contributions to Retirement Plans.
o 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).
o Distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company prototype 401(k)
plans:
(1) for hardship withdrawals;
(2) under a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code;
(3) to meet minimum distribution requirements as defined in the Internal
Revenue Code;
(4) to make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code;
(5) for separation from service; or
(6) for loans to participants or beneficiaries.
o Distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this
waiver.
o Redemptions of Class B shares held by Retirement Plans whose records
are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch.
|X| Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
|_| Shares sold to the Manager or its affiliates.
|_| Shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the Manager
or the Distributor for that purpose.
|_| Shares issued in plans of reorganization to which the Fund is
a party.
- ------------------------------------------------------------------------------
Special Sales Charge Arrangements for Shareholders of 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 in the Prospectus or
Statement of Additional Information of the Fund are modified as described
below for certain persons who were shareholders of the former Quest for Value
Funds. Those funds include:
Oppenheimer Quest Value Fund, Inc.,
Oppenheimer Quest Balanced Value Fund,
Oppenheimer Quest Opportunity Value Fund,
Oppenheimer Quest Small Cap Value Fund and
Oppenheimer Quest Global Value Fund, Inc.
To be eligible, those persons must have been shareholders on November 24,
1995, when OppenheimerFunds, Inc. became the investment advisor to those
former Quest for Value Funds.
The table also applies to shareholders of the following funds when they
merged into various Oppenheimer funds on November 24, 1995:
Quest for Value U.S. Government Income Fund,
Quest for Value Investment Quality Income Fund,
Quest for Value Global Income Fund,
Quest for Value New York Tax-Exempt Fund,
Quest for Value National Tax-Exempt Fund and
Quest for Value California Tax-Exempt Fund
All of the funds listed above are referred to in this Appendix as the "Former
Quest for Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the Fund that are
either:
|_|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
|_|purchased by such shareholder by exchange of other Oppenheimer funds
that were acquired 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.
|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest for
Value Funds Shareholders
Purchases by Groups and Associations. The following table sets forth the
initial sales charge rates for Class A shares purchased by members of
"Associations" formed for any purpose other than the purchase of securities.
The rates in the table apply if that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995.
Initial Initial Commission
Sales Charge Sales Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
- -------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- -------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Associations having 50 or more eligible employees or
members, there is no initial sales charge on purchases of Class A shares, but
those shares are subject to the Class A contingent deferred sales charge
described in the Fund's Prospectus.
Purchases made under this arrangement qualify for the lower of either
the sales charge rate in the table based on the number of members of an
Association, or the sales charge rate that applies under the Right of
Accumulation described in the Fund's Prospectus and Statement of Additional
Information. Individuals who qualify under this arrangement for reduced sales
charge rates as members of Associations also may purchase shares for their
individual or custodial accounts at these reduced sales charge rates, upon
request to the Fund's Distributor.
|X| 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.
|X| Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares 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.
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In
the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of the Fund. The Fund
shares must have been acquired by the merger of a Former Quest for Value Fund
into the Fund or by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such fund merged. Those shares must have been
purchased prior to March 6, 1995 in connection with:
|_| withdrawals under an automatic withdrawal plan holding only
either Class B or Class C shares if the annual withdrawal does not
exceed 10% of the initial value of the account, and
|_| liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum value of such accounts.
|X| Waivers for Redemptions of Shares Purchased on or After March 6, 1995 but
Prior to November 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, Class B or Class C
shares of the Fund. The Fund shares must have been acquired by the merger of
a Former Quest for Value Fund into the Fund or by exchange from an
Oppenheimer fund that was a Former Quest For Value Fund or into which such
fund merged. Those shares must have been purchased on or after March 6, 1995,
but prior to November 24, 1995:
|_| redemptions following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration);
|_| withdrawals under an automatic withdrawal plan (but only for
Class B or Class C shares) where the annual withdrawals do not
exceed 10% of the initial value of the account; and
|_| liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum account value.
A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A, Class
B or Class C shares of the Fund described in this section if the proceeds are
invested in the same Class of shares in this Fund or another Oppenheimer fund
within 90 days after redemption.
- ------------------------------------------------------------------------------
Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of the Former Connecticut Mutual Investment
Accounts, Inc.
- ------------------------------------------------------------------------------
The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the Prospectus or this Appendix for
Oppenheimer U. S. Government Trust, Oppenheimer Bond Fund, Oppenheimer
Disciplined Value Fund and Oppenheimer Disciplined Allocation Fund (each is
included in the reference to "Fund" below) are modified as described below
for those shareholders who were shareholders of Connecticut Mutual Liquid
Account, Connecticut Mutual Government Securities Account, Connecticut Mutual
Income Account, Connecticut Mutual Growth Account, Connecticut Mutual Total
Return Account, CMIA LifeSpan Capital Appreciation Account, CMIA LifeSpan
Balanced Account and CMIA Diversified Income Account (the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds.
Prior Class A CDSC and Class A Sales Charge Waivers
n Class A Contingent Deferred Sales Charge. Certain shareholders of
the Fund and the other Former Connecticut Mutual Funds are entitled to
continue to make additional purchases of Class A shares at net asset value
without a Class A initial sales charge, but subject to the Class A contingent
deferred sales charge that was in effect prior to March 18, 1996 (the "prior
Class A CDSC"). Under the prior Class A CDSC, if any of those shares are
redeemed within one year of purchase, they will be assessed a 1% contingent
deferred sales charge on an amount equal to the current market value or the
original purchase price of the shares sold, whichever is smaller (in such
redemptions, any shares not subject to the prior Class A CDSC will be
redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are: (1)
persons whose purchases of Class A shares of the Fund and other Former
Connecticut Mutual Funds were $500,000 prior to March 18, 1996, as a result
of direct purchases or purchases pursuant to the Funds' policies on Combined
Purchases or Rights of Accumulation, who still hold those shares in the Fund
or other Former Connecticut Mutual Funds, and (2) persons whose intended
purchases under a Statement of Intention entered into prior to March 18,
1996, with the Funds' former general distributor to purchase shares valued at
$500,000 or more over a 13-month period entitled those persons to purchase
shares at net asset value without being subject to the Class A initial sales
charge.
Any of the Class A shares of the Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18, 1996,
remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this
arrangement they will be subject to the prior Class A CDSC.
n Class A Sales Charge Waivers. Additional Class A shares of the Fund may
be purchased without a sales charge, by a person who was in one (or more)
of the categories below and acquired Class A shares prior to March 18,
1996, and still holds Class A shares:
(1) any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds totaled
$500,000 or more, including investments made pursuant to the
Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial purchase
and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged;
(2) any participant in a qualified plan, provided that the total initial
amount invested by the plan in the Fund or any one or more of the
Former Connecticut Mutual Funds totaled $500,000 or more;
(3) Trustees of the Fund or any one or more of the Former Connecticut
Mutual Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual Financial
Services, L.L.C. ("CMFS"), the Fund's prior distributor, and its
affiliated companies;
(5) one or more members of a group of at least 1,000 persons (and persons
who are retirees from such group) engaged in a common business,
profession, civic or charitable endeavor or other activity, and the
spouses and minor dependent children of such persons, pursuant to a
marketing program between CMFS and such group; and
(6) an institution acting as a fiduciary on behalf of an individual or
individuals, if such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of the
Fund or any one or more of the Former Connecticut Mutual Funds,
provided the institution had an agreement with CMFS.
Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.
Additionally, Class A shares of the Fund may be purchased without a
sales charge by any holder of a variable annuity contract issued in New York
State by Connecticut Mutual Life Insurance Company through the Panorama
Separate Account which is beyond the applicable surrender charge period and
which was used to fund a qualified plan, if that holder exchanges the
variable annuity contract proceeds to buy Class A shares of the Fund.
Class A and Class B Contingent Deferred Sales Charge Waivers
In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of the Fund and exchanges of Class A or Class B
shares of the Fund into Class A or Class B shares of a Former Connecticut
Mutual Fund provided that the Class A or Class B shares of the Fund to be
redeemed or exchanged were (i) acquired prior to March 18, 1996 or (ii) were
acquired by exchange from an Oppenheimer Fund that was a Former Connecticut
Mutual Fund. Additionally, the shares of such Former Connecticut Mutual Fund
must have been purchased prior to March 18, 1996:
(1) by the estate of a deceased shareholder;
(2) upon the disability of a shareholder, as defined in Section 72(m)(7) of
the Internal Revenue Code;
(3) for retirement distributions (or loans) to participants or
beneficiaries from retirement plans qualified under Sections 401(a)
or 403(b)(7)of the Code, or from IRAs, deferred compensation plans
created under Section 457 of the Code, or other employee benefit
plans;
(4) as tax-free returns of excess contributions to such retirement or
employee benefit plans;
(5) in whole or in part, in connection with shares sold to any state,
county, or city, or any instrumentality, department, authority, or
agency thereof, that is prohibited by applicable investment laws
from paying a sales charge or commission in connection with the
purchase of shares of any registered investment management company;
(6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger,
acquisition or similar reorganization transaction;
(7) in connection with the Fund's right to involuntarily redeem or
liquidate the Fund;
(8) in connection with automatic redemptions of Class A shares and Class B
shares in certain retirement plan accounts pursuant to an Automatic
Withdrawal Plan but limited to no more than 12% of the original
value annually; or
(9) as involuntary redemptions of shares by operation of law, or under
procedures set forth in the Fund's organizational documents, or as
adopted by the Board of the Fund.
- ------------------------------------------------------------------------------
Special Reduced Sales Charge for Former Shareholders of Advance America
Funds, Inc.
- ------------------------------------------------------------------------------
Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U. S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Equity Income Fund
who acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those
Oppenheimer funds on October 18, 1991, and who held shares of Advance America
Funds, Inc. on March 30, 1990, may purchase Class A shares of those four
Oppenheimer funds at a maximum sales charge rate of 4.50%.
<PAGE>
C-45
- ------------------------------------------------------------------------------
Oppenheimer Enterprise Fund
- ------------------------------------------------------------------------------
Internet Web Site:
www.oppenheimerfunds.com
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian Bank
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
67890
PX885.1298
<PAGE>
OPPENHEIMER ENTERPRISE FUND
FORM N-1A
PART C
- ------------------------------------------------------------------------------
OTHER INFORMATION
Item 23. Exhibits
(a) Amended and Restated Declaration of Trust dated 10/20/95: Previously
filed with Registrant's Post-Effective Amendment No. 2, 10/26/95, and
incorporated herein by reference.
(b) By-Laws dated 3/16/95: Previously filed with
Registrant's Registration Statement, 3/23/95, and incorporated herein by
reference.
(c) (i) Specimen Class A Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 4, 12/12/97, and incorporated
herein by reference.
(ii) Specimen Class B Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 4, 12/12/97, and incorporated
herein by reference.
(iii) Specimen Class C Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 4, 12/12/97, and incorporated
herein by reference.
(iv) Specimen Class Y Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 4, 12/12/97 and incorporated
herein by reference.
(d) Investment Advisory Agreement dated November 7, 1995: Previously filed
with Registrant's Post-Effective Amendment No. 4, 12/12/97, and incorporated
herein by reference.
(e) (i) General Distributor's Agreement dated November 7, 1995:
Previously filed with Registrant's Post-Effective Amendment No. 4, 12/12/97,
and incorporated herein by reference.
(ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(iii) Form of OppenheimerFunds Distributor, Inc. Broker Agreement:
Previously filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(iv) Form of OppenheimerFunds Distributor, Inc. Agency Agreement:
Previously filed with Post-Effective Amendment No. 14 of Oppenheimer Main
Street Funds, Inc. (Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(f) (i) Retirement Plan for Non-Interested Trustees for Directors:
Previously filed with Post-Effective Amendment No. 97 of Oppenheimer Fund
(Reg. No. 2-14588), 8/30/90, refiled with Post-Effective Amendment No. 45 of
Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94, pursuant to Item No. 102
of Regulation S-T, and incorporated herein by reference.
(ii) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: To be filed by amendment.
(g) Form of Custodian Agreement between Registrant and The Bank of New
York: Previously filed with Registrant's Registration Statement, 3/23/95, and
incorporated herein by reference.
(h) Not applicable.
(i) Form of Opinion and Consent of Counsel: Previously filed with
Registrant's Post-Effective Amendment No. 2 , 10/26/95, and incorporated
herein by reference.
(j) Independent Auditors Consent: To be filed by amendment.
(k) Not applicable.
(l) (i) Investment Letter from OppenheimerFunds, Inc. to Registrant:
Previously filed with Registrant's Post-Effective Amendment No. 2, 10/26/95,
and incorporated herein by reference.
(m) (i) Form of Service Plan and Agreement for Class A shares: Previously
filed with Registrant's Post-Effective Amendment No. 1, 9/6/95, and
incorporated herein by reference.
(ii) Distribution and Service Plan and Agreement for Class B shares
dated Feburary 12, 1998: Filed herewith.
(iii) Distribution and Service Plan and Agreement for Class C shares
dated February 12, 1998: Filed herewith.
(n) (i) Financial Data Schedule for Class A Shares: To be filed by
amendment.
(ii) Financial Data Schedule for Class B Shares: To be filed by
amendment.
(iii) Financial Data Schedule for Class C Shares: To be filed by
amendment.
(iv) Financial Data Schedule for Class Y Shares: To be filed by
amendment.
(o) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through
8/25/98: Previously filed with Post-Effective Amendment No. 70 to the
Registration Statement of Oppenheimer Global Fund (Reg. No. 2-31661),
9/14/98, and incorporated herein by reference.
- -- Powers of Attorney (including Certified Board resolutions for all
Trustees other than Bridget A. Macaskill): Previously filed with
Registrant's Registration Statement, 3/23/95, and incorporated herein by
reference.
- -- Power of Attorney and Certified Board resolution as to Bridget A.
Macaskill: Previously filed with Registrant's Post-Effective Amendment No. 1,
4/30/96, and incorporated herein by reference.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Reference is made to the provisions of Article Seventh of Registrant's
Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this
Registration Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
Item 26. Business and Other Connections of the Investment Adviser
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it
and certain subsidiaries and affiliates act in the same capacity to other
registered investment companies as described in Parts A and B hereof and
listed in Item 26(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
officer and director of OppenheimerFunds, Inc. is, or at any time during the
past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.
- ------------------------------------------------------------------------------
Name and Current Position Other Business and Connections
- ------------------------------------------------------------------------------
with OppenheimerFunds, Inc. During the Past Two Years
Charles E. Albers,
Senior Vice President An officer and/or portfolio manager of certain
Oppenheimer funds (since April 1998);
a Chartered Financial Analyst;
formerly, a Vice President and
portfolio manager for Guardian
Investor Services, the investment
management subsidiary of The Guardian
Life Insurance Company (since 1972).
Edward Amberger,
Assistant Vice President Formerly Assistant Vice President,
Securities Analyst for Morgan Stanley
Dean Witter (May 1997 - April 1998); and
Research Analyst (July 1996 - May 1997),
Portfolio Manager (February 1992 - July
1996) and Department Manager (June 1988
to February 1992) for The Bank of New
York.
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real Asset
Management, Inc. ("ORAMI"); formerly,
Vice President of Equity Derivatives at
Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Senior Vice President
of HarbourView Asset Management
Corporation ("HarbourView"); prior to
March, 1996 he was the senior equity
portfolio manager for the Panorama Series
Fund, Inc. (the "Company") and other
mutual funds and pension funds managed by
G.R. Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment adviser,
which was a subsidiary of Connecticut
Mutual Life Insurance Company; he was
also responsible for managing the common
stock department and common stock
investments of Connecticut Mutual Life
Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds. Formerly, a
Vice President and Senior Portfolio
Manager at First of America Investment
Corp.
George Batejan,
Executive Vice President,
Chief Information Officer Formerly Senior Vice President, Group
Executive, and Senior Systems Officer for
American International Group (October
1994 - May, 1998).
John R. Blomfield,
Vice President Formerly Senior Product Manager
(November, 1995 - August, 1997) of
International Home Foods and American
Home Products (March, 1994 - October,
1996).
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President Formerly, Vice President (January 1992 -
February, 1996) of Asian Equities for
Barclays de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of Mutual Fund Accounting
(since May 1996); an officer of other
Oppenheimer funds; formerly, an
Assistant Vice President of OFI/Mutual
Fund Accounting (April 1994-May 1996),
and a Fund Controller for OFI.
George C. Bowen,
Senior Vice President, Treasurer
and Director Vice President (since June 1983) and
Treasurer (since March 1985) of
OppenheimerFunds Distributor, Inc. (the
"Distributor"); Vice President (since
October 1989) and Treasurer (since April
1986) of HarbourView; Senior Vice
President (since February 1992),
Treasurer (since July 1991)and a director
(since December 1991) of Centennial;
President, Treasurer and a director of
Centennial Capital Corporation (since
June 1989); Vice President and Treasurer
(since August 1978) and Secretary (since
April 1981) of Shareholder Services, Inc.
("SSI"); Vice President, Treasurer and
Secretary of Shareholder Financial
Services, Inc. ("SFSI") (since November
1989); Assistant Treasurer of Oppenheimer
Acquisition Corp. ("OAC") (since March,
1998); Treasurer of Oppenheimer
Partnership Holdings, Inc. (since
November 1989); Vice President and
Treasurer of ORAMI (since July 1996);
an officer of other Oppenheimer funds.
Scott Brooks,
Vice President None.
Susan Burton,
Vice President None.
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice President of
Rochester Fund Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
John Cardillo,
Assistant Vice President None.
Erin Cawley,
Assistant Vice President None.
H.D. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Trustee (1993 - present) of Awhtolia
College - Greece.
William DeJianne, None.
Assistant Vice President
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Craig P. Dinsell
Executive Vice President Formerly, Senior Vice President of Human
Resources for Fidelity Investments-Retail
Division (January, 1995 - January, 1996),
Fidelity Investments FMR Co. (January,
1996 - June, 1997) and Fidelity
Investments FTPG (June, 1997 - January,
1998).
Robert Doll, Jr.,
Executive Vice President & Director An officer and/or portfolio manager of
certain Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice President (since September
1993), and a director (since January
1992) of the Distributor; Executive Vice
President, General Counsel and a director
of HarbourView, SSI, SFSI and
Oppenheimer Partnership Holdings, Inc.
since (September 1995); President and a
director of Centennial (since September
1995); President and a director of ORAMI
(since July 1996); General Counsel
(since May 1996) and Secretary (since
April 1997) of OAC; Vice President and
Director of OppenheimerFunds
International, Ltd. ("OFIL") and
Oppenheimer Millennium Funds plc (since
October 1997); an officer of other
Oppenheimer funds.
Patrick Dougherty, None.
Assistant Vice President
Bruce Dunbar, None.
Vice President
Eric Edstrom,
Vice President
George Evans,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of Oppenheimer
Millennium Funds plc (since October
1997); an officer of other Oppenheimer
funds; formerly, an Assistant Vice
President of OFI/Mutual Fund Accounting
(April 1994-May 1996), and a Fund
Controller for OFI.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of the
Distributor; Secretary of HarbourView,
and Centennial; Secretary, Vice President
and Director of Centennial Capital
Corporation; Vice President and Secretary
of ORAMI.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio
manager of certain Oppenheimer funds;
Presently he holds the following other
positions: Director (since 1995) of ICI
Mutual Insurance Company; Governor (since
1994) of St. John's College; Director
(since 1994 - present) of International
Museum of Photography at George Eastman
House. Formerly, he held the following
positions: formerly, Chairman of the
Board and Director of Rochester Fund
Distributors, Inc. ("RFD"); President and
Director of Fielding Management Company,
Inc. ("FMC"); President and Director of
Rochester Capital Advisors, Inc.
("RCAI"); Managing Partner of Rochester
Capital Advisors, L.P., President and
Director of Rochester Fund Services, Inc.
("RFS"); President and Director of
Rochester Tax Managed Fund, Inc.;
Director (1993 - 1997) of VehiCare Corp.;
Director (1993 - 1996) of VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly, she held the following
positions: An officer of certain former
Rochester funds (May, 1993 - January,
1996); Secretary of Rochester Capital
Advisors, Inc. and General Counsel (June,
1993 - January 1996) of Rochester Capital
Advisors, L.P.
Jennifer Foxson,
Vice President None.
Erin Gardiner,
Assistant Vice President None.
Linda Gardner,
Vice President None.
Alan Gilston,
Vice President Formerly, Vice President (1987-1997) for
Schroder Capital Management International.
Jill Glazerman,
Assistant Vice President None.
Robyn Goldstein-Liebler
Assistant Vice President None.
Mikhail Goldverg
Assistant Vice President None.
Jeremy Griffiths,
Executive Vice President and
Chief Financial Officer Chief Financial Officer and Treasurer
(since March, 1998) of Oppenheimer
Acquisition Corp.; a Member and Fellow of
the Institute of Chartered Accountants;
formerly, an accountant for Arthur Young
(London, U.K.).
Robert Grill,
Senior Vice President Formerly, Marketing Vice President for
Bankers Trust Company (1993-1996);
Steering Committee Member, Subcommittee
Chairman for American Savings Education
Council (1995-1996).
Caryn Halbrecht,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Elaine T. Hamann,
Vice President Formerly, Vice President (September, 1989
- January, 1997) of Bankers Trust Company.
Robert Haley
Assistant Vice President Formerly, Vice President of Information
Services for Bankers Trust Company
(January, 1991 - November, 1997).
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager President and Director of SFSI; President
and Chief executive Officer of SSI.
Dorothy Hirshman, None.
Assistant Vice President
Merryl Hoffman,
Vice President None.
Nicholas Horsley,
Vice President Formerly, a Senior Vice President and
Portfolio Manager for Warburg, Pincus
Counsellors, Inc. (1993-1997), Co-manager
of Warburg, Pincus Emerging Markets Fund
(12/94 - 10/97), Co-manager Warburg,
Pincus Institutional Emerging Markets
Fund - Emerging Markets Portfolio (8/96 -
10/97), Warburg Pincus Japan OTC Fund,
Associate Portfolio Manager of Warburg
Pincus International Equity Fund, Warburg
Pincus Institutional Fund - Intermediate
Equity Portfolio, and Warburg Pincus EAFE
Fund.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Vice President None.
Jane Ingalls,
Vice President None.
Kathleen T. Ives,
Vice President None.
Frank Jennings,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Thomas W. Keffer,
Senior Vice President None.
Avram Kornberg,
Vice President None.
John Kowalik,
Senior Vice President An officer and/or portfolio manager for
certain OppenheimerFunds; formerly,
Managing Director and Senior Portfolio
Manager at Prudential Global Advisors
(1989 - 1998).
Joseph Krist,
Assistant Vice President None.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio manager for
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView; prior to March 1996, the
senior bond portfolio manager for
Panorama Series Fund Inc., other mutual
funds and pension accounts managed by
G.R. Phelps; also responsible for
managing the public fixed-income
securities department at Connecticut
Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Dan Loughran,
Assistant Vice President:
Rochester Division
David Mabry,
Assistant Vice President None.
Steve Macchia,
Assistant Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive Officer (since September
1995); President and director (since June
1991) of HarbourView; Chairman and a
director of SSI (since August 1994), and
SFSI (September 1995); President (since
September 1995) and a director (since
October 1990) of OAC; President (since
September 1995) and a director (since
November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding
company subsidiary of OFI; a director of
ORAMI (since July 1996) ; President and a
director (since October 1997) of OFIL, an
offshore fund manager subsidiary of OFI
and Oppenheimer Millennium Funds plc
(since October 1997); President and a
director of other Oppenheimer funds; a
director of Hillsdown Holdings plc (a
U.K. food company); formerly, an
Executive Vice President of OFI.
Wesley Mayer,
Vice President Formerly, Vice President (January, 1995 -
June, 1996) of Manufacturers Life
Insurance Company.
Loretta McCarthy,
Executive Vice President None.
Kelley A. McCarthy-Kane
Assistant Vice President Formerly, Product Manager, Assistant Vice
President (June 1995- October, 1997) of
Merrill Lynch Pierce Fenner & Smith.
Beth Michnowski,
Assistant Vice President Formerly Senior Marketing Manager May,
1996 - June, 1997) and Director of
Product Marketing (August, 1992 - May,
1996) with Fidelity Investments.
Lisa Migan,
Assistant Vice President None.
Denis R. Molleur,
Vice President None.
Nikolaos Monoyios,
Vice President A Vice President and/or portfolio manager
of certain Oppenheimer funds (since April
1998); a Certified Financial Analyst;
formerly, a Vice President and portfolio
manager for Guardian Investor Services,
the management subsidiary of The Guardian
Life Insurance Company (since 1979).
Linda Moore,
Vice President Formerly, Marketing Manager (July
1995-November 1996) for Chase Investment
Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Ray Olson,
Assistant Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
James Phillips
Assistant Vice President None.
Jane Putnam,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Michael Quinn,
Assistant Vice President Formerly, Assistant Vice President
(April, 1995 - January, 1998) of Van
Kampen American Capital.
Russell Read,
Senior Vice President Vice President of Oppenheimer Real Asset
Management, Inc. (since March, 1995).
Thomas Reedy,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; formerly, a
Securities Analyst for the Manager.
John Reinhardt,
Vice President: Rochester Division None
Ruxandra Risko,
Vice President None.
Michael S. Rosen,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President & Director None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President None.
Michelle Simone,
Assistant Vice President None.
Richard Soper,
Vice President None.
Stuart J. Speckman
Vice President Formerly, Vice President and Wholesaler
for Prudential Securities (December, 1990
- July, 1997).
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.
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995) of
Rochester Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
John Stoma,
Senior Vice President, Director
of Retirement Plans None.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; a Vice President of
HarbourView.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director or
Managing Partner of the Denver-based
Oppenheimer Funds; formerly, President
and Director of OAMC, CAMC and Chairman
of the Board of SSI.
Susan Switzer,
Assistant Vice President
Anthony A. Tanner,
Vice President: Rochester Division
James Tobin,
Vice President None.
Susan Torrisi,
Assistant Vice President None.
Jay Tracey,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
James Turner,
Assistant Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Ashwin Vasan,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds.
Teresa Ward,
Assistant Vice President None.
Jerry Webman,
Senior Vice President Director of New York-based tax-exempt
fixed income Oppenheimer funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; a Chartered
Financial Analyst; Vice President of
HarbourView.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager of certain
Oppenheimer funds; Vice President of
Centennial; Vice President, Finance
and Accounting; Point of Contact:
Finance Supporters of Children;
Member of the Oncology Advisory Board
of the Childrens Hospital.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of SSI (since May
1985), SFSI (since November 1989), OFIL
(since 1998), Oppenheimer Millennium
Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Senior Vice President An officer and/or portfolio manager of
certain Oppenheimer funds; Vice President
of Centennial.
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Oppenheimer/Quest Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer Series Fund, Inc.
Oppenheimer U.S. Government Trust
Oppenheimer World Bond Fund
Quest/Rochester Funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds,
the Quest Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New
York 14625-2807.
Item 27. Principal Underwriter
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc. is
the investment adviser, as described in Part A and B of this Registration
Statement and listed in Item 26(b) above.
(b) The directors and officers of the Registrant's principal underwriter
are:
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
Jason Bach Vice President None
31 Racquel Drive
Marietta, GA 30364
Peter Beebe Vice President None
876 Foxdale Avenue
Winnetka, IL 60093
Douglas S. Blankenship Vice President None
17011 Woodbank
Spring, TX 77379
George C. Bowen(1) Vice President and Vice President and
Treasurer Treasurer of the
Oppenheimer funds.
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
Daniel Deckman Vice President None
12252 Rockledge Circle
Boca Raton, FL 33428
Christopher DeSimone Vice President None
5105 Aldrich Avenue South
Minneapolis, MN 55403
Rhonda Dixon-Gunner(1) Assistant Vice President None
Andrew John Donohue(2) Executive Vice Secretary of the
President & Director Oppenheimer funds.
And General Counsel
John Donovan Vice President None
868 Washington Road
Woodbury, CT 06798
Kenneth Dorris Vice President None
4104 Harlanwood Drive
Fort Worth, TX 76109
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
35 Crown Terrace
Yardley, PA 19067
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
412 Commons Way
Doylestown, PA 18901
Patrice Falagrady(1) Senior Vice President None
Eric Fallon Vice President None
10 Worth Circle
Newton, MA 02158
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki-Wells Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Michelle Gans Vice President None
8327 Kimball Drive
Eden Prairie, MN 55347
L. Daniel Garrity Vice President None
2120 Brookhaven View, N.E.
Atlanta, GA 30319
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President/National None
Sales Manager
Michael Guman Vice President None
3913 Pleasent Avenue
Allentown, PA 18103
Allen Hamilton Vice President None
5 Giovanni
Aliso Viejo, CA 92656
C. Webb Heidinger Vice President None
138 Gales Street
Portsmouth, NH 03801
Byron Ingram(1) Assistant Vice President None
Kathleen T. Ives(1) Vice President None
Eric K. Johnson Vice President None
3665 Clay Street
San Francisco, CA 94118
Mark D. Johnson Vice President None
409 Sundowner Ridge Court
Wildwood, MO 63011
Elyse Jurman Vice President None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL 33062
Michael Keogh(2) Vice President None
Brian Kelly Vice President None
60 Larkspur Road
Fairfield, CT 06430
John Kennedy Vice President None
799 Paine Drive
Westchester, PA 19382
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
560 Beacon Hill Drive
Orange Village, OH 44022
Ilene Kutno(2) Vice President/ None
Director of Sales
Oren Lane Vice President None
5286 Timber Bend Drive
Brighton, MI 48116
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne A. LeBlang Senior Vice President None
54511 Southern Hills
LaQuinta, CA 92253
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
2714 Orchard Terrace
Linden, NJ 07036
Steve Manns Vice President None
1941 W. Wolfram Street
Chicago, IL 60657
Todd Marion Vice President None
39 Coleman Avenue
Chatham, N.J. 07928
Marie Masters Vice President None
8384 Glen Eagle Drive
Manlius, NY 13104
LuAnn Mascia(2) Assistant Vice President None
Theresa-Marie Maynier Vice President None
2421 Charlotte Drive
Charlotte, NC 28203
Anthony Mazzariello Vice President None
100 Anderson Street, #427
Pittsburgh, PA 15212
John McDonough Vice President None
3812 Leland Street
Chevey Chase, MD 20815
Wayne Meyer Vice President None
2617 Sun Meadow Drive
Chesterfield, MO 63005
Tanya Mrva(2) Assistant Vice President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Denise-Marke Nakamura Vice President None
2870 White Ridge Place, #24
Thousand Oaks, CA 91362
Chad V. Noel Vice President None
2408 Eagleridge Dr.
Henderson, NV 89014
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Kevin Parchinski Vice President None
8409 West 116th Terrace
Overland Park, KS 66210
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
130 E. 63rd Street, #10E
New York, NY 10021
Steve Puckett Vice President None
5297 Soledad Mountain Road
San Diego, CA 92109
Elaine Puleo(2) Senior Vice President None
Minnie Ra Vice President None
100 Delores Street, #203
Carmel, CA 93923
Dustin Raring Vice President None
378 Elm Street
Denver, CO 80220
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
677 Middlesex Road
Grosse Pointe Park, MI 48230
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(2) Vice President None
Kenneth Rosenson Vice President None
3505 Malibu Country Drive
Malibu, CA 90265
James Ruff(2) President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Eric Sharp Vice President None
862 McNeill Circle
Woodland, CA 95695
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
Timothy Stegner Vice President None
794 Jackson Street
Denver, CO 80206
Peter Sullivan Vice President None
21445 S. E 35th Street
Issaquah, WA 98029
David Sturgis Vice President None
44 Abington Road
Danvers, MA 0923
Brian Summe Vice President None
239 N. Colony Drive
Edgewood, KY 41017
George Sweeney Vice President None
5 Smokehouse Lane
Hummelstown, PA 17036
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
704 Inwood
Southlake, TX 76092
David G. Thomas Vice President None
7009 Metropolitan Place, #300
Falls Church, VA 22043
Sarah Turpin Vice President None
2201 Wolf Street, #5202
Dallas, TX 75201
Andrea Walsh(1) Vice President None
Suzanne Walters(1) Assistant Vice President None
Mark Stephen Vandehey(1) Vice President None
James Wiaduck Vice President None
29900 Meridian Place
#22303
Farmington Hills, MI 48331
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
(1) 6803 South Tuscon Way, Englewood, CO 80112
(2) Two World Trade Center, New York, NY 10048
(3) 350 Linden Oaks, Rochester, NY 14623
(c) Not applicable.
Item 28. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of OppenheimerFunds,
Inc. at its offices at 6803 South Tuscon Way, Englewood, Colorado 80112.
Item 29. Management Services
Not applicable
Item 30. Undertakings
Not Applicable.
<PAGE>
SIGNATURES
Pursuant Pursuant to the requirements of the Securities Act of 1933 and/or
the Investment Company Act of 1940, the Registrant certifies that it 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 27rd day of October, 1998.
OPPENHEIMER ENTERPRISE FUND
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
By: /s/ _Bridget A. Macaskill__ _____*
- ------------------------------------------------------------------------------
Bridget A. Macaskill, President
- ------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
/s/ Leon Levy* Chairman of the October 27, 1998
- ------------------------------------- Board of Trustees
Leon Levy
/s/ Donald W. Spiro* Vice Chairman and October 27, 1998
- ------------------------------------- Trustee
Donald W. Spiro
/s/ George Bowen* Treasurer and October 27, 1998
- ------------------------------------- Principal Financial
George Bowen and Accounting
Officer
/s/ Robert G. Galli* Trustee October 27, 1998
- -------------------------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee October 27, 1998
- -------------------------------------
Benjamin Lipstein
/s/ Bridget A. Macaskill* President, October 27, 1998
- ------------------------------------- Principal
Executive
Bridget A. Macaskill Officer, Trustee
/s/ Elizabeth B. Moynihan* Trustee October 27, 1998
- -------------------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee October 27, 1998
- -------------------------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee October 27, 1998
- -------------------------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee October 27, 1998
- -------------------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee October 27, 1998
- -------------------------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee October 27, 1998
- -------------------------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- ---------------------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER ENTERPRISE FUND
Post-Effective Amendment No. 4
Registration No 33-58343
EXHIBIT INDEX
Exhibit No. Description
23(m)(ii) Distribution and Service Plan for Class BShares dated
February 2,
1998
23(m)(iii) Distribution and Service Plan for Class C Shares dated
February 2,
1998
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND
AGREEMENT
With
OppenheimerFunds Distributor, Inc.
For Class B Shares of
Oppenheimer Enterprise Fund
This Amended and Restated Distribution and Service Plan and Agreement (the
"Plan") is dated as of the 12th day of February, 1998, by and between
Oppenheimer Enterprise Fund (the "Fund") and OppenheimerFunds Distributor,
Inc. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule
12b-1 as it may be amended from time to time (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii) Rule 2830
of the Conduct Rules of the National Association of Securities Dealers, Inc.,
or any amendment or successor to such rule (the "NASD Conduct Rules") and
(iv) any conditions pertaining either to distribution-related expenses or to
a plan of distribution to which the Fund is subject under any order on which
the Fund relies, issued at any time by the U.S. Securities and Exchange
Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct, administrative
or both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with
such information as the Distributor shall reasonably request to answer such
questions as may arise concerning the sale of Shares; and (iii) has been
selected by the Distributor to receive payments under the Plan.
(b) "Independent Trustees" shall mean the members of the Fund's Board
of Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Fund and who have no direct or indirect financial interest in the
operation of this Plan or in any agreement relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or
investment advisory or other clients of a Recipient, and/or accounts as to
which such Recipient provides administrative support services or is a
custodian or other fiduciary.
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
Recipient's Customers, but in no event shall any such Shares be deemed owned
by more than one Recipient for purposes of this Plan. In the event that more
than one person or entity would otherwise qualify as Recipients as to the
same Shares, the Recipient which is the dealer of record on the Fund's books
as determined by the Distributor shall be deemed the Recipient as to such
Shares for purposes of this Plan.
<PAGE>
-51-
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) Payments to the Distributor. In consideration of the payments
made by the Fund to the Distributor under this Plan, the Distributor shall
provide administrative support services and distribution assistance services
to the Fund. Such services include distribution assistance and
administrative support services rendered in connection with Shares (1) sold
in purchase transactions, (2) issued in exchange for shares of another
investment company for which the Distributor serves as distributor or
sub-distributor, or (3) issued pursuant to a plan of reorganization to which
the Fund is a party. If the Board believes that the Distributor may not be
rendering appropriate distribution assistance or administrative support
services in connection with the sale of Shares, then the Distributor, at the
request of the Board, shall provide the Board with a written report or other
information to verify that the Distributor is providing appropriate services
in this regard. For such services, the Fund will make the following payments
to the Distributor:
(i) Administrative Support Services Fees. Within forty-five
(45) days of the end of each calendar quarter, the Fund will make payments in
the aggregate amount of 0.0625% (0.25% on an annual basis) of the average
during that calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Service Fee"). Such
Service Fee payments received from the Fund will compensate the Distributor
for providing administrative support services with respect to Accounts. The
administrative support services in connection with Accounts may include, but
shall not be limited to, the administrative support services that a Recipient
may render as described in Section 3(b)(i) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge).
Within ten (10) days of the end of each month, the Fund will make payments in
the aggregate amount of 0.0625% (0.75% on an annual basis) of the average
during the month of the aggregate net asset value of Shares computed as of
the close of each business day (the "Asset-Based Sales Charge") outstanding
for no more than six years (the "Maximum Holding Period"). Such Asset-Based
Sales Charge payments received from the Fund will compensate the Distributor
for providing distribution assistance in connection with the sale of Shares.
The distribution assistance to be rendered by the Distributor in
connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and/or paying such persons "Advance
Service Fee Payments" (as defined below) in advance of, and/or in amounts
greater than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing or
providing such financing from its own resources, or from an affiliate, for
the interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and administrative
support services to the Fund; and (iv) paying other direct distribution
costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those prospectuses furnished to
current holders of the Fund's shares ("Shareholders")) and state "blue sky"
registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the
Plan to pay Recipients (1) distribution assistance fees for rendering
distribution assistance in connection with the sale of Shares and/or (2)
service fees for rendering administrative support services with respect to
Accounts. However, no such payments shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed, at the
end of such quarter, the minimum amount ("Minimum Qualified Holdings"), if
any, that may be set from time to time by a majority of the Independent
Trustees. All fee payments made by the Distributor hereunder are subject to
reduction or chargeback so that the aggregate service fee payments and
Advance Service Fee Payments do not exceed the limits on payments to
Recipients that are, or may be, imposed by the NASD Conduct Rules. The
Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient or retain such payments if the Distributor qualifies as a
Recipient.
<PAGE>
(i) Service Fee. In consideration of the administrative support
services provided by a Recipient during a calendar quarter, the Distributor
shall make service fee payments to that Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close
of each business day, constituting Qualified Holdings owned beneficially or
of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, that may be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make the
following service fee payments to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter: (i) "Advance Service Fee
Payments" at a rate not to exceed 0.25% of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close
of business on the day such Shares are sold, constituting Qualified Holdings,
sold by the Recipient during that quarter and owned beneficially or of record
by the Recipient or by its Customers, plus (ii) service fee payments at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares, computed as
of the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period
of more than one (1) year. At the Distributor's sole option, the Advance
Service Fee Payments may be made more often than quarterly, and sooner than
the end of the calendar quarter. In the event Shares are redeemed less than
one year after the date such Shares were sold, the Recipient is obligated to
and will repay the Distributor on demand a pro rata portion of such Advance
Service Fee Payments, based on the ratio of the time such Shares were held to
one (1) year.
The administrative support services to be rendered by Recipients
in connection with the Accounts may include, but shall not be limited to, the
following: answering routine inquiries 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.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge)
Payments. In its sole discretion and irrespective of whichever alternative
method of making service fee payments to Recipients is selected by the
Distributor, in addition the Distributor may make distribution assistance fee
payments to a Recipient quarterly, within forty-five (45) days after the end
of each calendar quarter, at a rate not to exceed 0.1875% (0.75% on an annual
basis) of the average during the calendar quarter of the aggregate net asset
value of Shares computed as of the close of each business day constituting
Qualified Holdings owned beneficially or of record by the Recipient or its
Customers for no more than six years and for any minimum period that the
Distributor may establish. Distribution assistance fee payments shall be
made only to Recipients that are registered with the SEC as a broker-dealer
or are exempt from registration.
The distribution assistance to be rendered by the Recipients in
connection with the sale of Shares may include, but shall not be limited to,
the following: distributing sales literature and prospectuses other than
those furnished to current Shareholders, providing compensation to and paying
expenses of personnel of the Recipient who support the distribution of Shares
by the Recipient, and providing such other information and services in
connection with the distribution of Shares as the Distributor or the Fund may
reasonably request.
<PAGE>
(c) A majority of the Independent Trustees may at any time or from
time to time increase or decrease the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, any Minimum Holding Period or any Minimum Qualified Holdings. The
Distributor shall notify all Recipients of any Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period that are established and
the rate of payments hereunder applicable to Recipients, and shall provide
each Recipient with written notice within thirty (30) days after any change
in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination under the limits to which the Distributor
is, or may become, subject under the NASD Conduct Rules.
(e) Under the Plan, payments may also be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include
profits derived from the advisory fee it receives from the Fund), or (ii) by
the Distributor (a subsidiary of OFI), from its own resources, from
Asset-Based Sales Charge payments or from the proceeds of its borrowings, in
either case, in the discretion of OFI or the Distributor, respectively.
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares that entitle it to payments under the Plan.
In the event that either the Distributor or the Board should have reason to
believe that, notwithstanding the level of Qualified Holdings, a Recipient
may not be rendering appropriate distribution assistance in connection with
the sale of Shares or administrative support services for Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to
provide a written report or other information to verify that said Recipient
is providing appropriate distribution assistance and/or services in this
regard. If the Distributor or the Board of Trustees still is not satisfied
after the receipt of such report, either may take appropriate steps to
terminate the Recipient's status as such under the Plan, whereupon such
Recipient's rights as a third-party beneficiary hereunder shall terminate.
Additionally, in their discretion, a majority of the Fund's Independent
Trustees at any time may remove any broker, dealer, bank or other person or
entity as a Recipient, where upon such person's or entity's rights as a
third-party beneficiary hereof shall terminate. Notwithstanding any other
provision of this Plan, this Plan does not obligate or in any way make the
Fund liable to make any payment whatsoever to any person or entity other than
directly to the Distributor. The Distributor has no obligation to pay any
Service Fees or Distribution Assistance Fees to any Recipient if the
Distributor has not received payment of Service Fees or Distribution
Assistance Fees from the Fund.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of persons to be Trustees of the Fund who are
not "interested persons" of the Fund ("Disinterested Trustees") shall be
committed to the discretion of the incumbent Disinterested Trustees. Nothing
herein shall prevent the incumbent Disinterested Trustees from soliciting the
views or the involvement of others in such selection or nominations as long
as the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board for its review, detailing the
amount of all payments made under this Plan and the purpose for which the
payments were made. The reports shall be provided quarterly, and shall state
whether all provisions of Section 3 of this Plan have been complied with.
<PAGE>
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding Class B voting shares; (ii) such
termination shall be on not more than sixty days' written notice to any
other party to the agreement; (iii) such agreement shall automatically
terminate in the event of its "assignment" (as defined in the 1940 Act); (iv)
such agreement shall go into effect when approved by a vote of the Board and
its Independent Trustees cast in person at a meeting called for the purpose
of voting on such agreement; and (v) such agreement shall, unless terminated
as herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Trustees cast in person at a meeting called for the
purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and of the
Independent Trustees and replaces the Fund's prior Distribution and Service
Plan for Class B Shares. Unless terminated as hereinafter provided, it shall
continue in effect until renewed by the Board in accordance with the Rule and
thereafter from year to year or as the Board may otherwise determine but only
so long as such continuance is specifically approved at least annually by a
vote of the Board and its Independent Trustees cast in person at a meeting
called for the purpose of voting on such continuance.
This Plan may not be amended to increase materially the amount of
payments to be made under this Plan, without approval of the Class B
Shareholders at a meeting called for that purpose, and all material
amendments must be approved by a vote of the Board and of the Independent
Trustees.
This Plan may be terminated at any time by vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding Class B voting shares. In
the event of such termination, the Board and its Independent Trustees shall
determine whether the Distributor shall be entitled to payment from the Fund
of all or a portion of the Service Fee and/or the Asset-Based Sales Charge in
respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not binding
upon any Trustee or shareholder of the Fund personally, but bind only the
Fund and the Fund's property. The Distributor represents that it has notice
of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Fund.
Oppenheimer Enterprise Fund
/s/ Andrew J. Donohue
By:
Andrew Donohue, Secretary
OppenheimerFunds Distributor, Inc.
/s/ Katherine P. Feld.
By:
Katherine P. Feld,
Vice President and Secretary
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
with
OppenheimerFunds Distributor, Inc.
For Class C Shares of
Oppenheimer Enterprise Fund
This Amended and Restated Distribution and Service Plan and Agreement (the
"Plan") is dated as of the 12th day of February, 1998, by and between
Oppenheimer Enterprise Fund (the "Fund") and OppenheimerFunds Distributor,
Inc. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and service
plan for Class C shares of the Fund (the "Shares"), contemplated by Rule
12b-1 as it may be amended from time to time (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the Fund
will compensate the Distributor for its services in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the provisions
and definitions contained in (i) the 1940 Act, (ii) the Rule, (iii) Rule 2830
of the Conduct Rules of the National Association of Securities Dealers, Inc.,
or any applicable amendment or successor to such rule (the "NASD Conduct
Rules") and (iv) any conditions pertaining either to distribution-related
expenses or to a plan of distribution to which the Fund is subject under any
order on which the Fund relies, issued at any time by the U.S. Securities and
Exchange Commission ("SEC").
2. Definitions. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct, administrative
or both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with
such information as the Distributor shall reasonably request to answer such
questions as may arise concerning the sale of Shares; and (iii) has been
selected by the Distributor to receive payments under the Plan.
(b) "Independent Trustees" shall mean the members of the Fund's Board
of Trustees who are not "interested persons" (as defined in the 1940 Act) of
the Fund and who have no direct or indirect financial interest in the
operation of this Plan or in any agreement relating to this Plan.
(c) "Customers" shall mean such brokerage or other customers or
investment advisory or other clients of a Recipient, and/or accounts as to
which such Recipient provides administrative support services or is a
custodian or other fiduciary.
(d) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
Recipient's Customers, but in no event shall any such Shares
be deemed owned by more than one Recipient for purposes of this Plan. In the
event that more than one person or entity would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer of record
on the Fund's books as determined by the Distributor shall be deemed the
Recipient as to such Shares for purposes of this Plan.
<PAGE>
-57-
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) Payments to the Distributor. In consideration of the payments
made by the Fund to the Distributor under this Plan, the Distributor shall
provide administrative support services and distribution services to the
Fund. Such services include distribution assistance and administrative
support services rendered in connection with Shares (1) sold in purchase
transactions, (2) issued in exchange for shares of another investment company
for which the Distributor serves as distributor or sub-distributor, or (3)
issued pursuant to a plan of reorganization to which the Fund is a party. If
the Board believes that the Distributor may not be rendering appropriate
distribution assistance or administrative support services in connection with
the sale of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify that
the Distributor is providing appropriate services in this regard. For such
services, the Fund will make the following payments to the Distributor:
(i) Administrative Support Service Fees. Within forty-five (45)
days of the end of each calendar quarter, the Fund will make payments in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average during
that calendar quarter of the aggregate net asset value of the Shares computed
as of the close of each business day (the "Service Fee"). Such Service Fee
payments received from the Fund will compensate the Distributor for providing
administrative support services with respect to Accounts. The administrative
support services in connection with Accounts may include, but shall not be
limited to, the administrative support services that a Recipient may render
as described in Section 3(b)(i) below.
(ii) Distribution Assistance Fees (Asset-Based Sales Charge).
Within ten (10) days of the end of each month, the Fund will make payments in
the aggregate amount of 0.0625% (0.75% on an annual basis) of the average
during the month of the aggregate net asset value of Shares computed as of
the close of each business day (the "Asset-Based Sales Charge"). Such
Asset-Based Sales Charge payments received from the Fund will compensate the
Distributor for providing distribution assistance in connection with the sale
of Shares.
The distribution assistance services to be rendered by the Distributor
in connection with the Shares may include, but shall not be limited to, the
following: (i) paying sales commissions to any broker, dealer, bank or other
person or entity that sells Shares, and/or paying such persons "Advance
Service Fee Payments" (as defined below) in advance of, and/or in amounts
greater than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing or
providing such financing from its own resources, or from an affiliate, for
the interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and administrative
support services to the Fund; and (iv) paying other direct distribution
costs, including without limitation the costs of sales literature,
advertising and prospectuses (other than those prospectuses furnished to
current holders of the Fund's shares ("Shareholders")) and state "blue sky"
registration expenses.
(b) Payments to Recipients. The Distributor is authorized under the
Plan to pay Recipients (1) distribution assistance fees for rendering
distribution assistance in connection with the sale of Shares and/or (2)
service fees for rendering administrative support services with respect to
Accounts. However, no such payments shall be made to any Recipient for any
quarter in which its Qualified Holdings do not equal or exceed, at the end
of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any,
that may be set from time to time by a majority of the Independent Trustees.
All fee payments made by the Distributor hereunder are subject to reduction
or chargeback so that the aggregate service fee payments and Advance Service
Fee Payments do not exceed the limits on payments to Recipients that are, or
may be, imposed by the NASD Conduct Rules. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Recipient or retain such
payments if the Distributor qualifies as a Recipient.
<PAGE>
In consideration of the services provided by Recipients, the
Distributor shall make the following payments to Recipients:
(i) Service Fee. In consideration of administrative support
services provided by a Recipient during a calendar quarter, the Distributor
shall make service fee payments to that Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed 0.0625% (0.25% on an annual basis) of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close
of each business day, constituting Qualified Holdings owned beneficially or
of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, that may be set from
time to time by a majority of the Independent Trustees.
Alternatively, the Distributor may, at its sole option, make the
following service fee payments to any Recipient quarterly, within forty-five
(45) days of the end of each calendar quarter: (A) "Advance Service Fee
Payments" at a rate not to exceed 0.25% of the average during the calendar
quarter of the aggregate net asset value of Shares, computed as of the close
of business on the day such Shares are sold, constituting Qualified Holdings,
sold by the Recipient during that quarter and owned beneficially or of record
by the Recipient or by its Customers, plus (B) service fee payments at a rate
not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period
of more than one (1) year. At the Distributor's sole option, Advance Service
Fee Payments may be made more often than quarterly, and sooner than the end
of the calendar quarter. In the event Shares are redeemed less than one year
after the date such Shares were sold, the Recipient is obligated to and will
repay the Distributor on demand a pro rata portion of such Advance Service
Fee Payments, based on the ratio of the time such Shares were held to one (1)
year.
The administrative support services to be rendered by Recipients in
connection with the Accounts may include, but shall not be limited to, the
following: answering routine inquiries 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.
(ii) Distribution Assistance Fee (Asset-Based Sales Charge)
Payments. Irrespective of whichever alternative method of making service fee
payments to Recipients is selected by the Distributor, in addition the
Distributor shall make distribution assistance fee payments to each Recipient
quarterly, within forty-five (45) days after the end of each calendar
quarter, at a rate not to exceed 0.1875% (0.75% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
Shares computed as of the close of each business day constituting Qualified
Holdings owned beneficially or of record by the Recipient or its Customers
for a period of more than one (1) year. Alternatively, at its sole option,
the Distributor may make distribution assistance fee payments to a Recipient
quarterly, at the rate described above, on Shares constituting Qualified
Holdings owned beneficially or of record by the Recipient or its Customers
without regard to the 1-year holding period described above. Distribution
assistance fee payments shall be made only to Recipients that are registered
with the SEC as a broker-dealer or are exempt from registration.
The distribution assistance to be rendered by the Recipients in
connection with the sale of Shares may include, but shall not be limited to,
the following: distributing sales literature and prospectuses other than
those furnished to current Shareholders, providing compensation to and paying
expenses of personnel of the Recipient who support the distribution of Shares
by the Recipient, and providing such other information and services in
connection with the distribution of Shares as the Distributor or the Fund may
reasonably request.
<PAGE>
(c) A majority of the Independent Trustees may at any time or from
time to time (i) increase or decrease the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or (ii) direct the Distributor to increase or decrease any Minimum
Holding Period, any maximum period set by a majority of the Independent
Trustees during which fees will be paid on Shares constituting Qualified
Holdings owned beneficially or of record by a Recipient or by its Customers
(the "Maximum Holding Period"), or Minimum Qualified Holdings. The
Distributor shall notify all Recipients of any Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period that are established and
the rate of payments hereunder applicable to Recipients, and shall provide
each Recipient with written notice within thirty (30) days after any change
in these provisions. Inclusion of such provisions or a change in such
provisions in a supplement or amendment to or revision of the prospectus of
the Fund shall constitute sufficient notice.
(d) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination under the limits to which the Distributor
is, or may become, subject under the NASD Conduct Rules.
(e) Under the Plan, payments may also be made to Recipients: (i) by
OppenheimerFunds, Inc. ("OFI") from its own resources (which may include
profits derived from the advisory fee it receives from the Fund), or (ii) by
the Distributor (a subsidiary of OFI), from its own resources, from
Asset-Based Sales Charge payments or from the proceeds of its borrowings, in
either case, in the discretion of OFI or the Distributor, respectively.
(f) Recipients are intended to have certain rights as third-party
beneficiaries under this Plan, subject to the limitations set forth below.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it
has Qualified Holdings of Shares that entitle it to payments under the Plan.
If either the Distributor or the Board believe that, notwithstanding the
level of Qualified Holdings, a Recipient may not be rendering appropriate
distribution assistance in connection with the sale of Shares or
administrative support services for Accounts, then the Distributor, at the
request of the Board, shall require the Recipient to provide a written report
or other information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the Distributor
or the Board of Trustees still is not satisfied after the receipt of such
report, either may take appropriate steps to terminate the Recipient's status
as a Recipient under the Plan, whereupon such Recipient's rights as a
third-party beneficiary hereunder shall terminate. Additionally, in their
discretion a majority of the Fund's Independent Trustees at any time may
remove any broker, dealer, bank or other person or entity as a Recipient,
whereupon such person's or entity's rights as a third-party beneficiary
hereof shall terminate. Notwithstanding any other provision of this Plan,
this Plan does not obligate or in any way make the Fund liable to make any
payment whatsoever to any person or entity other than directly to the
Distributor. The Distributor has no obligation to pay any Service Fees or
Distribution Assistance Fees to any Recipient if the Distributor has not
received payment of Service Fees or Distribution Assistance Fees from the
Fund.
4. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of persons to be Trustees of the Fund who are
not "interested persons" of the Fund ("Disinterested Trustees") shall be
committed to the discretion of the incumbent Disinterested Trustees. Nothing
herein shall prevent the incumbent Disinterested Trustees from soliciting the
views or the involvement of others in such selection or nomination as long as
the final decision on any such selection and nomination is approved by a
majority of the incumbent Disinterested Trustees.
5. Reports. While this Plan is in effect, the Treasurer of the Fund shall
provide written reports to the Fund's Board for its review, detailing the
amount of all payments made under this Plan and the purpose for which the
payments were made. The reports shall be provided quarterly, and shall state
whether all provisions of Section 3 of this Plan have been complied with.
<PAGE>
6. Related Agreements. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the
Independent Trustees or by a vote of the holders of a "majority" (as defined
in the 1940 Act) of the Fund's outstanding voting Class C shares; (ii) such
termination shall be on not more than sixty days' written notice to any other
party to the agreement; (iii) such agreement shall automatically terminate in
the event of its "assignment" (as defined in the 1940 Act); (iv) such
agreement shall go into effect when approved by a vote of the Board and its
Independent Trustees cast in person at a meeting called for the purpose of
voting on such agreement; and (v) such agreement shall, unless terminated as
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Trustees cast in person at a meeting called for the
purpose of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This Amended
and Restated Plan has been approved by a vote of the Board and of the
Independent Trustees and replaces the Fund's prior Distribution and Service
Plan for Class C Shares. Unless terminated as hereinafter provided, it shall
continue in effect until renewed by the Board in accordance with the Rule and
thereafter from year to year or as the Board may otherwise determine but only
so long as such continuance is specifically approved at least annually by a
vote of the Board and its Independent Trustees cast in person at a meeting
called for the purpose of voting on such continuance.
This Plan may not be amended to increase materially the amount of
payments to be made under this Plan, without approval of the Class C
Shareholders at a meeting called for that purpose and all material amendments
must be approved by a vote of the Board and of the Independent Trustees.
This Plan may be terminated at any time by a vote of a majority of the
Independent Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding Class C voting shares. In
the event of such termination, the Board and its Independent Trustees shall
determine whether the Distributor shall be entitled to payment from the Fund
of all or a portion of the Service Fee and/or the Asset-Based Sales Charge in
respect of Shares sold prior to the effective date of such termination.
8. Disclaimer of Shareholder and Trustee Liability. The Distributor
understands that the obligations of the Fund under this Plan are not binding
upon any Trustee or shareholder of the Fund personally, but bind only the
Fund and the Fund's property. The Distributor represents that it has notice
of the provisions of the Declaration of Trust of the Fund disclaiming
shareholder and Trustee liability for acts or obligations of the Fund.
Oppenheimer Enterprise Fund
By: /s/ Andrew J. Donohue
Andrew Donohue, Secretary
OppenheimerFunds Distributor, Inc.
By: /s/ Katherine P. Feld
Katherine P. Feld,
Vice President and Secretary
