<PAGE>
OPPENHEIMER INTERNATIONAL GROWTH FUND
Prospectus dated September 20, 1996
Oppenheimer International Growth Fund is a mutual fund with the
investment objective of capital appreciation. Current income is not
an objective. The Fund invests primarily in common stocks of
foreign companies in countries throughout the world, including
emerging markets. The Fund emphasizes investments in "growth-type"
companies in industry sectors that the portfolio manager believes
have appreciation possibilities. The Fund may also use "hedging"
instruments to try to reduce the risks of market and currency
fluctuations that affect the value of the securities the Fund
holds.
Some of the Fund's investment techniques may be considered
speculative. Foreign investing involves special risks that do not
affect investments in domestic issuers, such as currency
fluctuations. Investments in emerging arkets can be very volatile.
These techniques may increase the risks of investing in the Fund
and the Fund's operating costs. You should carefully review the
risks associated with an investment in the Fund. Please refer to
"Investment Policies and Strategies" for more information about the
types of securities the Fund invests in and the risks of investing
in the Fund.
This Prospectus explains concisely what you should know before
investingin the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the September 20, 1996 Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
[Logo] OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
3 Expenses
5 A Brief Overview of the Fund
8 Investment Objective and Policies
16 How the Fund is Managed
18 Performance of the Fund
ABOUT YOUR ACCOUNT
19 How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
30 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
32 How to Sell Shares
By Mail
By Telephone
34 How to Exchange Shares
35 Shareholder Account Rules and Policies
37 Dividends, Capital Gains and Taxes
A-1 Appendix A: Special Sales Charge Arrangements
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All shareholders
therefore pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges and account transaction
charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and the share of the
Fund's business operating expenses that you will bear indirectly.
-- Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account," starting on page 19, for an explanation of how and when
these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C
------ -------- --------
<S> <C> <C> <C>
Maximum Sales Charge on 5.75% None None
Purchases (as a % of
offering price)
Sales Charge on Reinvested None None None
Dividends
Deferred Sales Charge (as a % None(1) 5% in the 1% if
of the lower of the original 1st year, redeemed
purchase price or redemption declining to within 12
proceeds) 1% in the months of
6th year and purchase(2)
eliminated
thereafter(2)
Exchange Fee None None None
Redemption Fee None None None
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares -- Buying Class A
Shares," below.
(2) For more information on contingent deferred sales charges, see "How
to Buy Shares -- Buying Class B Shares" and "Buying Class C Shares"
below.
-- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser,
OppenheimerFunds, Inc. (which is referred to in this Prospectus as the
"Manager"). The rates of the Manager's fees are set forth in "How the
Fund is Managed," below. The Fund has other regular expenses for
services, such as transfer agent fees, custodial fees paid to the bank
that holds its portfolio securities, audit fees and legal expenses. Those
expenses are detailed in the Fund's Financial Statements (unaudited) in
the Statement of Additional Information.
Annual Fund Operating Expenses (as a percentage of average net assets)
Class A Class B Class C
Management Fees 0.80% 0.80% 0.80%
12b-1 Distribution Plan 0.25% 1.00% 1.00%
Fees
Other Expenses 0.68% 0.76% 0.77%
Total Fund Operating 1.73% 2.56% 2.57%
Expenses
Shares of the Fund were first publicly offered for sale on March 25,
1996. As the Fund has not yet completed its initial fiscal year (which
ends November 30), the Annual Fund Operating Expenses, including "Other
Expenses", shown above are based on amounts estimated to be paid in the
current fiscal year and are shown as a percentage of the average net
assets of each class of the Fund's shares for that period. The 12b-1 Plan
Fees for Class A shares are service fees. The maximum fee is 0.25% of
average net assets of that class. For Class B and Class C shares, the
12b-1 Distribution Plan Fees are service fees (the maximum fee is 0.25%
of average net assets of the respective class) and the asset-based sales
charge of 0.75%. These plans are described in greater detail in "How to
Buy Shares."
The actual expenses for each class of shares in the Fund's first full
fiscal year and future years may be more or less than the numbers in the
table, depending on a number of factors, including changes in the actual
value of the Fund's assets represented by each class of shares.
-- Examples. To try to show the effect of these estimated expenses
on an investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class of
shares of the Fund, that the Fund's annual return is 5%, and that its
operating expenses for each class are the ones shown in the Annual Fund
Operating Expenses table above. If you were to redeem your shares at the
end of each period shown below, your investment would incur the following
expenses by the end of 1 and 3 years:
1 year 3 years
Class A Shares $74 $109
Class B Shares $76 $110
Class C Shares $36 $ 80
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years
Class A Shares $74 $109
Class B Shares $26 $ 80
Class C Shares $26 $ 80
Because of the effect of the asset-based sales charge and contingent
deferred sales charge imposed on Class B and Class C shares, long-term
holders of Class B and Class C shares could pay the economic equivalent
of more than the maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of Class
B shares to Class A Shares is designed to minimize the likelihood that
this will occur. Please refer to "How to Buy Shares -- Buying Class B
Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which may be more or less than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
-- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek capital appreciation.
-- What Does the Fund Invest In? The Fund primarily invests in
foreign common stocks of "growth type" companies considered to have
appreciation possibilities. Investments in debt securities may be made
to a limited degree in normal market conditions and without limitation
as a temporary defensive measure or for liquidity purposes in uncertain
market conditions. The Fund may also use hedging instruments and some
derivative investments to try to manage investment risks. These
investments are more fully explained in "Investment Objective and
Policies," starting on page 8.
-- Who Manages the Fund? The Fund's investment adviser is
OppenheimerFunds, Inc., which (including a subsidiary) manages investment
company portfolios having over $50 billion in assets as of June 30, 1996.
The Manager is paid an advisory fee by the Fund, based on its net assets.
The Fund's portfolio manager, who is primarily responsible for the
selection of the Fund's securities, is George Evans. The Fund's Board of
Trustees, which is elected by shareholders, oversees the investment
adviser and the portfolio manager. Please refer to "How the Fund is
Managed," starting on page 16 for more information about the Manager and
its fees.
-- How Risky is the Fund? All investments carry risks to some degree.
It is important to remember that the Fund is designed for long-term
investors. The Fund's investments are subject to changes in their value
from a number of factors such as changes in general stock market
movements or the change in value of particular stocks because of an event
affecting the issuer. The Fund's investments in foreign securities are
subject to additional risks associated with investing abroad, such as the
effect of currency rate changes on stock values and the special risks of
investing in emerging markets. These changes affect the value of the
Fund's investments and its price per share.
In the Oppenheimer funds spectrum, the Fund is expected to be more
volatile than stock funds that do not invest primarily for capital
appreciation or in emerging markets, and funds that invest primarily in
debt securities. The fact that the Fund is a new fund with no operating
history is also a factor to consider. While the Manager tries to reduce
risks by diversifying investments, by carefully researching securities
before they are purchased for the portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving the
Fund's objective, and your shares may be worth more or less than their
original cost when you redeem them. Please refer to "Investment Objective
and Policies" starting on page 8 for a more complete discussion of the
Fund's investment risks.
-- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
beginning on page 19 for more details.
-- Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. Each class has the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Class B and
Class C shares are offered without a front-end sales charge, but may be
subject to a contingent deferred sales charge if redeemed within 6 years
or 12 months, respectively, of purchase. There is also an annual
asset-based sales charge on Class B and Class C shares. Please review
"How to Buy Shares" starting on page 19 for more details, including a
discussion about factors you and your financial advisor should consider
in determining which class may be appropriate for you.
-- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How to Sell Shares" on page 32. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How
to Exchange Shares" on page 34.
-- How Can I Tell How the Fund Performed? The Fund measures its
performance by quoting its average annual total returns and cumulative
total returns, which measure historical performance. Those returns can
be compared to the returns (over similar periods) of other funds. Of
course, other funds may have different objectives, investments and levels
of risk. The Funds's performance can also be compared to that of a broad
stock market index. Please remember that past performance does not
guarantee future results.
Financial Highlights (Unaudited)
The table on the following page presents unaudited selected financial
information about the Fund, including per share data, expense ratios and
other data for the period from March 25, 1996 (commencement of
operations) through May 31, 1996. The Fund's unaudited Financial
Statements for that period appears in the Statement of Additional
Information.
<TABLE>
<CAPTION>
CLASS A CLASS B
CLASS C
---------- -------
---------
PERIOD ENDED PERIOD ENDED
PERIOD ENDED
MAY 31, 1996(1) MAY 31, 1996(1)
MAY 31, 1996(1)
- ------------------------------------------------------------------------------
- -------------------
<S> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.00 $10.00
$10.00
- ------------------------------------------------------------------------------
- -------------------
Income from investment operations:
Net investment income .03 .02
.01
Net realized and unrealized gain .42 .40
.41
- ------------------------------------------------------------------------------
- -------------------
Total income from investment operations .45 .42
.42
- ------------------------------------------------------------------------------
- -------------------
Net asset value, end of period $10.45 $10.42
$10.42
=====================================================================
==============================================================================
===================
TOTAL RETURN, AT NET ASSET VALUE(2) 4.50% 4.20%
4.20%
==============================================================================
===================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $6,986 $2,421
$603
- ------------------------------------------------------------------------------
- -----------------
Average net assets (in thousands) $4,819 $1,181
$292
- ------------------------------------------------------------------------------
- -----------------
Ratios to average net assets(3):
Net investment income 2.47% 1.77%
1.57%
Expenses 1.73% 2.56%
2.57%
- ------------------------------------------------------------------------------
- ------------------
Portfolio turnover rate(4) 6.5% 6.5%
6.5%
Average brokerage commission rate(5) $0.0154 $0.0154
$0.0154
</TABLE>
1. For the period from March 25, 1996 (commencement of operations)
to May 31, 1996.
2. Assumes a hypothetical initial investment on the business day
before the first day of the fiscal period, with all dividends and
distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last
business day of the fiscal period. Sales charges are not reflected
in the total returns. Total returns are not annualized for periods
of less than one full year.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a
period, divided by the monthly average of the market value of
portfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of one year
or less are excluded from the calculation. Purchases and sales of
investment securities (excluding short-term securities) for the
period ended May 31, 1996 were $9,577,541 and $290,264,
respectively.
5. Total brokerage commissions paid on applicable purchases and
sales of portfolio securities for the period divided by the total
number of related shares purchased and sold. <PAGE>
Investment Objective and Policies
Objective. The Fund invests its assets to seek capital
appreciation.
Investment Policies and Strategies. The Fund seeks capital
appreciation by emphasizing investments in common stocks of foreign
"growth-type" companies, which are described below. The Fund may
invest in securities of smaller, less well-known companies as well
as those of large, well-known companies (if they are "growth-type"
companies). The Fund may hold preferred stock, warrants and rights.
Current income is not a consideration in the selection of portfolio
securities. A portion of the Fund's assets may be invested in
securities for liquidity purposes.
As a matter of fundamental policy, under normal market
conditions (when the Manager believes that the securities markets
are not in a volatile or unstable period) the Fund will invest at
least 65% of its total assets in foreign common and preferred
stocks of at least three different countries other than the United
States. The Fund may invest up to 100% of its assets in foreign
securities.
[ ] What are "Growth-Type" Companies? These are companies that
the Manager believes are entering into a growth cycle in their
business, with the expectation that their stock will increase in
value. Growth companies may include larger, established companies
that the Manager believes are entering a growth phase, whether
because of the development of new products or markets, improved
sales, technological developments, or for other reasons. Growth
companies may also include companies that generate or apply new
technologies, new or improved distribution techniques, or new
services, companies that own or develop natural resources,
companies that may benefit from changing consumer demands or
lifestyles, companies with projected earnings growth in excess of
the average. They may include newer companies that may be in new or
developing industries, or which are developing new products or
services, or expanding into new markets for their products. In
either case, growth-type companies have what the Manager believes
to be favorable prospects for the long-term. Newer growth-type
companies normally retain a large part of their earnings for
research, development and investment in capital assets. Therefore,
they tend not to emphasize the payment of dividends. Since the Fund
does not invest for current income, that is not considered to be a
negative factor in selecting a stock.
In selecting stocks for investment, the Manager looks for
companies with capable management, sound financial and accounting
policies, successful product development and marketing, as well as
other factors.
-- Foreign Securities. "Foreign Securities" selected by the
Fund include equity securities issued by companies organized under
the laws of a foreign country, and debt securities (such as
convertible debentures or bonds) issued or guaranteed by foreign
companies or by foreign governments or their agencies. Foreign
securities also include securities are that are traded primarily on
a foreign securities exchange or over-the-counter market, as well
as securities of companies that derive a significant portion of
their revenue or profits from foreign business, investments or
sales or have a significant portion of their assets abroad. Foreign
securities may include securities of foreign issuers represented in
the U.S. markets by American Depository Receipts (ADRs) or other
similar arrangements. The Fund will hold foreign currency only in
connection with the purchase or sale of foreign securities.
[ ] Foreign securities have special risks. While foreign
securities offer special investment opportunities, there are also
special risks. Because the Fund may purchase securities denominated
in foreign currencies or traded primarily in foreign markets, a
change in the value of a foreign currency against the U.S. dollar
will result in a change in the U.S. dollar value of those foreign
securities. Foreign issuers are not required to use
generally-accepted accounting principles that apply to U.S.
issuers. If securities of a foreign issuer are not registered for
sale in the U.S. under U.S. securities laws, the issuer does not
have to comply with disclosure requirements that U.S. companies are
subject to. The value of foreign investments may be affected by
other factors, including exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental, economic or monetary policy in the U.S. or abroad, or
other political and economic factors.
In addition, it is generally more difficult to obtain court
judgments outside the U.S. if the Fund were to sue a foreign issuer
or broker. Additional costs may be incurred because foreign
brokerage commissions are generally higher than U.S. rates, and
there are additional custodial costs associated with holding
securities abroad. More information about the risks and potential
rewards of investing in foreign securities is contained in the
Statement of Additional Information.
[ ] Emerging Market Risks. The Fund can invest in securities in
any country, developed or undeveloped, including "emerging"
markets. In general "emerging" markets may offer special investment
opportunities because their securities markets, industries, capital
structure and consumer consumption are growing rapidly, but these
countries involve special risks not present in mature foreign
markets (such as England, Germany and Japan, for example).
Settlement of securities trades may be subject to extended delays,
so that the Fund may not receive the proceeds of sales of
securities on a timely basis. Emerging markets may have smaller,
less developed trading markets and exchanges, which may entail a
lack of liquidity (so that the Fund may not be able to dispose of
those securities rapidly) and greater volatility, which can affect
the value of the securities held by the Fund, and therefore its net
asset value per share. There may also be less developed legal and
accounting systems and a greater possibility of government
limitations on foreign investment.
[ ] Factors Used in Selecting Foreign Securities. The Fund's
portfolio manager presently intends to employ an investment
strategy in selecting foreign securities that considers the effects
of worldwide trends on the growth of various business sectors.
These trends or "global themes" currently include
telecommunications expansion, emerging consumer markets,
infrastructure development, natural resource use and development,
corporate restructuring, capital market development in foreign
countries, health care expansion, and global integration. These
trends, which may affect the growth of companies which have
businesses in these sectors or which are affected by their
development, may suggest opportunities for investing the Fund's
assets. The Manager does not invest a fixed or specific amount of
the Fund's assets in any one sector, and these themes or this
investment strategy may change over time.
The Fund may also seek to take advantage of changes in the
business cycle by investing in companies that are sensitive to
those changes as well as in "special situations" the Manager
believes present opportunities for capital growth. For example,
when a country's economy is expanding, companies in the financial
services and consumer products industries may be in a position to
benefit from changes in the business cycle and may present
long-term growth opportunities.
When investing the Fund's assets, the Manager considers many
factors, including the global themes discussed above, general
economic conditions and the trends in foreign stock markets. The
Fund may try to hedge against losses in the value of its portfolio
of securities by using hedging strategies and derivative
investments described below.
[ ] Debt Securities. The Fund may invest in debt securities of
foreign companies or governments, but presently does not plan to
invest more than 5% of its total assets in debt securities. To the
extent that the Fund does invest in debt securities, it will
primarily focus on convertible debt securities, that is, securities
that can be converted into the issuer's common stock at the Fund's
election. These securities entitle the owner to receive interest
until the security is redeemed (or converted) or matures. On
maturity the principal is repaid. The Manager considers convertible
securities to be "equity equivalents" because of the conversion
feature, and the security's rating has less impact on the
investment decision than in the case on non-convertible securities.
These securities are subject to interest rate risks (the price
of the security will tend to move down when interest rates rise,
and to go up when interest rates fall). They are also subject to
"credit risk" (the risk of the issuer's default). The Fund can
invest in debt securities that are unrated or which have ratings in
any category (including ratings below investment grade, which
involve greater risks of default), but will primarily focus on
investment grade securities to the extent it invests in debt
securities. A discussion of rating categories of principal rating
organizations is contained in the Statement of Additional
Information.
-- Domestic Securities. In general, the Fund does not expect to
hold significant amounts of securities of U.S. issuers (that is,
more than 10% of the Fund's total invested assets). It can,
however, hold common and preferred stocks of U.S. companies and may
hold U.S. debt securities to the same extent descried in "Debt
Securities" above. However, when market conditions are unstable it
may invest without limit in U.S. Government securities or
high-quality U.S. commercial paper for temporary defensive
purposes, as discussed below in "Temporary Defensive Measures."
-- Can the Fund's Investment Objective and Policies Change? The
Fund's investment policies and techniques are not "fundamental"
unless this Prospectus or the Statement of Additional Information
says that a particular policy is "fundamental." The Fund's
investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without
the approval of a "majority" of the Fund's outstanding voting
shares. The term "majority" is defined in the Investment Company
Act to be a particular percentage of outstanding voting shares (and
this term is explained in the Statement of Additional Information).
The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
-- Stock Investment Risks. Because the Fund normally invests
most, or a substantial portion, of its assets in stocks, the value
of the Fund's portfolio will be affected by changes in the stock
markets. At times, the stock markets can be volatile, and stock
prices can change substantially. This market risk will affect the
Fund's net asset values per share, which will fluctuate as the
values of the Fund's portfolio securities change. Not all stock
prices change uniformly or at the same time, not all stock markets
move in the same direction at the same time, and other factors can
affect a particular stock's prices (for example, poor earnings
reports by an issuer, loss of major customers, major litigation
against an issuer, or changes in government regulations affecting
an industry). Not all of these factors can be predicted.
As discussed below, the Fund attempts to limit 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.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, some of which may be
speculative, the Fund is designed for investors who are investing
for the long-term and who are willing to accept greater risks of
loss of their investment in the hope of achieving capital
appreciation. It is not intended for investors seeking assured
income and preservation of capital. Investing for capital
appreciation entails the risk of loss of all or part of your
investment. Because changes in securities market prices can occur
at any time, there is no assurance that the Fund will achieve its
investment objective, and when you redeem your shares, they may be
worth more or less than what you paid for them.
-- Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund ordinarily does not
engage in short-term trading to try to achieve its objective. As a
result, the Fund's portfolio turnover is not expected to be more
than 100% each year.
Portfolio turnover affects brokerage costs, dealer markups and
other transaction costs, and results in the Fund's realization of
capital gains or losses for tax purposes. It may also affect the
Fund's ability to qualify as a "regulated investment company" under
the Internal Revenue Code for tax deductions for dividends and
capital gains distributions the Fund pays to shareholders. The Fund
intends to qualify as a regulated investment company in its current
fiscal year, although it reserves the right not to qualify.
Other Investment Techniques and Strategies. The Fund may also
use the investment techniques and strategies described below. These
techniques involve certain risks. The Statement of Additional
Information contains more information about these practices,
including limitations on their use that may help to reduce some of
the risks.
-- Temporary Defensive Measures. When market conditions are
unstable, as a temporary defensive measure, the Fund may invest
without limit in debt securities, such as securities issued by the
U.S. Government or its agencies or instrumentalities, cash
equivalents and commercial paper in the top two rating categories
of a nationally-recognized securities rating organization such as
Standard & Poor's Corporation. It is expected that in this case the
Fund would select short-term debt securities (which are securities
maturing in one year or less from date of purchase), since those
securities usually may be disposed of quickly and their prices tend
not to be as volatile as the prices of longer term debt securities.
Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities, other than in
repurchase transactions, to brokers, dealers and other financial
institutions. The Fund must receive collateral for a loan. These
loans are limited to not more than 25% of the value of the Fund's
total assets and are subject to the conditions described in the
Statement of Additional Information. The Fund presently does not
intend to engage in loans of securities that will exceed 5% of the
value of the Fund's total assets in the coming year.
Repurchase Agreements. To maintain liquidity to meet
shareholder redemption requests or to settle portfolio trades, the
Fund may enter into repurchase agreements. In a repurchase
transaction, the Fund buys a security and simultaneously sells it
to the vendor for delivery at a future date. They are used
primarily for cash liquidity purposes.
Repurchase agreements must be fully collateralized. However,
if the vendor fails to pay the resale price on the delivery date,
the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so.
The Fund will not enter into a repurchase agreement that causes
more than 10% of its net assets to be subject to repurchase
agreements having a maturity beyond seven days. There is no limit
on the amount of the Fund's net assets that may be subject to
repurchase agreements of seven days or less.
-- Special Risks -- Borrowing for Leverage. The Fund may
borrow up to 10% of the value of its net assets from banks on an
unsecured basis to buy securities. That percentage limit is a
fundamental policy. This is a speculative investment method known
as "leverage." This investing technique may subject the Fund to
greater risks and costs than funds that do not borrow. These risks
may include the possibility that the Fund's net asset value per
share will fluctuate more than funds that don't borrow. Borrowing
for leverage is subject to limits under the Investment Company Act,
described in more detail in "Borrowing for Leverage" in the
Statement of Additional Information.
-- Warrants and Rights. Warrants basically are options to
purchase stock at set prices that are valid for a limited period of
time. Rights are similar to warrants but normally have a short
duration and are distributed directly by the issuer to its
shareholders. The Fund may invest up to 5% of its total assets in
warrants or rights. That 5% limitation does not apply to warrants
the Fund has acquired as part of units with other securities or
that are attached to other securities. No more than 2% of the
Fund's total assets may be invested in warrants that are not listed
on either The New York Stock Exchange or The American Stock
Exchange. For further details, see "Warrants and Rights" in the
Statement of Additional Information.
-- Special Situations. The Fund may invest in securities of
companies that are in "special situations" that the Manager
believes may present opportunities for capital growth. A "special
situation" may be an event such as a proposed merger,
reorganization, or other unusual development that is expected to
occur and which may result in an increase in the value of a
company's securities, regardless of general business conditions or
the movement of prices in the securities market as a whole. There
is a risk that the price of the security may decline if the
anticipated development fails to occur.
Investing In Small, Unseasoned Companies. The Fund may invest
in securities of small, unseasoned companies. These are companies
that have been in operation less than three years, including the
operations of any predecessors. Securities of these companies may
have limited liquidity (which means that the Fund may have
difficulty selling them at an acceptable price when it wants to)
and the price of these securities may be volatile. See "Investing
in Small, Unseasoned Companies" in the Statement of Additional
Information for a further discussion of the risks involved in such
investments.
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.
Investments may be illiquid because of the absence of an active
trading market, making it difficult to value them or dispose of
them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on its resale or which cannot be
sold publicly until it is registered under the Securities Act of
1933. The Fund will not invest more than 10% of its net assets in
illiquid or restricted securities. The Fund's percentage limitation
on these investments does not apply to certain restricted
securities that are eligible for resale to qualified institutional
purchasers. See "Restricted and Illiquid Securities" in the
Statement of Additional Information for further details.
-- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, forward
contracts, and options on futures and broadly-based stock indices.
These are all referred to as "hedging instruments." The Fund does
not use hedging instruments for speculative purposes, and has
limits on the use of them, described below. The hedging instruments
the Fund may use are described below and in greater detail in
"Other Investment Techniques and Strategies" in the Statement of
Additional Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing
individual securities. Some of these strategies, such as selling
futures, buying puts and writing covered calls, 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 are used to try to manage foreign
currency risks on the Fund's foreign investments. Foreign currency
options are used to try to protect against declines in the dollar
value of foreign securities the Fund owns, or to protect against an
increase in the dollar cost of buying foreign securities. Writing
covered call options may also provide income to the Fund for
liquidity purposes.
[ ] Futures. The Fund may buy and sell futures contracts that
relate to(1) broadly-based stock indices (these are referred to as
Stock Index Futures) or (2) foreign currencies (these are called
Forward Contracts and are discussed below).
[ ] Put and Call Options. The Fund may buy and sell certain
kinds of put options (puts) and call options (calls). A call or put
option may not be purchased if the value of all of the Fund's put
and call options would exceed 5% of the Fund's total assets. Calls
the Fund buys or sells must be traded on a securities or
commodities exchange, or be quoted by recognized dealers in those
options.
The Fund may buy calls only on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures, or to terminate
its obligation on a call the Fund previously wrote.
The Fund may write (that is, sell) call options. Each call the
Fund writes must be "covered" while it is outstanding. That means
the Fund must own the investment on which the call was written. The
Fund may write calls on futures contracts it owns, but these calls
must be covered by securities or other liquid assets the Fund owns
and segregates to enable it to satisfy its obligations if the call
is exercised. When the Fund writes a call, it receives cash (called
a premium). The call gives the buyer the ability to buy the
investment on which the call was written from the Fund at the call
price during the period in which the call may be exercised. If the
value of the investment does not rise above the call price, it is
likely that the call will lapse without being exercised, while the
Fund keeps the cash premium (and the investment). After the Fund
writes a call, not more than 25% of the Fund's total assets may be
subject to calls.
The Fund may purchase put options. Buying a put on an
investment gives the Fund the right to sell the investment at a set
price to a seller of a put on that investment. The Fund can buy
only those puts that relate to securities that the Fund owns,
broadly-based stock indices, foreign currencies or Stock Index
Futures. The Fund can buy a put on a Stock Index Future whether or
not the Fund owns the particular Stock Index Future in its
portfolio.
The Fund may write puts on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures in an amount up
to 50% of its total assets but only if those puts are covered by
segregated liquid assets. In writing puts, there is a risk that the
Fund may be required to buy the underlying security at a
disadvantageous price.
[ ] 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 try 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 foreign currency. The Fund limits its net exposure
under forward contracts in a particular foreign currency to the
amount of its assets denominated in that currency or denominated
in a closely-correlated currency.
[ ] Hedging Instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different from what is required for normal portfolio management.
If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may
reduce the Fund's return. The Fund could also experience losses if
the prices of its futures and options positions were not
correlated with its other investments or if it could not close out
a position because of an illiquid market for the future or option.
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 a covered call written by the
Fund is exercised on a security that has increased in value, the
Fund will be required to sell the security at the call price and
will not be able to realize any profit if the security has
increased in value above the call price. The use of forward
contracts may reduce the gain that would otherwise result from a
change in the relationship between the U.S. dollar and a foreign
currency. These risks and the hedging strategies the Fund may use
are described in greater detail in the Statement of Additional
Information.
-- Derivative Investments. In general, a "derivative
investment" is a specially designed investment. Its performance is
linked to the performance of another investment or security, such
as an option, future, index, currency or commodity. The Fund can
invest in a number of different kinds of "derivative investments."
They are used in some cases for hedging purposes and in other cases
to attempt to seek increased total return. In the broadest sense,
exchange-traded options and futures contracts (discussed in
"Hedging," below) may be considered "derivative investments."
There are special risks in investing in derivative
investments. The company issuing the instrument may fail to pay the
amount due on the maturity of the instrument. Also, the underlying
investment or security on which the derivative is based might not
perform the way the Manager expected it to perform. The performance
of derivative investments may also be influenced by interest rate
and stock market changes in the U.S. and abroad. All of this can
mean that the Fund may realize less principal or income from the
investment than expected. Certain derivative investments held by
the Fund may trade in the over-the-counter market and may be
illiquid. Please refer to "Illiquid and Restricted Securities"
for an explanation.
-- Short Sales Against-the-Box. In a short sale, the seller
does not own the security that is sold, but normally borrows the
security to fulfill its delivery obligation. The seller later
buys the security to repay the loan, in the expectation that the
price of the security will be lower when the purchase is made,
resulting in a gain. The Fund may not sell securities short except
in collateralized transactions referred to as "short sales
against-the-box," where the Fund owns an equivalent amount of the
securities sold short. This technique is primarily used for tax
purposes. No more than 15% of the Fund's net assets will be held
as collateral for such short sales at any one time.
Other Investment Restrictions. The Fund has certain investment
restrictions that are fundamental policies. Under these
restrictions, the Fund cannot do any of the following:
[ ] The Fund cannot buy securities issued or guaranteed by
any one issuer (except the U.S. Government or any of its agencies
or instrumentalities) if, with respect to 75% of its total assets,
more than 5% of the Fund's total assets would be invested in
securities of that issuer, or the Fund would then own more than 10%
of that issuer's voting securities; and
[ ] The Fund cannot concentrate investments in any particular
industry. Therefore the Fund will not purchase the securities of
companies in any one industry if, thereafter, 25% or more of the
value of the Fund's assets would consist of securities of companies
in that industry.
All of the percentage restrictions described above and
elsewhere in this Prospectus (other than the regulatory percentage
limits in the Statement of Additional Information that apply to
borrowing), apply only at the time the Fund purchases a security.
The Fund need not dispose of a security merely because the size of
the Fund's assets has changed or the security has increased in
value relative to the size of the Fund. There are other fundamental
policies discussed in the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in December 1995
as a Massachusetts business trust. The Fund is an open-end,
diversified management investment company, with an unlimited number
of authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders under
Massachusetts law. The Trustees periodically meet throughout the
year to oversee the Fund's activities, review its performance, and
review the actions of the Manager. The Trustees are elected by
shareholders of the Fund, the initial Board has been elected by the
Manager as sole initial shareholder. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and officers of the Fund and provides more information about them.
Although the Fund will not normally hold annual meetings of Fund
shareholders, it may hold shareholder meetings from time to time on
important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in
the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has three
classes of shares, Class A, Class B and Class C. All classes invest
in the same investment portfolio. Each class has its own dividends
and distributions and pays certain expenses, which may be different
for the different classes. Each class may have a different net
asset value. Each share has one vote at shareholder meetings, with
fractional shares voting proportionally. Only shares of a
particular class vote as a class on matters that affect that class
alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the
Fund's investments and handling its day-to-day business. The
Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an Investment Advisory Agreement
which states the Manager's responsibilities. The Agreement sets the
fees paid by the Fund to the Manager and describes the expenses
that the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959.
The Manager including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $50 billion as of June 30, 1996, and with more than 3 million
shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
-- Portfolio Manager. The Portfolio Manager of the Fund is
George Evans, who is employed by the Manager. He is the person
principally responsible for the day-to-day management of the Fund's
portfolio. During the past five years, Mr. Evans has also served as
an officer and portfolio manager for other Oppenheimer funds, prior
to which hewas an international equities portfolio manager/analyst
with Brown Brothers, Harriman & Co.
-- Fees and Expenses. Under the Investment Advisory Agreement
the Fund pays the Manager the following annual fees, which decline
on additional assets as the Fund grows: 0.80% of the first $250
million of average annual net assets, 0.77% of the next $250
million, 0.75% of the next $500 million, 0.69% of the next $1
billion, and 0.67% of average annual net assets in excess of $2
billion.
The Fund pays expenses related to its daily operations, such
as custodian fees, Trustees' fees, transfer agency fees, legal fees
and auditing costs. Those expenses are paid out of the Fund's
assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are
indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreement and the other
expenses paid by the Fund is contained in the Statement of
Additional Information.
There is also information about the Fund's brokerage policies
and practices in "Brokerage Policies of the Fund" in the Statement
of Additional Information. That section discusses how brokers and
dealers are selected for the Fund's portfolio transactions. When
deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves
as investment adviser.
-- The Distributor. The Fund's shares are sold through
dealers, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of other Oppenheimer funds and is
sub-distributor for funds managed by a subsidiary of the Manager.
-- The Transfer Agent. The Fund's transfer agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for the other
Oppenheimer funds. Shareholders should direct inquiries about their
accounts to the Transfer Agent at the address and toll-free number
shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class will usually be
different as a result of the different kinds of expenses each class
bears. These returns measure the performance of a hypothetical
account in the Fund over various periods, and do not show the
performance of each shareholder's account (which will vary if
dividends are received in cash, or shares are sold or purchased).
The Fund's performance information may help you see how well your
Fund has done over time and to compare it to other funds or market
indices.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. This performance data
is described below, but more detailed information about how total
returns are calculated is contained in the Statement of Additional
Information, which also contains information about other ways to
measure and compare the Fund's performance. The Fund's investment
performance will vary over time, depending on market conditions,
the composition of the portfolio, expenses and which class of
shares you purchase.
-- Total Returns. There are different types of total returns
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However, total
returns may also be quoted "at net asset value," without
considering the effect of the sales charge, and those returns would
be less if sales charges were deducted.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares: Class A, Class B and Class C. The different
classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely
have different share prices.
-- Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by OppenheimerFunds prototype 401(k) plans).
If you purchase Class A shares as part of an investment of at least
$1 million ($500,000 for OppenheimerFunds prototype 401(k) plans)
in shares of one or more Oppenheimer funds, you will not pay an
initial sales charge, but if you sell any of those shares within 18
months of buying them, you may pay a contingent deferred sales
charge. The amount of that sales charge will vary depending on
the amount you invested. Sales charge rates are described in
"Buying Class A Shares" below.
-- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
six years of buying them, you will normally pay a contingent
deferred sales charge. That sales charge varies depending on how
long you own your shares, as described in "Buying Class B Shares"
below.
-- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%, as discussed in "Buying Class C
Shares" below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over
time and you plan to purchase additional shares, you should
re-evaluate those factors to see if you should consider another
class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the maximum sales charge rates that apply to each
class, considering the effect of the annual asset-based sales
charge on Class B and Class C shares (which, like all expenses,
will affect your investment return). For the sake of comparison, we
have assumed that there is a 10% rate of appreciation in the
investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's
actual investment returns and the operating expenses borne by the
class you invest in.
The factors discussed below are not intended to be investment
advice or recommendations, because each investor's financial
considerations are different. The discussion below of the factors
to consider in purchasing a particular class of shares assumes that
you will purchase only one class of shares and not a combination of
shares of different classes.
-- How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. Because of the effect of
class-based expenses, your choice will also depend on how much you
plan to invest. For example, the reduced sales charges available
for larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which
reduces the amount of your investment dollars used to buy shares
for your account), compared to the effect over time of higher
class-based expenses on Class B or Class C shares for which no
initial sales charge is paid.
[ ] Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years),you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than 7 years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual
asset-based sales charge on Class C shares will have a greater
impact on your account over the longer term than the reduced
front-end sales charge available for larger purchases of Class A
shares. For example, Class A might be more advantageous than Class
C (as well as Class B) for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments
over $250,000 expected to be held 4 to 6 years (or more), Class A
shares may become more advantageous than Class C (and Class B). If
investing $500,000 or more, Class A may be more advantageous as
your investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how
long you intend to hold your shares. For that reason, the
Distributor normally will not accept purchase orders of $500,000 or
more of Class B shares or $1 million or more of Class C shares from
a single investor.
[ ] Investing for the Longer Term. If you are investing for
the longer term, for example, for retirement, and do not expect to
need access to your money for seven years or more, Class B shares
may be an appropriate consideration, if you plan to invest less
than $100,000. If you plan to invest more than $100,000 over the
long term, Class A shares will likely be more advantageous than
Class B shares or Class C shares, as discussed above, because of
the effect of the expected lower expenses for Class A shares and
the reduced initial sales charges available for larger investments
in Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance return
stated above, and therefore, you should analyze your options
carefully.
-- Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class B
or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of
the contingent deferred sales charge) for Class B or Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares to buy.
Share certificates are not available for Class B or Class C shares,
and if you are considering using your shares as collateral for a
loan, that may be a factor to consider.
-- How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class than for selling another class.
It is important that investors understand that the purposes of the
Class B and Class C contingent deferred sales charges and
asset-based sales charges are the same as the purpose of the
front-end sales charge on sales of Class A shares: that is, to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans.
-- With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
-- Under pension, profit-sharing plans and Individual
Retirement Accounts IRAs), you can make an initial investment of as
little as $250 (if your IRA is established under an asset builder
plan, the $25 minimum applies), and subsequent investments may be
as little as $25.
-- There is no minimum investment requirement if you are
buying shares by reinvesting dividends from the Fund or other
Oppenheimer funds (a list of them appears in the Statement of
Additional Information, or you can ask your dealer or call the
Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
-- How Are Shares Purchased? You can buy shares several ways
- -- through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B, or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
-- Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
-- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, it is recommended that you discuss your investment
first with a financial advisor, to be sure that it is appropriate
for you.
-- Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing
House (ACH) member. You can then transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your bank
account.
Shares are purchased for your account on the regular business
day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions
automatically, under an Asset Builder Plan, described below, or by
telephone instructions using OppenheimerFunds PhoneLink, also
described below. You should request AccountLink privileges on the
application or dealer settlement instructions used to establish
your account. Please refer to "AccountLink" below for more details.
-- Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the Application
and in the Statement of Additional Information.
-- At What Price Are Shares Sold? Shares are sold at the
public offering price based on the net asset value (and any initial
sales charge that applies) that is next determined after the
Distributor receives the purchase order in Denver, Colorado. In
most cases, to enable you to receive that day's offering price, the
Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The
net asset value of each class of shares is determined as of that
time on each day The New York Stock Exchange is open (which is a
"regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the close of The New York Stock Exchange, on a
regular business day and transmit it to the Distributor so that it
is received before the Distributor's close of business that day,
which is normally 5:00 P.M. The Distributor may, in its sole
discretion, reject any purchase order for the Fund's shares.
Special Sales Charge Arrangements for Certain Persons.
Appendix A to this Prospectus sets forth conditions for the waiver
of, or exemption from, sales charges or the special sales charge
rates that apply to purchases of shares of the Fund (including
purchases by exchange) by a person who was a shareholder of one of
the Former Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor
and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as
follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission
as Percentage as Percentage as Percentage
Amount of of Offering of Amount of Offering
Purchase Price Invested Price
- --------- ------------- ------------- -------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- ---------------------
<FN>
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
</TABLE>
-- Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
-- Purchases aggregating $1 million or more; or
-- Purchases by an OppenheimerFunds prototype 401(k) 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 that it projects to have annual plan purchases of
$200,000 or more.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to the sum of 1.0% of the first $2.5
million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on the
amount of those purchases in excess of $1 million ($500,000 for
purchases by OppenheimerFunds prototype 401(k) plans) that were not
previously subject to a front-end sales charge and dealer
Commission.
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 either (1) the aggregate net asset
value of the redeemed shares (not including shares purchased by
reinvestment of dividends or capital gain distributions) or (2)the
original cost of the shares, whichever is less. However, the Class
A contingent deferred sales charge will not exceed the aggregate
amount of the commissions the Distributor paid to your dealer on
all Class A shares of all Oppenheimer funds you purchased subject
to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund"s exchange privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the sales charge will apply.
-- Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients. Dealers whose sales of Class A
shares of Oppenheimer funds (other than money market funds)under
OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5
million per year (calculated per quarter), will receive monthly
one-half of the Distributor's retained commissions on those sales,
and if those sales exceed $10 million per year, those dealers will
receive the Distributor's entire retained commission on those
sales.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
-- Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also include Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial
or contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The value of
those shares will be based on the greater of the amount you paid
for the shares or their current value (at offering price). The
Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
-- Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A shares and Class B shares of the Fund and
other Oppenheimer funds during a 13-month period, you can reduce
the sales charge rate that applies to your purchases of Class A
shares. The total amount of your intended purchases of both Class
A and Class B shares will determine the reduced sales charge rate
for the Class A shares purchased during that period. This can
include purchases made up to 90 days before the date of the Letter.
More information is contained in the Application and in "Reduced
Sales Charges" in the Statement of Additional Information.
-- Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
[ ] the Manager or its affiliates;
[ ] present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
[ ] registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
[ ] dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
[ ] employees and registered representatives (and their
spouses) of dealers or brokers described above or financial
institutions that have entered into sales arrangements with such
dealers or brokers (and are identified to the Distributor) or with
the Distributor; the purchaser must certify to the Distributor at
the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
[ ] dealers, brokers, banks or registered investment advisers
that have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products or employee benefit plans made available to
their clients (those clients may be charged the transaction fee by
their dealer, broker, bank or adviser for the purchase or sale of
fund shares);
[ ] (1) investment advisors and financial planners who charge
an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients, and
(2) retirement plans and deferred compensation plans and trusts
used to fund those plans (including, for example, plans qualified
or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; (3) clients
of such investment advisors or financial planners who buy shares
for their own accounts may also purchase shares without sales
charge but only if their accounts are linked to a master account of
their investment advisor or financial planner on the books and
records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements (each of these
investors may be charged a fee by the broker, agent or financial
intermediary for purchasing shares).
[ ] Employee benefit plans purchasing shares through a
shareholder servicing agent which the Distributor has appointed as
its agent to accept those purchase orders;
[ ] directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
[ ] accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
[ ] any unit investment trust that has entered into an
appropriate agreement with the Distributor;
[ ] a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former
Quest for Value Fund were exchanged for Class A shares of that fund
due to the termination of the Class B and Class C TRAC-2000 program
on November 24, 1995; or
[ ] qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
[ ] shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
[ ] shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
[ ] shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
[ ] shares purchased and paid for with the proceeds of shares
redeemed in the prior 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
[ ] shares purchased with the proceeds of maturing principal
of units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also
waived if shares that would otherwise be subject to the contingent
deferred sales charge are redeemed in the following cases:
[ ] for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred
compensation plans or other employee benefit plans, including
OppenheimerFunds prototype 401(k) plans (these are all referred to
as "Retirement Plans");
[ ] to return excess contributions made to Retirement Plans;
[ ] to make Automatic Withdrawal Plan payments that are
limited annually to no more than 12% of the original account value;
[ ] involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
[ ] if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18
months of purchase); or
[ ] for distributions from OppenheimerFunds prototype 401(k)
plans for any of the following cases or 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) hardship
withdrawals, as defined in the plan; (3) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (4) to
meet the minimum distribution requirements of the Internal Revenue
Code; (5) to establish "substantially equal periodic payments" as
described in Section 72(t) of the Internal Revenue Code, or (6)
separation from service.
-- Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal
service and maintenance of shareholder accounts that hold Class A
shares. Under the Plan, the Fund pays a service fee monthly to the
Distributor at the rate of 0.25% of the average annual net assets
of the class. The Distributor uses the service fee 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.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average net
assets of Class A shares held in accounts of the service providers
or their customers. The payments under the Plan increase the annual
expenses of Class A shares. For more details, please refer to
"Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
charge will be assessed on the lesser of the net asset value of the
shares at the time of redemption or the original purchase price.
The contingent deferred sales charge is not imposed on the amount
of your account value represented by an increase in net asset value
over the initial purchase price. The Class B contingent deferred
sales charge is paid to the Distributor to reimburse its expenses
of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges," below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Contingent Deferred
Sales Charge on Redemptions in
Years Since Beginning of Month In That Year (As % of Amount
Which Purchase Order Was Accepted Subject to Charge)
- --------------------------------- ----------------------------
0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
-- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements -- Class A, Class B and Class
C Shares" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original
purchase price. The contingent deferred sales charge is not imposed
on the amount of your account value represented by the increase in
net asset value over the initial purchase price. The Class C
contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
-- Distribution and Service Plans for Class B and Class C
Shares. The Fund has adopted Distribution and Service Plans for
Class B and Class C shares to compensate the Distributor for 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 that are outstanding for 6 years or less and on Class C
shares. The Distributor also receives a service fee of 0.25% per
year under each plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays the
0.25% service fees to dealers in advance for the first year after
Class B or Class C shares have been sold by the dealer. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares. Those
payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the service
fee, the total amount paid by the Distributor to the dealer at the
time of sale 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.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and Class
C shares. If either Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the
Plan was terminated.
-- Waivers of Class B and Class C Sales Charges. The Class B
and Class C contingent deferred sales charges will not be applied
to shares purchased in certain types of transactions nor will it
apply to Class B and Class C shares redeemed in certain
circumstances as described below. The reasons for this policy are
in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases, if the Transfer Agent
is notified that these conditions apply to the redemption:
[ ] distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary (the
death or disability must have occurred after the account was
established);
[ ] redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving
shareholder, including a trustee of a "grantor" trust or revocable
living trust for which the trustee is also the sole beneficiary
(the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a
determination of disability by the Social Security Administration);
[ ] returns of excess contributions to Retirement Plans;
[ ] distributions from retirement plans to make "substantially
equal periodic payments" as permitted in Section 72 (1) 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;
[ ] shares redeemed involuntarily, as described in
"Shareholder Account Rules and Policies," below; or
[ ] distributions from OppenheimerFunds prototype 401(k) plans
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or
(5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
[ ] shares sold to the Manager or its affiliates;
[ ] shares sold to registered management investment companies
or separate accounts of insurance companies having an agreement
with the Manager or the Distributor for that purpose; and
[ ] shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
-- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
-- PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
[ ] Purchasing Shares. You may purchase shares in amounts up
to $100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
[ ] Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
[ ] Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account. Please
refer to "How to Sell Shares," below, for details.
-- Automatic Withdrawal and Exchange Plans. The Fund has
several plans that enable you to sell shares automatically or
exchange them to another Oppenheimer funds account on a regular
basis:
-- Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan
to receive payments of at least $50 on a monthly, quarterly,
semi-annual or annual basis. The checks may be sent to you or sent
automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by
telephone. You should consult the Application and Statement of
Additional Information for more details.
-- Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange automatically an amount you establish in advance
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer funds account is
$25. These exchanges are subject to the terms of the Exchange
Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge. This
privilege applies to Class A 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. Please consult the Statement of Additional Information for
more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
[ ] Individual Retirement Accounts including rollover IRAs,
for individuals and their spouses
[ ] 403(b)(7) Custodial Plans for employees of eligible
tax-exempt organizations, such as schools, hospitals and charitable
organizations
[ ] SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SAR/SEP-IRAs
[ ] Pension and Profit-Sharing Plans for self-employed persons
and other employers
[ ] 401(k) Prototype Retirement Plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
-- Retirement Accounts. To sell shares in an Oppenheimer funds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
-- Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
[ ] You wish to redeem more than $50,000 worth of shares and
receive a check
[ ] The redemption check is not payable to all shareholders
listed on the account statement
[ ] The redemption check is not sent to the address of record
on your account statement
[ ] Shares are being transferred to a Fund account with a
different owner or name
[ ] Shares are redeemed by someone other than the owners (such
as an Executor)
-- Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business, or as a fiduciary,
you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
[ ] Your name
[ ] The Fund's name
[ ] Your Fund account number (from your account statement)
[ ] The dollar amount or number of shares to be redeemed
[ ] Any special payment instructions
[ ] Any share certificates for the shares you are selling,
[ ] The signatures of all registered owners exactly as the
account is registered, and
[ ] Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for Send courier or Express Mail
requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue
Denver, Colorado 80217 Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. You may not redeem shares held in an Oppenheimer
funds retirement plan or under a share certificate by telephone.
[ ] To redeem shares through a service representative, call
1-800-852-8457
[ ] To redeem shares automatically on PhoneLink, call
1-800-533-3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds sent to that bank account.
-- Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not available
within 30 days of changing the address on an account.
-- Telephone Redemptions Through AccountLink. There are no
dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the ACH
transfer to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the
shares you redeemed while they are waiting to be transferred.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers
on behalf of their customers. Please call your dealer for more
information about this procedure. Brokers or dealers may charge for
that service. Please refer to "Special Arrangements for Repurchase
of Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
[ ] Shares of the fund selected for exchange must be available
for sale in your state of residence.
[ ] The prospectuses of this Fund and the fund whose shares
you want to buy must offer the exchange privilege.
[ ] You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after
the account is open 7 days, you can exchange shares every regular
business day.
[ ] You must meet the minimum purchase requirements for the
fund you purchase by exchange.
[ ] Before exchanging into a fund, you should obtain and read
its prospectus.
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc., offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please refer
to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
-- Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send it
to the Transfer Agent at the addresses listed in "How to Sell
Shares."
-- Telephone Exchange Requests. Telephone exchange requests
may be made either by calling a service representative at
1-800-852-8457 or by using PhoneLink for automated exchanges, by
calling 1-800-533-3310. Telephone exchanges may be made only
between accounts that are registered with the same name(s) and
address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
[ ] Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. However, either fund may delay the purchase of shares
of the fund you are exchanging into up to seven days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
[ ] Because excessive trading can hurt fund performance and
harm shareholders, the Fund reserves the right to refuse any
exchange request that will disadvantage it, or to refuse multiple
exchange requests submitted by a shareholder or dealer.
[ ] The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
[ ] For tax purposes, exchanges of shares involve a redemption
of the shares of the fund you own and a purchase of shares of the
other fund, which may result in a capital gain or loss. For more
information about taxes affecting exchanges, please refer to "How
to Exchange Shares" in the Statement of Additional Information.
[ ] If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
-- Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange on each day
the Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
-- The offering of shares may be suspended during any period
in which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
-- Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
-- The Transfer Agent will record any telephone calls to
verify data concerning transactions and has adopted other
procedures to confirm that telephone instructions are genuine, by
requiring callers to provide tax identification numbers and other
account data or by using PINs, and by confirming such transactions
in writing. If the Transfer Agent does not use reasonable
procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund
will be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine. If you are unable
to reach the Transfer Agent during periods of unusual market
activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.
-- Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
-- Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
-- The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio
fluctuate, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
-- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker/dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
-- Involuntary redemptions of small accounts may be made by
the Fund if the account value has fallen below $500 for reasons
other than the fact that the market value of shares has dropped,
and in some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
-- Under unusual circumstances, shares of the Fund may be
redeemed "in kind", which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
-- "Backup Withholding" of Federal income tax may be applied
at the rate of 31% from taxable dividends, distributions and
redemption proceeds (including exchanges) if you fail to furnish
the Fund a certified Social Security or Employer Identification
Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your dealer
or broker handles your redemption, they may charge a fee. That fee
can be avoided by redeeming your Fund shares directly through the
Transfer Agent. Under the circumstances described in "How To Buy
Shares," you may be subject to a contingent deferred sales charge
when redeeming certain Class A, Class B and Class C shares.
--To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B and Class C shares from net investment income, if any, on
an annual basis and normally pays those dividends to shareholders
in December, but the Board of Trustees can change that date. The
Board may also cause the Fund to declare dividends after the close
of the Fund's fiscal year (which ends November 30th). Because the
Fund does not have an objective of seeking current income, the
amounts of dividends it pays, if any, will likely be small.
Dividends paid on Class A shares will generally be higher than for
Class B or Class C shares because expenses allocable to Class B and
Class C shares will generally be higher than for Class A shares.
There is no fixed dividend rate and there can be no assurance that
the Fund will pay any dividends.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of capital gains following the
end of its fiscal year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end
of the year. Short-term capital gains are treated as dividends for
tax purposes. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
-- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
-- Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
-- Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
-- Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of all taxable distributions you
received in the previous year.
When more than 50% of its assets are invested in foreign
securities at the end of any fiscal year, the Fund may elect that
Section 853 of the Internal Revenue Code will apply to it to permit
shareholders to take a credit (or a deduction) on their own federal
income tax returns for foreign taxes paid by the Fund. "Dividends,
Capital Gains and Taxes" in the Statement of Additional Information
contains further information about this tax provision.
-- "Buying a Dividend". When a fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
-- Taxes on Transactions. Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking, a capital gain or loss is the difference
between the price you paid for the shares and the price you
received when you sold them.
-- Returns of Capital. In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain Federal tax
information about your investment. More information is contained in
the Statement of Additional Information, and in addition you should
consult with your tax adviser about the effect of an investment in
the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund Who
Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and
waivers for Class A, Class B and Class C shares of the Fund
described elsewhere in this Prospectus are modified as described
below for those shareholders of (i) Quest for Value Fund, Inc.,
Quest for Value Growth and Income Fund, Quest for Value Opportunity
Fund, Quest for Value Small Capitalization Fund and Quest for Value
Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those
funds, and (ii) Quest for Value U.S. Government Income Fund, Quest
for Value Investment Quality Income Fund, Quest for Value Global
Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for
Value National Tax-Exempt Fund and Quest for Value California
Tax-Exempt Fund when those funds merged into various Oppenheimer
funds on November 24, 1995. The funds listed above are referred to
in this Prospectus as the "Former Quest for Value Funds." The
waivers of initial and contingent deferred sales charges described
in this Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds
or (ii) received by such shareholder pursuant to the merger of any
of the Former Quest for Value Funds into an Oppenheimer fund on
November 24, 1995.
Class A Sales Charges
-- Reduced Class A Initial Sales Charge Rates for Certain
Former Quest Shareholders
--Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible of Offering of Amount Offering
Employees Price Invested Price
Invested
Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages and of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
-- Special Class A Contingent Deferred Sales Charge Rates.
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995 will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
-- Waiver of Class A Sales Charges for Certain Shareholders.
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
[ ] Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
[ ] Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
-- Waiver of Class A Contingent Deferred Sales Charge in
Certain Transactions. The Class A contingent deferred sales charge
will not apply to redemptions of Class A shares of the Fund
purchased by the following investors who were shareholders of any
Former Quest for Value Fund:
-- Investors who purchased Class A shares from a dealer that
is or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
[ ] Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge.
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
-- Waivers for Redemptions of Shares Purchased Prior to March
6, 1995. In the following cases, the contingent deferred sales
charge will be waived for redemptions of Class A, Class B or Class
C shares of the Fund acquired by exchange from an Oppenheimer fund
that was a Former Quest for Value Fund or into which a former Quest
for Value Fund merged, if those shares were purchased prior to
March 6, 1995 in connection with (i) distributions to participants
or beneficiaries of plans qualified under Section 401(a) of the
Internal Revenue Code or from custodial accounts under Section
403(b)(7) of the Code, Individual Retirement Accounts, deferred
compensation plans under Section 457 of the Code, and other
employee benefit plans, and returns of excess contributions made to
each type of plan, (ii) withdrawals under an automatic withdrawal
plan holding only either Class B or Class C shares if the annual
withdrawal does not exceed 10% of the initial value of the account,
and (iii) liquidation of a shareholder's account if the aggregate
net asset value of shares held in the account is less than the
required minimum value of such accounts.
-- Waivers for Redemptions of Shares Purchased on or After
March 6, 1995 but Prior to November 24, 1995. In the following
cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of the Fund
acquired by exchange from an Oppenheimer fund that was a Former
Quest For Value Fund or into which such fund merged, if those
shares were purchased on or after March 6, 1995, but prior to
November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under Section
408(a) of the Internal Revenue Code or retirement plans under
Section 401(a), 401(k), 403(b) and 457 of the Code, if those
distributions are made either (a) to an individual participant as
a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or
beneficiary; (2) returns of excess contributions to such retirement
plans; (3) redemptions other than from retirement plans following
the death or disability of the shareholder(s) (as evidenced by a
determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan
(but only for Class B or C shares) where the annual withdrawals do
not exceed 10% of the initial value of the account; and (5)
liquidation of a shareholder's account if the aggregate net asset
value of shares held in the account is less than the required
minimum account value. A shareholder's account will be credited
with the amount of any contingent deferred sales charge paid on the
redemption of any Class A, Class B or Class C shares of the Fund
described in this section if within 90 days after that redemption,
the proceeds are invested in the same Class of shares in this Fund
or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and that were transferred to
an OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and (i) the shares held by
those plans were exchanged for Class A shares, or (ii) the plan
assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
Oppenheimer International Growth Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information, and if given or made, such information
and representations must not be relied upon as having been
authorized by the Fund, OppenheimerFunds, Inc., OppenheimerFunds
Distributor, Inc. or any affiliate thereof. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby in any state to any person
to whom it is unlawful to make such an offer in such state.
PR0825.001.0996 [Logo] Printed on recycled paper
<PAGE>
Oppenheimer International Growth Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated September 20, 1996
This Statement of Additional Information of Oppenheimer
International Growth Fund is not a Prospectus. This document
contains additional information about the Fund and supplements
information in the Prospectus dated September 20, 1996. It should
be read together with the Prospectus, which may be obtained by
writing to the Fund's Transfer Agent, OppenheimerFunds Services at
P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number shown above.
Table of Contents
Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 7
Other Investment Restrictions 16
How the Fund is Managed 17
Organization of the Fund 17
Trustees and Officers of the Fund 18
The Manager and Its Affiliates 23
Brokerage Policies of the Fund 25
Performance of the Fund 26
Distribution and Service Plans 29
About Your Account
How to Buy Shares 31
How to Sell Shares 37
How to Exchange Shares 41
Dividends, Capital Gains and Taxes 43
Additional Information About the Fund 44
Financial Information About the Fund
Financial Statements 45,57
Independent Auditors' Report 56
Appendix A: Corporate Industry Classifications A-1
Appendix B: Description of Ratings B-1
<PAGE>
About the Fund
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund may invest, as well as the
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meanings as those terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment adviser, OppenheimerFunds, Inc. (the "Manager"),
evaluates the merits of securities primarily through the exercise
of its own investment analysis. This may include, among other
things, evaluation of the history of the issuer's operations,
prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product
developments and developments by competitors, the effect of general
market and economic conditions on the issuer's business, and
legislative proposals or new laws that might affect the issuer.
The Fund intends to spread its investments (invest risk) among
the markets of at least three foreign countries under normal market
conditions. The percentage of the Fund's assets invested in
particular foreign countries will vary from time to time based on
the Manager's assessment of the appreciation possibilities of
particular issuers as well as market and economic conditions in a
particular county, balance of payments, rates of inflation,
economic self-sufficiency, and social and political factors that
may affect specific markets.
The portion of the Fund's assets allocated to securities
selected for capital appreciation and the investment techniques
used will depend upon the judgment of the Fund's Manager as to the
future movement of the equity securities markets. If the Manager
believes that economic conditions favor a rising market, the Fund
will emphasize securities and investment methods selected for high
capital growth. If the Manager believes that a market decline is
likely, defensive securities and investment methods may be
emphasized.
Current income is not a consideration in the selection of
portfolio securities for the Fund, whether for appreciation,
defensive or liquidity purposes. The fact that a security has a
low yield or does not pay current income will not be an adverse
factor in selecting securities to try to achieve the Fund's
investment objective of capital appreciation unless the Manager
believes that the lack of yield might adversely affect appreciation
possibilities.
-- Investing in Securities of Growth-Type Companies. The Fund
emphasizes securities of "growth-type" companies. Such issuers
typically are those the goods or services of which have relatively
favorable long-term prospects for increasing demand for their
products, or increasing earnings prospects, or ones which develop
new products, services or markets and normally retain a relatively
large part of their earnings for research, development and
investment in capital assets. They may include companies in the
natural resources fields or those developing industrial
applications for new scientific knowledge having potential for
technological innovation, such as information technology,
biochemistry, communications, environmental products, oceanography,
business services and new consumer products. Growth-type companies
may include relatively new businesses as well as larger mature
businesses that the Manager believes are entering a grow phase
because of the development of new products, businesses, markets or
other factors. Therefore, the Manger does not limit the selection
of investments in growth-type companies to issuers having a market
capitalization within a specific range.
-- Investing in Small, Unseasoned Companies. Some growth-
type companies may be newer start-up businesses that do not have a
substantial operating history. The securities of these small,
unseasoned companies may have a limited trading market, which may
adversely affect the Fund's ability to sell them and can reduce the
price the Fund might be able to obtain for them. If other
investors holding the same securities as the Fund sell them when
the Fund attempts to dispose of its holdings, the Fund may receive
lower prices than might otherwise be obtained, because of the
thinner market for such securities. Additionally, investments in
these companies tend to involve greater risks then larger more
established companies, such as the risk that their securities may
be subject to more abrupt or erratic market movements. These
companies also may have limited product lines, markets or financial
resources.
-- Foreign Securities. "Foreign securities" include companies
organized under the laws of countries other than the United States,
debt securities of foreign governments, and equity and debt
securities of U.S. corporations denominated in non-U.S. currencies,
that are traded on foreign securities exchanges or in the foreign
over-the-counter markets. Securities of foreign issuers that are
represented by American Depository Receipts or similar depository
arrangements and that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are also considered
"foreign securities" for the purpose of the Fund's investment
allocations, because they are subject to some of the special
considerations and risks, discussed below, that apply to foreign
securities traded and held abroad, typically because the issuer of
the security is domiciled in a foreign country, or has substantial
assets or business operations in a foreign county, or its
securities are primarily trades on a foreign securities exchange.
Investing in foreign securities offers the Fund potential
benefits not available from investing in securities of domestic
issuers, such as 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. It may enable the Fund to take advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. If
the Fund's portfolio securities are held in foreign countries, the
countries in which the securities are held abroad and the sub-
custodians or depositories holding them must be approved by the
Fund's Board of Trustees to the extent that approval is required
under applicable rules of the Securities and Exchange Commission.
In buying foreign securities, the Fund may convert U.S. dollars
into foreign currency, but only to effect securities transactions
on foreign securities exchanges and not to hold such currency as an
investment.
-- Risks of Foreign Investing. Investing in foreign
securities involves special additional risks and considerations not
typically associated with investing in securities of issuers traded
in the U.S. These include: fluctuation in value of foreign
portfolio investments due to changes in currency rates and control
regulations (e.g., currency blockage); transaction charges for
currency exchange; lack of public information about foreign
issuers; lack of uniform accounting, auditing and financial
reporting standards comparable to those applicable to domestic
issuers; less volume on foreign exchanges than on U.S. exchanges,
which affects the ability to dispose of a security; greater
volatility and less liquidity in some foreign markets, particularly
emerging markets, than in the U.S.; less governmental oversight and
regulation of foreign issuers, stock exchanges and brokers than in
the U.S.; greater difficulties in commencing lawsuits against
foreign issuers; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio
transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization
of assets, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; unfavorable
differences between the U.S. economy and foreign economies; and the
effects of foreign taxes on income and capital gains 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.
Costs of transactions in foreign securities are generally higher
than for transactions in U.S. securities, including higher
custodial costs, which will increase the Fund's expenses over those
typically associated with funds that do not invest in foreign
securities.
A number of current significant political demographic and
economic developments may affect investments in foreign securities
and in securities of companies with operations overseas. Such
developments include dramatic political changes in government and
economic policies in several Eastern European countries, Germany
and the republics comprising the former Soviet Union, as well as
unification of the European Economic Community. The course of any
of one or more of these events and the effect on trade barriers,
competition and markets for consumer goods and services is
uncertain. With roughly two-thirds of all outstanding equity
securities now traded outside of the United States, the Fund's
international scope enables it to attempt to take advantage of
other world markets and companies and seek to protect itself
against declines in any single economy.
-- Special Risks of "Emerging Markets." Investments in
securities traded in "emerging markets" (which are trading markets
that are relatively new in countries with developing economies)
involve more risks that other foreign securities. Emerging markets
may have extended settlement periods for securities transactions so
that the Fund might not receive the repayment of principal or
income on its investments on a timely basis, which could affect its
net asset value. There may be a lack of liquidity for emerging
market securities. Interest rates and foreign currency exchange
rates may be more volatile. Government limitations on foreign
investments may be more likely to be imposed than in more developed
countries. Emerging markets may respond in a more volatile manner
to economic changes than those of more developed countries.
-- 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 converting 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.
-- Special Risks of Lower-Rated Securities. The Fund may
invest in higher-yielding, lower-rated debt securities, commonly
known as "junk bonds," because these securities generally offer
higher income potential than investment grade securities. As
stated in the Prospectus, the Fund does not presently intend to
invest more than 5% of its total assets in debt securities. Lower-
rated securities are also referred to as lower-grade securities.
"Lower-grade" debt securities are those rated below "investment
grade," which means they have a rating lower than "Baa" by Moody's
Investors Service, Inc. ("Moody's") or lower than "BBB" by Standard
& Poor's Corporation ("S&P") or similar ratings by other rating
organizations. The Fund may invest in securities rated as low as
"C" or "D" or which may be in default at the time the Fund buys
them. While securities rated "Baa" by Moody's or "BBB" by S&P are
investment grade and are not regarded as "junk bonds," those
securities may be subject to greater market fluctuations and risks
of loss of income and principal than higher grade securities and
may be considered to have certain speculative characteristics. The
Fund may invest in unrated securities that the Manager believes
offer yields and risks comparable to rated securities.
High-yield, lower-grade securities, whether rated or unrated,
often have speculative characteristics. Lower-grade securities
have special risks that make them riskier investments than
investment grade securities. They may be subject to greater market
fluctuations and risk of loss of income and principal than lower
yielding, investment grade securities. There may be less of a
market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that
the issuer's earnings may be insufficient to make the payments of
interest due on the bonds. The issuer's low creditworthiness may
increase the potential for its insolvency. Further, a decline in
the high-yield bond market is likely during an economic downturn.
An economic downturn or an increase in interest rates could
severely disrupt the market for high-yield securities and adversely
affect the value of outstanding securities and the ability of
issuers to repay principal and interest.
These risks mean that the Fund may not achieve the expected
income from lower-grade securities, and that the Fund's net asset
value per share may be affected by declines in value of these
securities. The Fund is not obligated to dispose of securities
when issuers are in default or if the rating of the security is
reduced.
-- Warrants and Rights. Warrants basically are options to
purchase equity securities at specified prices valid for a specific
period of time. Their prices do not necessarily move in a manner
parallel to the prices of the underlying securities. The price
paid for a warrant will be lost unless the warrant is exercised
prior to expiration. Rights are similar to warrants, but normally
have a short duration and are distributed directly by the issuer to
its shareholders. Warrants and rights have no voting rights,
receive no dividends and have no rights with respect to the assets
of the issuer.
-- Illiquid and Restricted Securities. To enable the Fund to
sell (in the Unites States) restricted securities not registered
under the Securities Act of 1933, the Fund may have to cause those
securities to be registered. The expenses of registration of
restricted securities may be negotiated by the Fund with the issuer
at the time such securities are purchased by the Fund, if such
registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund
wishes to sell the security, a considerable period may elapse
between the time the decision is made to sell the securities and
the time the Fund would be permitted to sell them. The Fund would
bear the risks of any downward price fluctuation during that
period. The Fund may also acquire, through private placements,
securities having contractual restrictions on their resale, which
might limit the Fund's ability to dispose of such securities and
might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Trustees of the Fund or by the Manager under Board-
approved guidelines. Those guidelines take into account the trading
activity for such securities and the availability of reliable
pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's
holding of that security may be deemed to be illiquid.
-- Repurchase Agreements. The Fund may acquire securities
subject to repurchase agreements for liquidity purposes to meet
anticipated redemptions, or pending the investment of the proceeds
from sales of Fund shares, or pending the settlement of purchases
of portfolio securities.
In a repurchase transaction, the Fund acquires a security from,
and simultaneously resells it to, an approved vendor. An "approved
vendor" is a commercial bank or the U.S. branch of a foreign bank,
or a broker-dealer which has been designated a primary dealer in
government securities, which must meet credit requirements set by
the Fund's Board of Trustees from time to time. The resale price
exceeds the purchase price by an amount that reflects an agreed-
upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these
transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), collateralized by the underlying security. The Fund's
repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must
equal or exceed the repurchase price to fully collateralize the
repayment obligation. Additionally, the Fund's Manager will impose
creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's
value.
-- Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral must, on each business day,
at least equal the market value of the loaned securities and must
consist of cash, bank letters of credit, U.S. government
securities, or other cash equivalents in which the Fund is
permitted to invest. To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by the Fund if
the demand meets the terms of the letter. Such terms and the
issuing bank must be satisfactory to the Fund. In a portfolio
securities lending transaction, the Fund receives from the borrower
an amount equal to the interest paid or the dividends declared on
the loaned securities during the term of the loan as well as the
interest on the collateral securities, less any finder's,
administrative or other fees the Fund pays in connection with the
loan. The Fund may share the interest it receives on the
collateral securities with the borrower as long as it realizes at
least a minimum amount of interest required by the lending
guidelines established by its Board of Trustees. The Fund will not
lend its portfolio securities to any officer, trustee, employee or
affiliate of the Fund or its Manager. The terms of the Fund's
loans must meet certain tests under the Internal Revenue Code and
permit the Fund to reacquire loaned securities on five business
days' notice or in time to vote on any important matter.
-- Borrowing For Leverage. From time to time, the Fund may
increase its ownership of securities by borrowing from banks on an
unsecured basis and investing the borrowed funds, subject to the
restrictions stated in the Prospectus. Any such borrowing will be
made only from banks, and pursuant to the requirements of the
Investment Company Act, will 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, when
computed in that manner, should fail to meet the 300% asset
coverage requirement, the Fund is required within three days to
reduce its bank debt to the extent necessary to meet that coverage
requirement. To do so, the Fund may have to sell a portion of its
investments at a time when it would otherwise not want to sell the
securities. Interest on money the Fund borrows is an expense the
Fund would not otherwise incur, so that during periods of
substantial borrowings, its expenses may increase more than the
expenses of funds that do not borrow.
Other Investment Techniques and Strategies
-- Hedging With Options and Futures Contracts. The Fund may
use hedging instruments for the purposes described in the
Prospectus. When hedging to attempt to protect against declines in
the market value of the Fund's portfolio, or to permit the Fund to
retain unrealized gains in the value of portfolio securities which
have appreciated, or to facilitate selling securities for
investment reasons, the Fund may: (i) sell Futures, (ii) buy puts
on such Futures or securities, or (iii) write covered calls on
securities or on Futures. When hedging to establish a position in
the equity securities markets as a temporary substitute for the
purchase of individual equity securities the Fund may: (i) buy
Futures, or (ii) buy calls on such Futures or securities held by
it. Normally, the Fund would then purchase the equity securities
and terminate the hedging position.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be developed, to the extent such
investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
-- Stock Index Futures. The Fund may buy and sell futures
contracts relating to a securities index ("Financial Futures"),
including "Stock Index Futures," a type of Financial Future for
which the index used as the basis for trading is a broadly-based
stock index (including stocks that are not limited to issuers in a
particular industry or group of industries). A stock index assigns
relative values to the common stocks included in the index and
fluctuates with the changes in the market value of those stocks.
Stock indices cannot be purchased or sold directly. Financial
Futures are contracts based on the future value of the basket of
securities that comprise the underlying index. The contracts
obligate the seller to deliver, and the purchaser to take, cash to
settle the futures transaction or to enter into an offsetting
contract. No physical delivery of the securities underlying the
index is made on settling the futures obligation. No monetary
amount is paid or received by the Fund on the purchase or sale of
a Financial Future or Stock Index Future.
Upon entering into a Futures transaction, the Fund will be
required to deposit an initial margin payment, in cash or U.S.
Treasury bills, with the futures commission merchant (the "futures
broker"). Initial margin payments will be deposited with the
Fund's Custodian in an account registered in the futures broker's
name; however, the futures broker can gain access to that account
only under certain 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
on a daily basis.
At any time prior to the 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
additional cash is required to be paid by or released to the Fund.
Any gain or loss is then realized by the Fund on the Future for tax
purposes. Although Financial Futures by their terms call for
settlement by the delivery of cash, in most cases the settlement
obligation is fulfilled without such delivery by entering into an
offsetting transaction. All Futures transactions are effected
through a clearinghouse associated with the exchange on which the
contracts are traded.
-- Writing Covered Calls. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised, because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of deliverable securities or
liquid assets of any type, including equity and debt securities.
The Fund will segregate additional liquid assets if the value of
the escrowed assets drops below 100% of the current value of the
Future. In no circumstances would an exercise notice as to a
Future put the Fund in a short futures position.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options that are traded
on exchanges, or as to other acceptable escrow securities, so that
no margin will be required from the Fund for such option
transactions. OCC will release the securities covering a call on
the expiration of the call or when the Fund enters into a closing
purchase transaction. Call writing affects the Fund's turnover
rate and the brokerage commissions it pays. Commissions, normally
higher than on general securities transactions, are payable on
writing or purchasing a call.
-- Purchasing Puts and Calls. 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 purchases a call, it pays a premium (other than in a
closing purchase transaction) and, except as to calls on stock
indices, 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. In purchasing a call, the
Fund benefits only if the call is sold at a profit or if, during
the call period, the market price of the underlying investment is
above the sum of the call price, transaction costs, and the premium
paid, and the call is exercised. If the call is not exercised or
sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the
right to purchase the underlying investment. When the Fund
purchases a call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of the underlying
investment to the Fund.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling 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 and the Fund will lose the
premium payment and the right to sell the underlying investment.
However, the put may be sold prior to expiration (whether or not at
a profit).
Puts and calls on broadly-based stock indices or Stock Index
Futures are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price
movements in the stock market generally) rather than on price
movements of individual securities or futures contracts. When the
Fund buys a call on a stock index or Stock Index Future, it pays a
premium. If the Fund exercises the call during the call period, a
seller of a corresponding call on the same investment will pay the
Fund an amount of cash to settle the call if the closing level of
the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to
the difference between the closing price of the call and the
exercise price of the call times a specified multiple (the
"multiplier") which determines the total dollar value for each
point of difference. When the Fund buys a put on a stock index or
Stock Index Future, it pays a premium and has the right during the
put period to require a seller of a corresponding put, upon the
Fund's exercise of its put, to deliver cash to the Fund to settle
the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price
of the put. That cash payment is determined by the multiplier, in
the same manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock
Index Future not owned by it, the put protects the Fund to the
extent that the index moves in a similar pattern to the securities
the Fund holds. The Fund can either resell the put or, in the case
of a put on a Stock Index Future, buy the underlying investment and
sell it at the exercise price. The resale price of the put will
vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price, and as a result the put is not exercised, the put will
become worthless on the expiration date. In the event of a decline
in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its
loss on its portfolio securities.
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 will pay
a brokerage commission each time it buys or sells a call, put or an
underlying investment in connection with the exercise of a put or
call. Those commissions may be higher 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 and, consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
-- Options on Foreign Currency. The Fund may write and
purchase calls on foreign currencies. The Fund may purchase and
write puts and calls on foreign currencies that are traded on a
securities or commodities exchange or over-the-counter markets or
are quoted by major recognized dealers in such options. It does so
to protect against declines in the dollar value of foreign
securities and against increases in the dollar cost of foreign
securities to be acquired. If the Manager anticipates a rise in
the dollar value of a foreign currency in which securities to be
acquired are denominated, the increased cost of such securities may
be partially offset by purchasing calls or writing puts on that
foreign currency. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio
securities denominated in that currency may be partially offset by
writing calls or purchasing puts on that foreign currency.
However, in the event of currency rate fluctuations adverse to the
Fund's position, it would lose the premium it paid and transactions
costs.
A call written on a foreign currency by the Fund is covered if
the Fund owns the underlying foreign currency covered by the call
or has an absolute and immediate right to acquire that foreign
currency without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign currency held in its
portfolio. A call may be written by the Fund on a foreign currency
to provide a hedge against a decline due to an expected adverse
change in the exchange rate in the U.S. dollar value of a security
which the Fund owns or has the right to acquire and which is
denominated in the currency underlying the option. This is a
cross-hedging strategy. In such circumstances, the Fund
collateralizes the option by maintaining in a segregated account
with the Fund's Custodian, cash or U.S. Government Securities in an
amount not less than the value of the underlying foreign currency
in U.S. dollars marked-to-market daily.
-- Forward Contracts. The Fund may enter into foreign
currency exchange contracts ("Forward Contracts"), which obligate
the seller to deliver and the purchaser to take a specific amount
of foreign currency at a specific future date for a fixed price.
A Forward Contract involves bilateral obligations of one party to
purchase, and another party to sell, a specific currency at a
future date (which may be any fixed number of days from the date of
the contract agreed upon by the parties), at a price set at the
time the contract is entered into. These contracts are generally
traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. The
Fund may enter into a Forward Contract in order to "lock in" the
U.S. dollar price of a security denominated in a foreign currency
which it has purchased or sold but which has not yet settled, or to
protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the
gain that would otherwise result from a change in the relationship
between the U.S. dollar and a foreign currency. Forward contracts
include standardized foreign currency futures contracts which are
traded on exchanges and are subject to procedures and regulations
applicable to other Futures. The Fund may also enter into a
forward contract to sell a foreign currency denominated in a
currency other than that in which the underlying security is
denominated. This is done in the expectation that there is a
greater correlation between the foreign currency of the forward
contract and the foreign currency of the underlying investment than
between the U.S. dollar and the foreign currency of the underlying
investment. This technique is referred to as "cross hedging." The
success of cross hedging is dependent on many factors, including
the ability of the Manager to correctly identify and monitor the
correlation between foreign currencies and the U.S. dollar. To the
extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the
cross currency hedge.
The Fund may use Forward Contracts to protect against
uncertainty in the level of future exchange rates. The use of
Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities the Fund owns or intends to acquire, but
it does fix a rate of exchange in advance. In addition, although
Forward Contracts limit the risk of loss due to a decline in the
value of the hedged currencies, at the same time they limit any
potential gain that might result should the value of the currencies
increase.
There is no limitation as to the percentage of the Fund's
assets that may be committed to foreign currency exchange
contracts. The Fund does not enter into such forward contracts or
maintain a net exposure in such contracts to the extent that the
Fund would be obligated to deliver an amount of foreign currency in
excess of the value of the Fund's assets denominated in that
currency, or enter into a "cross hedge," unless it is denominated
in a currency or currencies that the Manager believes will have
price movements that tend to correlate closely with the currency in
which the investment being hedged is denominated. See "Tax Aspects
of Covered Calls and Hedging Instruments" below for a discussion of
the tax treatment of foreign currency exchange contracts
The Fund may enter into Forward Contracts with respect to
specific transactions. For example, when the Fund enters into a
contract for the purchase or sale of a security denominated in a
foreign currency, or when the Fund anticipates receipt of dividend
payments in a foreign currency, the Fund may desire to "lock-in"
the U.S. dollar price of the security or the U.S. dollar equivalent
of such payment by entering into a Forward Contract, for a fixed
amount of U.S. dollars per unit of foreign currency, for the
purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will
thereby be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the
security is purchased or sold, or on which the payment is declared,
and the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S.
dollar value of portfolio positions ("position hedge"). In a
position hedge, for example, when the Fund believes that foreign
currency may suffer a substantial decline against the U.S. dollar,
it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency,
or when the Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a
fixed dollar amount. In this situation the Fund may, in the
alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount where the Fund
believes that the U.S. dollar value of the currency to be sold
pursuant to the 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 ("cross hedge").
The Fund's Custodian will place liquid assets of any type, in
a separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward contracts
to cover its short positions. If the value of the securities
placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that
the value of the account will equal the amount of the Fund's net
commitments with respect to such contracts. As an alternative to
maintaining all or part of the separate account, the Fund may
purchase a call option permitting the Fund to purchase the amount
of foreign currency being hedged by a forward sale contract at a
price no higher than the forward contract price, or the Fund may
purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price
as high or higher than the forward contract price. Unanticipated
changes in currency prices may result in poorer overall performance
for the Fund than if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the
value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of
these securities between the date the Forward Contract is entered
into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e.,
cash) market (and bear the expense of such purchase), if the market
value of the security is less than the amount of foreign currency
the Fund is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. The projection of short-term
currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring the
Fund to sell a currency, the Fund may either sell a portfolio
security and use the sale proceeds to make delivery of the currency
or retain the security and offset its contractual obligation to
deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly,
the Fund may close out a Forward Contract requiring it to purchase
a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss
as a result of entering into such an offsetting Forward Contract
under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies
with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because
Forward Contracts are usually entered into on a principal basis, no
fees or commissions are involved. Because such contracts are not
traded on an exchange, the Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward
Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert all of its holdings of
foreign currency deposits into U.S. dollars on a daily basis. The
Fund may convert foreign currency from time to time, and investors
should be aware of the costs of currency conversion. Foreign
exchange dealers do not charge a fee for conversion, 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 may
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
-- Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of Futures and options on Futures established by
the Commodity Futures Trading Commission ("CFTC"). In particular
the Fund is exempted from registration with the CFTC as a
"commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not
limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its
aggregate initial Futures margin and related options premiums to no
more than 5% of the Fund's total assets for hedging purposes that
are not considered bona fide hedging strategies under the Rule.
Under the Rule, the Fund also must use short Futures and Futures
options on Futures positions solely for bona fide hedging purposes
within the meaning and intent of the applicable provisions of the
Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
exchanges or through one or more brokers. Thus the number of
options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment
companies having the same 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.
Due to requirements under the Investment Company Act, when the
Fund purchases a Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, liquid assets of any type,
including equity and debt securities of any grade, in an amount
equal to the market value of the securities underlying such Future,
less the margin deposit applicable to it.
-- Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without
having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the
shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (i) selling investments, including Stock Index
Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (ii)
purchasing options which expire in less than three months; (iii)
effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv)
exercising puts or calls held by the Fund for less than three
months; or (v) writing calls on investments held less than three
months.
Certain foreign currency exchange contracts (Forward Contracts)
in which the Fund may invest are treated as "section 1256
contracts." Gains or losses relating to section 1256 contracts
generally are characterized under the Internal Revenue Code as 60%
long-term and 40% short-term capital gains or losses. However,
foreign currency gains or losses arising from certain section 1256
contracts (including Forward Contracts) generally are treated as
ordinary income or loss. In addition, section 1256 contracts held
by the Fund at the end of each taxable year are "marked-to-market"
with the result that unrealized gains or losses are treated as
though they were realized. These contracts also may be marked-to-
market for purposes of the excise tax applicable to investment
company distributions and for other purposes under rules prescribed
pursuant to the Internal Revenue Code. An election can be made by
the Fund to exempt these transactions from this marked-to-market
treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the character of gains (or losses) realized by the Fund
on straddle positions. Generally, a loss sustained on the
disposition of a position(s) making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable
to fluctuations in exchange rates which 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 generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition of foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of disposition also are treated
as an ordinary gain or loss. Currency gains and losses are offset
against market gains and losses on each trade before determining a
net "section 988" gain or loss under the Internal Revenue Code,
which may ultimately increase or decrease the amount of the Fund's
investment company income available for distribution to its
shareholders.
-- Risks of Hedging With Options and Futures. 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. In addition to the risks associated with hedging that are
discussed in the Prospectus and above, there is a risk in using
short hedging by (i) selling Stock Index Futures or (ii) purchasing
puts on stock indices or Stock Index Futures to attempt to protect
against declines in the value of the Fund's equity securities. The
risk is that the prices of Stock Index Futures will correlate
imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's equity securities. The ordinary spreads
between prices in the cash and futures markets are subject to
distortions, due to differences in the natures of those markets.
First, all participants in the futures markets are subject to
margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close out
futures contracts through offsetting transactions which could
distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to
make or take delivery, liquidity in the futures markets could be
reduced, thus producing distortion. Third, from the point of view
of speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the equity 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 equity securities being hedged if the historical
volatility of the prices of the equity securities being hedged is
more than the historical volatility of the applicable index. It is
also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity
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 value in 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 equity securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of individual equity securities (long hedging) by buying Stock
Index Futures and/or calls on such Futures, on securities or on
stock indices, it is possible that the market may decline. If the
Fund then concludes not to invest in equity securities at that time
because of concerns as to a possible further market decline or for
other reasons, the Fund will realize a loss on the hedging
instruments that is not offset by a reduction in the price of the
equity securities purchased.
-- Short Sales Against-the-Box. In this type of short sale,
while the short position is open, the Fund must own an equal amount
of the securities sold short, or by virtue of ownership of other
securities have the right, without payment of further
consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer, for
Federal income tax purposes, recognition of gain or loss on the
sale of securities "in the box" until the short position is closed
out. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and recognize a
capital gain.
Other Investment Restrictions
The Fund's significant investment restrictions are described
in the Prospectus. The following are also fundamental policies, and
together with the Fund's fundamental policies described in the
Prospectus, cannot be changed without the approval of a "majority"
of the Fund's outstanding voting securities. Such a "majority"
vote is defined in the Investment Company Act as the vote of the
holders of the lesser of: (i) 67% or more of the shares present or
represented by proxy at a shareholders meeting, if the holders of
more than 50% of the outstanding shares are present or represented
by proxy; or (ii) more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot do any of
the following:
-- The Fund cannot invest in companies for the primary
purpose of acquiring control or management thereof;
-- The Fund cannot invest in commodities or in commodities
contracts, other than the hedging instruments permitted by
any of its other investment policies, whether or not any
such hedging instrument is considered to be a commodity or
a commodity contract;
-- The Fund cannot invest in real estate or in interests in
real estate, but it can purchase readily marketable
securities of companies holding real estate or interests
therein;
-- The Fund cannot purchase securities on margin; however,
the Fund can make margin deposits in connection with any
of the hedging instruments permitted by any of its other
investment policies;
-- The Fund cannot lend money, but the Fund can engage in
repurchase transactions and can invest in all or a portion
of an issue of bonds, debentures, commercial paper, or
other similar corporate obligations, whether or not
publicly distributed, provided that the Fund's purchase of
obligations that are not publicly distributed shall be
subject to any applicable percentage limitation on the
Fund's holdings of illiquid and restricted securities; the
Fund may also lend its portfolio securities, subject to
any restrictions adopted by the Board of Trustees and set
forth in the Prospectus;
-- The Fund cannot mortgage or pledge any of its assets; this
prohibition does not prohibit the escrow arrangements
contemplated by the writing of covered call options or
other collateral or margin arrangements in connection with
any of the Hedging Instruments permitted by any of its
other investment policies;
-- The Fund cannot underwrite securities of other companies,
except to the extent that it might be deemed to be an
underwriter for purposes of the Securities Act of 1933 in
the resale of any securities held in its own portfolio;
-- The Fund cannot invest or hold securities of any issuer if
those officers and trustees of the Fund or officers and
directors of its adviser owning individually more than
0.5% of the securities of such issuer together own more
than 5% of the securities of that issuer;
-- The Fund cannot issue "senior securities", but this does
not prohibit it from borrowing money for investment or
emergency purposes, or entering into margin, collateral or
escrow arrangements as permitted by its other invest
policies; or
-- The Fund cannot invest in other open-end investment
companies, or invest more than 5% of its net assets at the
time of purchase in closed-end investment companies,
including small business investment companies, nor make
any such investments at commission rates in excess of
normal brokerage commissions.
The percentage restrictions described above and in the
Prospectus apply only at the time of investment and require no
action by the Fund as a result of subsequent changes in relative
values.
In connection with the qualification of its shares in certain
states, the Fund has undertaken that it will not: (1) invest more
than 5% of its assets in securities of issuers, including their
predecessors, which have been in continuous operation for less
than three continuous years; or (2) invest any part of its assets
in oil, gas or other mineral exploration or development programs.
In the event that the Fund's shares cease to be qualified for sale
in the applicable states or if these undertaking(s) otherwise cease
to be operative, the Fund would not be subject to such
restrictions.
For purposes of the Fund's policy not to concentrate its assets,
described in "Other Investment Restrictions" in the Prospectus, the
Fund has adopted the industry classifications set forth in the
Appendix to this Statement of Additional Information. This is not
a fundamental policy.
How the Fund Is Managed
Organization of the Fund. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when
required to do so by the Investment Company Act or other applicable
law, or when a shareholder meeting is called by the Trustees or
upon proper request of the shareholders. Shareholders have the
right, upon the declaration in writing or vote of two-thirds of the
outstanding shares of the Fund, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the record holders of 10% of
its outstanding shares. In addition, if the Trustees receive a
request from at least 10 shareholders (who have been shareholders
for at least six months) holding shares of the Fund valued at
$25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate
with other shareholders to request a meeting to remove a Trustee,
the Trustees will then either make the Fund's shareholder list
available to the applicants or mail their communication to all
other shareholders at the applicants' expense, or the Trustees may
take such other action as set forth under Section 16(c) of the
Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer
of shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of
its property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a business trust (such as the Fund) to be held
personally liable as a "partner" under certain circumstances, the
risk of a Fund shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
obligations described above. Any person doing business with the
Trust, and any shareholder of the Trust, agrees under the Trust's
Declaration of Trust to look solely to the assets of the Trust for
satisfaction of any claim or demand which may arise out of any
dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and
officers and their principal business affiliations and occupations
during the past five years are set forth below. The address for
each Trustee and officer is Two World Trade Center, New York, New
York 10048-0203, unless another address is listed below. All of
the Trustees are also trustees or directors of Oppenheimer Fund,
Oppenheimer Growth Fund, Oppenheimer Tax-Free Bond Fund,
Oppenheimer Money Market Fund, Inc., Oppenheimer Target Fund,
Oppenheimer U.S. Government Trust, Oppenheimer New York Tax-Exempt
Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer Multi-
State Tax-Exempt Trust, Oppenheimer Asset Allocation Fund,
Oppenheimer Gold & Special Minerals Fund, Oppenheimer Series Fund,
Inc., Oppenheimer Discovery Fund, Oppenheimer Global Fund,
Oppenheimer Global Growth & Income Fund, Oppenheimer Global
Emerging Growth Fund, Oppenheimer Enterprise Fund, Oppenheimer
Multi-Sector Income Trust and Oppenheimer World Bond Fund
(collectively, the "New York-based Oppenheimer funds") except that
Ms. Macaskill is not a director of Oppenheimer Money Market Fund,
Inc. Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and Zack,
respectively, hold the same offices with the other New York-based
Oppenheimer funds as with the Fund. As of September 6, 1996, the
Trustees and officers of the Fund as a group owned less that 1% of
the outstanding Class A shares of the Fund; no Trustee or officer
of the Fund owned Class B or Class C shares of the Fund. That
statement does not include ownership of shares held of record by an
employee benefit plan for employees of the Manager (one of the
Trustees of the Fund listed below, Ms. Macaskill, and one of the
officers, Mr. Donohue, are trustees of that plan) other than the
shares beneficially owned under that plan by the officers of the
Fund listed below.
Leon Levy, Chairman of the Board of Trustees; Age 71
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee*; Age 63
Vice Chairman of OppenheimerFunds, Inc. (the "Manager");
formerly he held the following positions: Vice President and
Counsel of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company; Executive Vice President & General Counsel
and a director of the Manager and OppenheimerFunds Distributor,
Inc. (the "Distributor"), Vice President and a director of
HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment
adviser subsidiaries of the Manager, a director of Shareholder
Financial Services, Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the Manager and an officer
of other Oppenheimer funds.
Benjamin Lipstein, Trustee; Age 73
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publishers, Inc (Publishers of Psychology Today and Mother Earth
News) and of Spy Magazine, L.P.
Bridget A. Macaskill, President and Trustee*; Age 48
President, Chief Executive Officer and a Director of the Manager;
Chairman and a director of SSI, and SFSI; President and a director
of OAC, HarbourView and Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of
Oppenheimer Real Asset Management, Inc.; formerly an Executive
Vice President of the Manager.
Elizabeth B. Moynihan, Trustee; Age 67
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), 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 69
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company),
Kemper Corporation (insurance and financial services company),
Fidelity Life Association (mutual life insurance company); formerly
President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research) and a director of
Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
_______________________________
*A Trustee who is an "interested person" of the Fund as defined in
the Investment Company Act.
Edward V. Regan, Trustee; Age 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New
York; Senior Fellow of Jerome Levy Economics Institute, Bard
College; a member of the U.S. Competitiveness Policy Council; a
director of GranCare, Inc. (health care provider); formerly New
York State Comptroller and trustee, New York State and Local
Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age 64
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship Inc. (consulting and
publishing); a director of XYAN Inc. (printing), Professional Staff
Limited and American Scientific Resources, Inc.; a trustee of
Mystic Seaport Museum, International House, Greenwich Historical
Society and Greenwich Hospital.
Sidney M. Robbins, Trustee; Age 84
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting
Professor of Finance, University of Hawaii; Emeritus Founding
Director of The Korea Fund, Inc. (closed-end investment company);
a member of the Board of Advisors, Olympus Private Placement Fund,
L.P.; Professor Emeritus of Finance, Adelphi University.
Donald W. Spiro, Vice Chairman and Trustee*; Age 70
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Trustee; Age 83
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Trustee; Age 65
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar,
Inc. (machinery), ConAgra, Inc. (food and agricultural products),
Farmers Insurance Company (insurance), FMC Corp. (chemicals and
machinery), IMC Global Inc. (chemicals and animal feed) and Texas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Counsellor to the President (Bush) for
Domestic Policy, Chairman of the Republican National Committee,
Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.
Andrew J. Donohue, Secretary; Age: 46
Executive Vice President and General Counsel of the Manager and
the Distributor; President and a director of Centennial;
Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI, and Oppenheimer Partnership Holdings, Inc.;
President and director of Oppenheimer Real Asset Management, Inc.;
General Counsel of OAC; Executive Vice President, Chief Legal
Officer and a director of MultiSource Services, Inc. (a broker-
dealer); an officer of other Oppenheimer funds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor; Partner in, Kraft & McManimon (a law firm); an officer
of First Investors Corporation (a broker-dealer) and First
Investors Management Company, Inc. (broker-dealer and investment
adviser); director and an officer of First Investors Family of
Funds and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age 59
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Senior Vice President, Treasurer and Secretary of SSI;
Vice President, Treasurer and Secretary of SFSI; Treasurer of OAC;
Vice President and Treasurer of Oppenheimer Real Asset Management,
Inc.; Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc. (a broker-dealer); an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age 37
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott T. Farrar, Assistant Treasurer; Age 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman & Co., a bank, and
previously a Senior Fund Accountant for State Street Bank & Trust
Company.
Robert G. Zack, Assistant Secretary; Age 48
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other Oppenheimer
funds.
George Evans, Vice President and Portfolio Manager; Age 37
Vice President of the Manager; formerly an International Equities
Portfolio Manager/Analyst with Brown Brothers Harriman & Co.
-- Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager; they and the Trustees of the Fund who
are affiliated with the Manager (Ms. Macaskill and Messrs. Galli
and Spiro) receive no salary or fee from the Fund. The remaining
Trustees of the Fund (i) are expected to receive the total amounts
shown below from the Fund during the current fiscal period and (ii)
received the total amounts shown below from all of the New York-
based Oppenheimer funds for which they served as Trustee or
Director. Compensation is paid for services
in the positions below their names:
<TABLE>
<CAPTION>
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as Part From All
Name and from of Fund New York-based
Position Fund 1 Expenses Oppenheimer funds 2
<S> <C> <C> <C>
Leon Levy $1,585.00 None $141,000.00
Chairman and
Trustee
Benjamin Lipstein $ 965.00 None $ 86,200.00
Study
Committee
Member and
Trustee
Elizabeth B.
Moynihan $ 965.00 None $ 86,200.00
Study
Committee
Member and
Trustee
Kenneth A. $ 885.00 None $ 78,400.00
Randall
Audit Committee
Chairman and
Trustee
Edward V. Regan $ 875.00 None $ 68,800.00
Proxy Committee
Chairman,
Audit
Committee
Member and
Trustee
Russell S.
Reynolds, Jr. $ 655.00 None $ 52,100.00
Proxy Committee
Member and
Trustee
Sidney M. Robbins $1,370.00 None $122,100.00
Study Committee
Chairman, Audit
Committee
Vice-Chairman
and Trustee
Pauline Trigere $585.00 None $ 52,100.00
Trustee
Clayton K. Yeutter $655.00 None $ 52,100.00
Proxy Committee
Member and
Trustee
</TABLE>
______________________
1 Estimated to be received during the period from inception (March
25, 1996) to November 30, 1996.
2 For the 1995 calendar year (prior to the inception of the Proxy
Committee), during which the New York-based Oppenheimer funds,
listed in the first paragraph of this section, included Oppenheimer
Mortgage Income Fund and Oppenheimer Time Fund (which ceased
operation following the acquisition of their assets by certain
other Oppenheimer funds) but excluded the Fund, which had not yet
commenced operations.
The Fund has adopted a retirement plan that provides for payment
to a retired Trustee of up to 80% of the average compensation paid
during that Trustee's five years of service in which the highest
compensation was received. A Trustee must serve in that capacity
for any of the New York-based Oppenheimer funds for at least 15
years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the
Trustee's future compensation and length of service, the amount of
those benefits cannot be determined at this time, nor can the Fund
estimate the number of years of credited service that will be used
to determine those benefits.
Major Shareholders. As of September 6, 1996, no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding Class A, Class B or Class C shares
except: (i) the Manager, which owned of record 138,947.942 Class A
shares (15.20% of the Class A shares outstanding as of such date),
(ii) Merrill Lynch Pierce Fenner & Smith, Inc., 4800 Deer Lake
Drive East, Jacksonville, Florida 32246-6484, which owned of record
for the benefit of its clients, 7,181.000 Class C shares (6.69% of
the Class C shares outstanding as of such date) and (iii) James and
Mary Hendrickson, Cotrustees for the James L. Hendrickson Living
Trust, 15940 Airlie Road, Manmouth, Oregon 97361-9427, which owned
of record 6,071.392 Class C Shares (5.65% of the Class C shares
outstanding as of such date).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager's directors and officers, some of
whom also serve as officers of the Fund, and three of whom (Ms.
Macaskill and Messrs. Spiro and Galli) serve as Trustees of the
Fund.
The Manager and the Fund have a Code of Ethics. It is designed
to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
-- The Investment Advisory Agreement. A management fee is
payable monthly to the Manager under the terms of the investment
advisory agreement between the Manager and the Fund and is computed
on the aggregate net assets of the Fund as of the close of business
each day. The investment advisory agreement requires the Manager,
at its expense, to provide the Fund with adequate office space,
facilities and equipment, and to provide and supervise the
activities of all administrative and clerical personnel required to
provide effective corporate administration for the Fund, including
the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for
continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's
Agreement are paid by the Fund. The advisory agreement lists
examples of expenses paid by the Fund, the major categories of
which relate to interest, taxes, brokerage commissions, fees to
certain Trustees, legal and audit expenses, custodian and transfer
agent expenses, share issuance costs, certain printing and
registration costs and non-recurring expenses, including litigation
costs. For the Fund's fiscal period from March 25, 1996
(commencement of operations) to May 31, 1996, the management fees
paid by the Fund to the Manager totalled $9,000.
The Agreement contains no expense limitation. However,
independently of the Agreement, the Manager has undertaken that the
total expenses of the Fund in any fiscal year (including the
management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary
expenses, such as litigation costs) shall not exceed the most
stringent expense limitation imposed under state law applicable to
the registration of the Fund's shares. Pursuant of the
undertaking, the Manager's fee will be reduced at the end of a
month so that there will not be any accrued but unpaid liability
under this undertaking. Currently, the most stringent state
expense limitation is imposed by California and limits the Fund's
expenses (with specified exclusions) to 2.5% of the first $30
million of average annual net assets, 2.0% of the next $70 million
of average annual net assets and 1.5% of average annual net assets
in excess of $100 million. Any assumption of the Fund's expenses
under these limitations would lower the Fund's overall expense
ratio and increase its total return during any period during which
expenses are limited. The Manager reserves the right to amend or
terminate these expense undertakings at any time.
The Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its
duties, or reckless disregard for its obligations and duties
thereunder, the Manager is not liable for any loss sustained by
reason of good faith errors or omissions in connection with any
matters to which the Agreement relates. The Agreement permits the
Manager to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with
other investment companies for which it may act as investment
adviser or general distributor. If the Manager shall no longer act
as investment adviser to the Fund, the right of the Fund to use the
name "Oppenheimer" as part of its name may be withdrawn.
-- The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's Class
A, Class B and Class C shares but is not obligated to sell a
specific number of shares. Expenses normally attributable to
sales, (excluding payments under the Distribution and Service Plans
but including advertising and the cost of printing and mailing
prospectuses, other than those furnished to existing shareholders),
are borne by the Distributor. During the Fund's fiscal period from
March 25, 1996 (commencement of operations) to May 31, 1996, the
aggregate sales charges on sales of the Fund's Class A shares were
$25,125, of which the Distributor and an affiliated broker-dealer
retained in the aggregate $9,038. During this period, the
aggregate sales charge on sales of the Fund's Class B shares were
$23,380, of which the Distributor and an affiliated broker-dealer
retained in the aggregate $1,195, and the aggregate sales charges
on sales of the Fund's Class C shares were $2,763. For additional
information about distribution of the Fund's shares and the
payments made by the Fund to the Distributor in connection with
such activities, please refer to "Distribution and Service Plans,"
below.
-- The Transfer Agent. OppenheimerFunds Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under the advisory agreement is to
arrange the portfolio transactions for the Fund. The advisory
agreement contains provisions relating to the employment of broker-
dealers ("brokers") to effect the Fund's portfolio transactions.
In doing so, the Manager is authorized by the advisory agreement to
employ broker-dealers, including "affiliated" brokers, as that term
is defined in the Investment Company Act, as may, in its best
judgment based on all relevant factors, implement the policy of the
Fund to obtain, at reasonable expense, the "best execution" (prompt
and reliable execution at the most favorable price obtainable) of
such transactions. The Manager need not seek competitive
commission bidding but is expected to minimize the commissions paid
to the extent consistent with the interest and policies of the Fund
as established by its Board of Trustees. Purchases of securities
from underwriters include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers include a
spread between the bid and asked price.
Under the advisory agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its
affiliates have investment discretion. The commissions paid to
such brokers may be higher than another qualified broker would have
charged if a good faith determination is made by the Manager that
the commission is fair and reasonable in relation to the services
provided. Subject to the foregoing considerations, the Manager may
also consider sales of shares of the Fund and other investment
companies managed by the Manager or its affiliates as a factor in
the selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the advisory agreement, and the
procedures and rules described above, allocations of brokerage are
generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain
instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the advisory
agreement and the procedures and rules described above. In either
case, brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those
for which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for
certain fixed-income agency transactions in the secondary market,
and are otherwise paid only if it appears likely that a better
price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent
orders to purchase or sell the same security by more than one of
the accounts managed by the Manager or its affiliates are combined.
The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase
or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply
to direct purchases and sales of portfolio securities.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager
and its affiliates, and investment research received for the
commissions of those other accounts may be useful both to the Fund
and one or more of such other accounts. Such research, which may
be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as
well as market or economic trends and portfolio strategy, receipt
of market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If
a research service also assists the Manager in a non-research
capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to
the Manager in the investment decision-making process may be paid
for in commission dollars. The Board of Trustees has permitted the
Manager to use concessions on fixed price offerings to obtain
research, in the same manner as is permitted for agency
transactions. The Board has also permitted the Manager to use
stated commissions on secondary fixed-income agency trades to
obtain research where the broker has represented to 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 research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and
by enabling the Manager to obtain market information for the
valuation of securities held in the Fund's portfolio or being
considered for purchase. The Board of Trustees, including the
"independent" Trustees of the Fund (those Trustees of the Fund who
are not "interested persons" as defined in the Investment Company
Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans
described below) annually reviews information furnished by the
Manager as to the commissions paid to brokers furnishing such
services so that the Board may ascertain whether the amount of such
commissions was reasonably related to the value or benefit of such
services.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return," "average annual total return at net asset value" and
"total return at net asset value" of a class of shares of the Fund
may be advertised. An explanation of how these total returns are
calculated for each class and the components of those calculations
is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each advertised class of
shares of the Fund for the 1, 5, and 10-year periods (or the life
of the class, if less) ending as of the most recently-ended
calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the
performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a
basis for comparison with other investments. An investment in the
Fund is not insured; its returns and share prices are not
guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of each class of shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to the particular class.
-- Average Annual Total Returns. The "average annual total
return" of a class of shares is an average annual compounded rate
of return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment, according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
-- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). For Class
B shares, the payment of the applicable contingent deferred sales
charge (5.0% for the first year, 4.0% for the second year, 3.0% for
the third and fourth years, 2.0% in the fifth year, 1.0% in the
sixth year and none thereafter) is applied to the investment result
for the period shown (unless the total return is shown at net asset
value, as described below). For Class C shares, the payment of the
1.0% contingent deferred sales charge is applied to the investment
result for the one-year period (or less). Total returns also
assume that all dividends and capital gains distributions during
the period are reinvested to buy additional shares at net asset
value per share, and that the investment is redeemed at the end of
the period. For the fiscal period March 25, 1996 (commencement of
operations) to May 31, 1996, payments under the Class A Plan
totalled $2,158, all of which was paid by the Distributor to
Recipients. The cumulative total return on an investment in Class
A, Class B and Class C shares of the Fund for the period March 25,
1995 (commencement of operations) to May 31, 1996 were -1.51%, -
0.8% and 3.2%, respectively.
-- Total Returns at Net Asset Value. From time to time the Fund
may also quote an average annual total return at net asset value or
a cumulative total return at net asset value for Class A, Class B,
or Class C shares. Each is based on the difference in net asset
value per share at the beginning and the end of the period for a
hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and
takes into consideration the reinvestment of dividends and capital
gains distributions. The cumulative total return at net asset value
on an investment in Class A, Class B and Class C shares of the Fund
for the period March 25, 1995 (commencement of operations) to May
31, 1996 were 4.50%, 4.20% and 4.20%, respectively.
Total return information may be useful to investors in reviewing
the performance of the Fund's Class A, Class B or Class C shares.
However, when comparing total return of an investment in shares of
the Fund with that of other alternatives, investors should
understand that as the Fund is an aggressive equity fund seeking
capital appreciation, its shares are subject to greater market
risks and volatility than shares of funds having other investment
objectives and that the Fund is designed for investors who are
willing to accept greater risk of loss in the hopes of realizing
greater gains.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B or Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund's
classes is ranked against (i) all other funds, (ii) all other
"international" funds and (iii) all other "international" funds in
a specific size category. The Lipper performance rankings are
based on total returns that include the reinvestment of capital
gain distributions and income dividends but do not take sales
charges or taxes into consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, monthly in broad
investment categories (equity, taxable bond, municipal bond and
hybrid) based on risk-adjusted investment return. Investment
return measures a fund's three, five and ten-year average annual
total returns (when available) in excess of 90-day U.S. Treasury
bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in a
fund's category. Five stars is the "highest" ranking (top 10%),
four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and
one star is "lowest" (bottom 10%). Morningstar ranks the Class A,
Class B and Class C shares of the Fund in relation to other equity
funds. Rankings are subject to change monthly.
From time to time, the Fund may include in its advertisements
and sales literature performance information about the Fund cited
in other newspapers and periodicals, such as The New York Times,
which may include performance quotations from other sources,
including Lipper.
The total return on an investment in the Fund's Class A, Class
B or Class C shares may be compared with performance for the same
period of the Morgan Stanley World Index, an unmanaged index of
issuers on the stock exchanges of 20 foreign countries and the
United States and widely recognized as a measure of global stock
market performance. The performance of such Index includes a
factor for the reinvestment of dividends but does not reflect
expenses or taxes. The performance of the Fund's Class A, Class B
or Class C shares may also be compared in publications to (i) the
performance of various market indices or to other investments for
which reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the Oppenheimer funds' services to those of
other mutual fund families selected by the rating or ranking
services and may be based upon the opinions of the rating or
ranking service itself, based on its research or judgment, or based
upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted Distribution and Service Plans for Class A,
Class B and Class C shares of the Fund under Rule 12b-1 of the
Investment Company Act, pursuant to which the Fund makes payments
to the Distributor in connection with the distribution and/or
servicing of the shares of that class, as described in the
Prospectus. Each Plan has been approved by a vote of the Manager
as the initial shareholder of the Fund and will be submitted for
approval by the Board of Trustees of the Fund, including a majority
of the Independent Trustees, cast in person at a meeting called for
the purpose of voting on that Plan.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform, at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make to Recipients from
their own resources.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as its continuance is
specifically approved at least annually by the Fund's Board of
Trustees and its Independent Trustees by a vote cast in person at
a meeting called for the purpose of voting on such continuance. A
Plan for a particular class may be terminated at any time by the
vote of a majority of the Independent Trustees or by the vote of
the holders of a "majority" (as defined in the Investment Company
Act) of the outstanding shares of that class. None of the Plans
may be amended to increase materially the amount of payments to be
made unless such amendment is approved by shareholders of the class
affected by the amendment. In addition, because Class B shares of
the Fund automatically convert into Class A shares after six years,
the Fund will seek the approval of Class B as well as Class A
shareholder for a proposed amendment to the Class A Plan that would
materially increase the amount to be paid under the Class A Plan.
Such approval must be by a majority of the Class A and Class B
shares (as defined in the Investment Company Act), voting
separately by class. All material amendments must be approved by
the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which the payments were made and the identity
of each Recipient that received any payment. The report for each
Plan shall also include the distribution costs for that quarter.
Those reports, including the allocations on which they are based,
will be subject to the review and approval of the Independent
Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and
nomination of those Trustees of the Fund who are not "interested
persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of
others in such selection and nomination if the final decision on
selection or nomination is approved by a majority of the
Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by
the Recipient for itself and its customers, did not exceed a
minimum amount, if any, that may be determined from time to time by
a majority of the Fund's Independent Trustees. Initially, the Board
of Trustees has set the fees at the maximum rate and has set no
minimum amount of assets to qualify for payment.
Any unreimbursed expenses incurred by the Distributor with
respect to Class A shares for any fiscal year may not be recovered
in subsequent years. Payments received by the Distributor under
the Plan for Class A shares will not be used to pay any interest
expense, carrying charge, or other financial costs, or allocation
of overhead by the Distributor. For the fiscal period March 25,
1996 (commencement of operations) to May 31, 1996, payments under
the Class A Plan totalled $2,158, all of which was paid by the
Distributor to Recipients.
The Class B and the Class C Plans allow the service fee payment
to be paid by the Distributor to Recipients in advance for the
first year such shares are outstanding, and thereafter on a
quarterly basis, as described in the Prospectus. The advance
payment is based on the net asset value of Class B and Class C
shares sold. An exchange of shares does not entitle the Recipient
to an advance service fee payment. In the event Class B or Class
C shares are redeemed during the first year that the shares are
outstanding, the Recipient will be obligated to repay to the
Distributor a pro rata portion of the Distributor's advance payment
for those shares. For the fiscal period March 25, 1996
(commencement of operations) to May 31, 1996, payments under the
Class B Plan totalled $2,100, all of which was retained. During
this period, payments under the Class C Plan totalled $519, all of
which was retained.
Although the Class B and Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fees on
such shares, or to pay Recipients the service fee on a quarterly
basis, without payment in advance, the Distributor presently
intends to pay the service fee to Recipients in the manner
described above. A minimum holding period may be established from
time to time under the Class B Plan and the Class C Plan by the
Board. Initially, the Board has set no minimum holding period.
All payments under the Class B Plan and the Class C Plan are
subject to the limitations imposed by the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., on payments
of asset-based sales charges and service fees.
The Class B and Class C Plans provide for the distributor to be
compensated at a flat rate, whether the Distributor s distribution
expenses are more or less than the amounts paid by the Fund during
that period. Such payments are made in recognition that the
Distributor (i) pays sales commissions to authorized brokers and
dealers at the time of sale and pays service fees as described in
the Prospectus, (ii) may finance such commissions and/or the
advance of the service fee payment to Recipients under those Plans,
or may provide such financing from its own resources, or from an
affiliate, (iii) employs personnel to support distribution of
shares, and (iv) may bear the costs of sales literature,
advertising and prospectuses (other than those furnished to current
shareholders), state "blue sky" registration fees and certain other
distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The availability of three classes of shares permits the
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-
based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other.
The Distributor normally will not accept any order for $500,000 or
$1 million or more of Class B or Class C shares, respectively, on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and expenses. The net income
attributable to Class A, Class B and Class C shares and the
dividends payable on such shares will be reduced by incremental
expenses borne solely by those classes, including the asset-based
sales charges.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to a class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (i) Distribution Plan fees, (ii)
incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "the Exchange") on each day that the Exchange is
open, by dividing the value of the Fund's net assets attributable
to that class by the number of shares of that class that are
outstanding. The Exchange normally closes at 4:00 P.M. New York
time, but may close earlier on some days (for example, in case of
weather emergencies or on days falling before a holiday). The
Exchange's most recent annual announcement (which is subject to
change) states that it will close on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It may also close on other
days. The Fund may invest a substantial portion of its assets in
foreign securities primarily listed on foreign exchanges which may
trade on Saturdays or customary U.S. business holidays on which the
Exchange is closed. Because the Fund's net asset value will not be
calculated on those days, the Fund's net asset values per share of
Class A, Class B and Class C shares of the Fund may be
significantly affected at times when shareholders cannot purchase
or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a U.S. securities exchange or on
NASDAQ, for which last sale information is regularly reported, are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale prices of the preceding trading day or
closing bid and asked prices that day); (ii) securities traded on
a foreign securities exchange are valued generally at the last
sales price available to the pricing service approved by the Fund's
Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded at its last trading
session on or preceding the valuation date, or at the mean between
"bid" and "asked" prices obtained from the principal exchange or
two active market makers in the security on the basis of reasonable
inquiry; (iii) long-term debt securities having a remaining
maturity in excess of 60 days are valued based on the mean between
the "bid" and "asked" prices determined by a portfolio pricing
service approved by the Fund's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis
of reasonable inquiry; (iv) debt instruments having a maturity of
more than 397 days when issued, and non-money market type
instruments having a maturity of 397 days or less when issued,
which have a remaining maturity of 60 days or less are valued at
the mean between "bid" and "asked" prices determined by a pricing
service approved by the Fund's Board of Trustees or obtained from
two active market makers in the security on the basis of reasonable
inquiry; (v) money market debt securities that had a maturity of
less than 397 days when issued that have a remaining maturity of 60
days or less are valued at cost, adjusted for amortization of
premiums and accretion of discounts; and (vi) securities (including
restricted securities) not having readily-available market
quotations are valued determined at fair value determined under the
Board's procedures.
If the Manager is unable to locate two market makers willing to
give quotes (see (ii), (iii) and (iv) above), the security may be
priced at the mean between the "bid" and "asked" prices provided by
a single active market maker.
Trading in securities on European and Asian exchanges and over-
the-counter markets is normally completed before the close of The
New York Stock Exchange. Events affecting the values of foreign
securities traded in securities markets that occur between the time
their prices are determined and the close of The New York Stock
Exchange will not be reflected in the Fund's calculation of net
asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that
the particular event is likely to effect a material change in the
value of such security. Foreign currency including foreign
contracts will be valued at the closing price in the London foreign
exchange market that day as provided by a reliable bank, dealer or
pricing service as close to the time fixed for the valuation date
as is reasonably practicable. The values of securities denominated
in foreign currency will be converted to U.S. dollars at the
closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on
the principal exchange on which they are traded, or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
When the Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and
Liabilities as an asset, and an equivalent credit is included in
the liability section. The credit is adjusted ("marked-to-
market") to reflect the current market value of the call or put.
In determining the Fund's gain on investments, if a call 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. In the case of foreign securities and corporate bonds,
when last sale information is not generally available, such pricing
procedures may include "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, maturity and
other special factors involved. The Trustees will monitor the
accuracy of such pricing services by comparing prices used for
portfolio evaluation to actual sales prices of selected securities.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy shares. Dividends
will begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for
the purchase through the ACH system before the close of the
Exchange. The Exchange normally closes at 4:00 P.M., but may close
earlier on certain days. If Federal Funds are received on a
business day after the close of the Exchange, the shares will be
purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received
by the Fund 3 days after the transfers are initiated. The
Distributor and the Fund are not responsible for any delays in
purchasing shares resulting from delays in ACH transmissions.
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 the
Prospectus because the Distributor incurs little or no selling
expenses. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, aunts, uncles,
nieces and nephews, a sibling's spouse and a spouse's siblings.
-- The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the Fund and the following funds:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer U.S. Government Trust
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Bond Fund for Growth
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Bond Fund Series - Oppenheimer Bond Fund for Growth
Rochester Portfolio Series - Limited Term
New York Municipal Fund*
Rochester Fund Municipals*
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
_________________
*Shares of the Fund are not presently exchangeable for shares of
these Funds.
-- Letters of Intent. A Letter of Intent ("Letter") is the
investor's statement of intention to purchase Class A or Class A
and Class B shares of the Fund (and other eligible Oppenheimer
funds) during the 13-month period from the investor's first
purchase pursuant to the Letter (the "Letter of Intent period"),
which may, at the investor's request, include purchases made up to
90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases
(excluding any purchases made by reinvestment of dividends or
distributions or purchases made at net asset value without sales
charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated
on the date of the Letter) will equal or exceed the amount
specified in the Letter. This enables the investor to count the
shares to be purchased under the Letter of Intent to obtain the
reduced sales charge rate (as set forth in the Prospectus) 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, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account
and the amount of sales charge retained by the Distributor will be
adjusted to the rates applicable to actual purchases. For
purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent,
the Transfer Agent will not hold shares in escrow. If the intended
purchases amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there normally will be
no adjustment of commission previously paid to the broker-dealer or
financial institution of record for shares purchased for accounts
held in the name of that plan. If total eligible purchases during
the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges
paid will be adjusted to the lower rate, but only if and when the
dealer returns to the Distributor the excess of the amount of
commissions allowed or paid to the dealer over the amount of
commissions that apply to the actual amount of purchases. The
excess commissions returned to the Distributor will be used to
purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase,
promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
-- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value to 5% of the intended purchase amount specified in the Letter
shall be held in escrow by the Transfer Agent. For example, if the
intended purchase amount is $50,000, the escrow shall be shares
valued in the amount of $2,500 (computed at the public offering
price adjusted for a $50,000 purchase). Any dividends and capital
gains distributions on the escrowed shares will be credited to the
investor's account.
2. If the intended purchase amount specified under the Letter
is completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period
the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes
and appoints the Transfer Agent as attorney-in-fact to surrender
for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares acquired subject to a contingent deferred sales charge, and
(c) Class A or Class B shares acquired in exchange for either (i)
Class A shares of one of the other Oppenheimer funds that were
acquired subject to a Class A initial or contingent deferred sales
charge or (ii) Class B shares of one of the other Oppenheimer funds
that were acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less
than $500 or such lesser amount as the Board may fix. The Board of
Trustees will not cause the involuntary redemption of shares in an
account if the aggregate net asset value of the shares has fallen
below the stated minimum solely as a result of market fluctuations.
Should the Board elect to exercise this right, it may also fix, in
accordance with the Investment Company Act, the requirements for
any notice to be given to the shareholders in question (not less
than 30 days), or the Board may set requirements for granting
permission to the Shareholder to increase the investment, and set
other terms and conditions so that the shares would not be
involuntarily redeemed.
-- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash.
However, the Board of Trustees of the Fund may determine that it
would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of a redemption order
wholly or partly in cash. In that case the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind"
of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day
period for any one shareholder. If shares are redeemed in kind,
the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The method of valuing securities
used to make redemptions in kind will be the same as the method the
Fund uses to value its portfolio securities described above under
the "Determination of Net Asset Values Per Share" and that
valuation will be made as of the time the redemption price is
determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares that you purchased subject to an initial sales
charge, or (ii) Class B shares on which you paid a contingent
deferred sales charge when you redeemed them, without sales charge.
This privilege does not apply to Class C shares. The reinvestment
may be made without sales charge only in Class A shares of the Fund
or any of the other Oppenheimer funds into which shares of the Fund
are exchangeable as described below, at the net asset value next
computed after the Transfer Agent receives the reinvestment order.
The shareholder must ask the Distributor for that privilege at the
time of reinvestment. Any capital gain that was realized when the
shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be
tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are
reinvested in shares of the Fund or another of the Oppenheimer
funds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed
may not include the amount of the sales charge paid. That would
reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B or the
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be
addressed to "Trustee, Oppenheimer funds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored prototype pension, profit-sharing plans or 401(k) plans
may not directly redeem or exchange shares held for their accounts
under those plans. The employer or plan administrator must sign
the request. Distributions from pension and profit sharing plans
are subject to special requirements under the Internal Revenue Code
and certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the
Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that
tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except that if
the Distributor receives a repurchase order from a dealer or broker
after the close of The New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value if
the order was received by the dealer or broker from its customers
prior to the time the Exchange closed (normally that is 4:00 P.M.,
but may be earlier some days) and the order was transmitted to and
received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds retirement plans may not be arranged on this
basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right
to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should
not establish withdrawal plans, because of the imposition of the
contingent deferred sales charge on such withdrawals (except where
the Class B or the Class C contingent deferred sales charge is
waived as described in the Prospectus in "Waivers of Class B and
Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the
OppenheimerFunds Application relating to such Plans, as well as the
Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
-- Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
-- Automatic Withdrawal Plans. Fund shares will be redeemed
as necessary to meet withdrawal payments. Shares acquired without
a sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither the Fund nor the Transfer
Agent shall incur any liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer
the Plan. Certificates will not be issued for shares of the Fund
purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder
may be surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or AccountLink payments of the proceeds of
Plan withdrawals will normally be transmitted three business days
prior to the date selected for receipt of the payment (receipt of
payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use Class A shares held under the Plan as collateral for a
debt, the Planholder may request issuance of a portion of the Class
A shares in certificated form. Share certificates are not issued
for Class B shares or Class C shares. Upon written request from
the Planholder, the Transfer Agent will determine the number of
Class A shares for which a certificate may be issued without
causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should
such uncertificated shares become exhausted, Plan withdrawals will
terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. At present Rochester Fund Municipals and Limited Term New
York Municipal Fund are not "Eligible Funds" for purposes of the
exchange privilege in the Prospectus. Shares of the Oppenheimer
funds that have a single class without a class designation are
deemed "Class A" shares for this purpose. All Oppenheimer funds
offer Class A, Class B and Class C shares except Oppenheimer Money
Market Fund, Inc., Centennial Money Market Trust, Centennial Tax-
Exempt Trust, Centennial Government Trust, Centennial New York Tax-
Exempt Trust, Centennial California Tax-Exempt Trust, Centennial
America Fund, L.P. and Daily Cash Accumulation Fund, Inc, which
offer only Class A shares, and Oppenheimer Main Street California
Tax-Exempt Fund which only offers Class A and Class B shares (Class
B and Class C shares of Oppenheimer Cash Reserves are generally
only available by exchange from the same class of other Oppenheimer
funds or thorough OppenheimerFunds sponsored 401(k) plans). A
current list showing which funds offer which class can be obtained
by calling the Distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds, including Rochester Fund Municipals and Limited Term New
York Municipal Fund. Class A shares of Rochester Fund Municipals
or Limited Term New York Municipal Fund acquired on the exchange of
Class M shares of Oppenheimer Bond Fund for Growth may be exchanged
for Class M shares of that fund. For accounts of Oppenheimer Bond
Fund for Growth established after March 8, 1996, Class M shares may
be exchanged for Class A shares of other Oppenheimer funds except
Rochester Fund Municipals and Limited Term New York Municipal Fund.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund,
Inc. or Oppenheimer Cash Reserves that were acquired by exchange
from Class M shares. Otherwise no exchanges of any class of any
Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge). However, shares of Oppenheimer Money
Market Fund, Inc., purchased with the redemption proceeds of shares
of other mutual funds (other than funds managed by the Manager or
its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other
Oppenheimer funds without being subject to an initial or contingent
deferred sales charge, whichever is applicable. To qualify for
this privilege, the investor or the investor's dealer must notify
the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc., are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds. No contingent deferred sales charge is imposed
on exchanges of shares of any class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares
(see "Class A Contingent Deferred Sales Charge" in the Prospectus).
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 shares or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B or the Class C
contingent deferred sales charge will be followed in determining
the order in which the shares are exchanged. Shareholders should
take into account the effect of any exchange on the applicability
and rate of any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares.
Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans, and retirement plan contributions will be
switched to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day
the Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be
delayed by either fund up to five business days if it determines
that it would be disadvantaged by an immediate transfer of the
redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. Because of the Fund's emphasis on
foreign securities, it is unlikely that the Fund's dividends will
qualify for this 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, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Fund's Board of Trustees and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund has more than 50% of its total assets invested in
foreign securities at the end of its fiscal year, it may elect the
application of Section 853 of the Internal Revenue Code to permit
shareholders to take a credit (or, at their option, a deduction)
for foreign taxes paid by the Fund. Under Section 853,
shareholders would be entitled to treat the foreign taxes withheld
from interest and dividends paid to the Fund from its foreign
investments as a credit on their federal income taxes. As an
alternative, shareholders could, if to their advantage, treat the
foreign tax withheld as a deduction from gross income in computing
taxable income rather than as a tax credit. In substance, the
Fund's election would enable shareholders to benefit from the same
foreign tax credit or deduction that would be received if they had
been the record owners of the Fund's foreign securities and had
paid foreign taxes on the income received.
If the Fund qualifies as a "regulated investment company" under
the Internal Revenue Code, it will not be liable for Federal income
taxes on amounts paid by it as dividends and distributions. The
Fund intends to qualify in the current and future fiscal years, but
reserves the right not to do so. The Internal Revenue Code
contains a number of complex tests relating to such qualification,
and a Fund might not meet those tests in any particular year. For
example, if the Fund derives 30% or more of its gross income from
the sale of securities held less than three months, it may fail to
qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it did not so qualify, the Fund would be
treated for tax purposes as an ordinary corporation and receive no
tax deduction for payments made to shareholders.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent to enable the
investor to earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made
at the net asset value per share in effect at the close of business
on the payable date of the dividend or distribution. Dividends
and/or distributions from shares of other Oppenheimer funds may be
invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the
delivery of such securities to and from the Fund. The Manager has
represented to the Fund that the banking relationships between the
Manager and the Custodian have been and will continue to be
unrelated to and unaffected by the relationship between the Fund
and the Custodian. It will be the practice of the Fund to deal
with the Custodian in a manner uninfluenced by any banking
relationship the Custodian may have with the Manager and its
affiliates. The Fund's cash balances with the Custodian in excess
of $100,000 are not protected by Federal deposit insurance. Such
uninsured balances at times may be substantial.
Independent Auditors. The independent auditors of the Fund audit
the Fund's financial statements and perform other related audit
services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
STATEMENT OF INVESTMENTS MAY 31, 1996 (UNAUDITED)
MARKET VALUE
SHARES SEE NOTE 1
<S>
<C> <C>
===============================================================================================================================
COMMON STOCKS - 95.3%
- -------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS - 3.1%
- -------------------------------------------------------------------------------------------------------------------------------
CHEMICALS - 1.7%
- --------------------------------------------------------------------------------------------------------------------
Hoechst AG
500 $ 167,013
- -------------------------------------------------------------------------------------------------------------------------------
GOLD - 0.4%
- --------------------------------------------------------------------------------------------------------------------
Anglo American Corp. of South Africa Ltd., ADR
650 41,925
- -------------------------------------------------------------------------------------------------------------------------------
METALS - 1.0%
- --------------------------------------------------------------------------------------------------------------------
Boehler-Uddeholm AG
1,000 80,480
- --------------------------------------------------------------------------------------------------------------------
Compania de Minas Buenaventura SA, Sponsored ADR(1)
1,000 19,500
------------
99,980
- -------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS - 13.1%
- -------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING - 3.0%
- --------------------------------------------------------------------------------------------------------------------
Autobacs Seven Co. Ltd.
2,000 194,264
- --------------------------------------------------------------------------------------------------------------------
Sun Hung Kai Properties Ltd.
10,000 102,100
------------
296,364
- -------------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.8%
- --------------------------------------------------------------------------------------------------------------------
News Corp. Ltd.
14,015 78,668
- -------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL - 1.4%
- --------------------------------------------------------------------------------------------------------------------
Bulgari SpA
9,000 144,351
- -------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY - 7.9%
- --------------------------------------------------------------------------------------------------------------------
adidas AG
5,500 412,654
- --------------------------------------------------------------------------------------------------------------------
Giordano International Ltd.
60,000 53,893
- --------------------------------------------------------------------------------------------------------------------
Wella AG
600 323,877
------------
790,424
- -------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS - 13.0%
- -------------------------------------------------------------------------------------------------------------------------------
BEVERAGES - 2.5%
- --------------------------------------------------------------------------------------------------------------------
Hellenic Bottling Co., SA
2,000 69,084
- --------------------------------------------------------------------------------------------------------------------
Serm Suk Co. Ltd.
2,000 47,395
- --------------------------------------------------------------------------------------------------------------------
Serm Suk Public Co. Ltd.
4,200 129,389
------------
245,868
- -------------------------------------------------------------------------------------------------------------------------------
FOOD - 0.4%
- --------------------------------------------------------------------------------------------------------------------
Nestle SA
40 45,040
- -------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS - 5.9%
- --------------------------------------------------------------------------------------------------------------------
Astra AB Free, Series A
1,000 45,692
- --------------------------------------------------------------------------------------------------------------------
Biocompatibles International PLC
19,833 144,576
- --------------------------------------------------------------------------------------------------------------------
Ciba-Geigy AG
70 76,975
- --------------------------------------------------------------------------------------------------------------------
Sanofi SA
1,200 92,216
- --------------------------------------------------------------------------------------------------------------------
Torii Pharmaceutical Co. Ltd.
10,000 226,642
------------
586,101
- -------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES & SERVICES - 4.2%
- --------------------------------------------------------------------------------------------------------------------
Nichii Gakkan Co.
2,100 111,119
- --------------------------------------------------------------------------------------------------------------------
Nycomed ASA, A Shares
3,000 60,626
- --------------------------------------------------------------------------------------------------------------------
Rhoen Klinikum AG, Preference, Non-vtg.(1)
2,000 244,856
------------
416,601
- -------------------------------------------------------------------------------------------------------------------------------
ENERGY - 4.0%
- -------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED - 4.0%
- --------------------------------------------------------------------------------------------------------------------
British Petroleum Co. PLC
12,000 103,296
- --------------------------------------------------------------------------------------------------------------------
Expro International Group PLC
23,000 119,504
- --------------------------------------------------------------------------------------------------------------------
Forasol-Foramer NV
5,600 69,300
- --------------------------------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.(1)
21,300 107,195
------------
399,295
</TABLE>
5 Oppenheimer International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE
SHARES SEE NOTE 1
<S>
<C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
FINANCIAL - 18.6%
- -------------------------------------------------------------------------------------------------------------------------------
BANKS - 4.5%
- --------------------------------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA, ADR
4,500 $ 126,563
- --------------------------------------------------------------------------------------------------------------------
HSBC Holdings PLC
10,800 163,308
- --------------------------------------------------------------------------------------------------------------------
Standard Chartered Bank PLC(1)
16,300 162,305
------------
452,176
- -------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL - 5.6%
- --------------------------------------------------------------------------------------------------------------------
ABN Amro Holding NV
2,000 110,062
- --------------------------------------------------------------------------------------------------------------------
Compagnie Bancaire SA
1,000 109,340
- --------------------------------------------------------------------------------------------------------------------
Development Bank of Singapore Ltd.
6,000 71,079
- --------------------------------------------------------------------------------------------------------------------
Societe Generale de Paris
2,500 265,622
------------
556,103
- -------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 8.5%
- --------------------------------------------------------------------------------------------------------------------
Marschollek, Lautenschlaeger und Partner AG(1)
200 202,301
- --------------------------------------------------------------------------------------------------------------------
Mediolanum SpA
30,000 233,766
- --------------------------------------------------------------------------------------------------------------------
Reinsurance Australia Corp. Ltd.
120,000 337,267
- --------------------------------------------------------------------------------------------------------------------
Skandia Forsakrings AB
3,000 76,451
------------
849,785
- -------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL - 24.0%
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.5%
- --------------------------------------------------------------------------------------------------------------------
Yokogawa Electric Corp.
25,000 254,394
- -------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES - 8.2%
- --------------------------------------------------------------------------------------------------------------------
Boskalis Westminster
9,400 155,407
- --------------------------------------------------------------------------------------------------------------------
Cordiant PLC(1)
200,000 378,441
- --------------------------------------------------------------------------------------------------------------------
MRC Allied Industries, Inc.
1,700,000 292,095
------------
825,943
- -------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 10.1%
- --------------------------------------------------------------------------------------------------------------------
Chargeurs SA
1,500 427,411
- --------------------------------------------------------------------------------------------------------------------
Commercial del Plata SA
30,000 89,521
- --------------------------------------------------------------------------------------------------------------------
Hoganas AB, Cl. B
1,500 57,282
- --------------------------------------------------------------------------------------------------------------------
Powerscreen International PLC
25,000 182,823
- --------------------------------------------------------------------------------------------------------------------
Toolex Alpha NV
10,000 252,500
------------
1,009,537
- -------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 3.2%
- --------------------------------------------------------------------------------------------------------------------
East Japan Railway Co.
30 165,125
- --------------------------------------------------------------------------------------------------------------------
Kvaerner AS, Series B
4,000 155,545
------------
320,670
- -------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY - 14.7%
- -------------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE - 2.0%
- --------------------------------------------------------------------------------------------------------------------
Canon, Inc.
10,000 196,115
- -------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE - 8.0%
- --------------------------------------------------------------------------------------------------------------------
Ines Corp.
7,000 132,747
- --------------------------------------------------------------------------------------------------------------------
Misys PLC
28,300 369,579
- --------------------------------------------------------------------------------------------------------------------
Nintendo Co. Ltd.
4,000 294,542
------------
796,868
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 2.8%
- --------------------------------------------------------------------------------------------------------------------
Keyence Corp.
1,200 157,632
- --------------------------------------------------------------------------------------------------------------------
Rohm Co.
2,000 125,069
------------
282,701
</TABLE>
6 Oppenheimer International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE
SHARES SEE NOTE 1
<S>
<C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY - 1.9%
- --------------------------------------------------------------------------------------------------------------------
Millicom International Cellular SA(1)
4,000 $ 192,500
- -------------------------------------------------------------------------------------------------------------------------------
UTILITIES - 4.8%
- -------------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES - 4.8%
- --------------------------------------------------------------------------------------------------------------------
OTE SA
3,000 49,919
- --------------------------------------------------------------------------------------------------------------------
Portugal Telecom SA
7,000 168,694
- --------------------------------------------------------------------------------------------------------------------
Telecom Italia Mobile SpA
100,000 214,286
- --------------------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA, ADR
800 51,500
------------
484,399
------------
Total Common Stocks (Cost $9,287,121)
9,532,821
UNITS
===============================================================================================================================
RIGHTS, WARRANTS AND CERTIFICATES - 0.0%
- -------------------------------------------------------------------------------------------------------------------------------
Biocompatibles International PLC Wts., Exp. 2/97
(Cost $1,493)
2,833 2,197
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $9,288,614)
95.3% 9,535,018
- --------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES
4.7 474,873
------ ------------
NET ASSETS
100.0% $10,009,891
====== ============
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
7 Oppenheimer International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
STATEMENT OF ASSETS AND LIABILITIES MAY
31, 1996 (UNAUDITED)
<S> <C>
<C>
============================================================================================================================
ASSETS Investments, at value (cost $9,288,614) -
see accompanying statement $ 9,535,018
- ----------------------------------------------------------------------------------------------------
Cash
383,955
- ----------------------------------------------------------------------------------------------------
Unrealized appreciation on forward
foreign currency
exchange contracts - Note 5
905
- ----------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold
268,817
Dividends
23,163
- ----------------------------------------------------------------------------------------------------
Deferred organization costs - Note 1
14,885
- ----------------------------------------------------------------------------------------------------
Other
488
------------
Total assets
10,227,231
============================================================================================================================
LIABILITIES Unrealized depreciation on forward
foreign currency
exchange contracts - Note 5
125
- ----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased
191,173
Organization costs
15,000
Distribution and service plan fees
2,813
Transfer and shareholder servicing agent
fees 1,390
Shares of beneficial interest redeemed
1,000
Other
5,839
------------
Total liabilities
217,340
============================================================================================================================
NET ASSETS
$10,009,891
============
============================================================================================================================
COMPOSITION OF Paid-in capital
$ 9,749,651
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Accumulated net investment income
26,478
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on
investment transactions
(12,066)
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation on
investments
245,828
------------
Net assets
$10,009,891
============
============================================================================================================================
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per
share (based on
net assets of $6,985,920 and 668,664
shares of beneficial interest outstanding) $10.45
Maximum offering price per share (net
asset value plus sales charge
of 5.75% of offering price)
$11.09
- ----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and
offering price per share (based on
net assets of $2,421,017 and 232,388
shares of beneficial interest outstanding) $10.42
- ----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and
offering price per share (based on
net assets of $602,954 and 57,853 shares
of beneficial interest outstanding) $10.42
</TABLE>
See accompanying Notes to Financial
Statements.
8 Oppenheimer International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================
STATEMENT OF OPERATIONS FOR THE PERIOD
FROM MARCH 25, 1996 (COMMENCEMENT OF OPERATIONS)
TO MAY 31, 1996 (UNAUDITED)
<S> <C>
<C>
============================================================================================================================
INVESTMENT INCOME Dividends (net of foreign withholding
taxes of $3,123) $ 37,781
Interest
10,817
------------
Total income
48,598
============================================================================================================================
EXPENSES Management fees - Note 4
9,000
- ----------------------------------------------------------------------------------------------------
Distribution and service plan fees - Note
4:
Class A
2,158
Class B
2,100
Class C
519
- ----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A
2,539
Class B
853
Class C
219
- ----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent
fees - Note 4 1,963
- ----------------------------------------------------------------------------------------------------
Custodian fees and expenses
1,154
- ----------------------------------------------------------------------------------------------------
Shareholder reports
577
- ----------------------------------------------------------------------------------------------------
Legal and auditing fees
346
- ----------------------------------------------------------------------------------------------------
Trustees' fees and expenses - Note 1
346
- ----------------------------------------------------------------------------------------------------
Other
346
------------
Total expenses
22,120
============================================================================================================================
NET INVESTMENT INCOME
26,478
============================================================================================================================
REALIZED AND Net realized gain (loss) on:
UNREALIZED GAIN (LOSS) Investments
1,209
Foreign currency transactions
(13,275)
------------
Net realized loss
(12,066)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments
263,999
Translation of assets and liabilities
denominated in foreign currencies (18,171)
------------
Net change
245,828
------------
Net realized and unrealized gain
233,762
============================================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$ 260,240
============
</TABLE>
See accompanying Notes to Financial
Statements.
9 Oppenheimer International Growth Fund
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD ENDED
MAY 31, 1996(1)
(UNAUDITED)
<S> <C>
<C>
============================================================================================================================
OPERATIONS Net investment income
$ 26,478
- ----------------------------------------------------------------------------------------------------
Net realized loss
(12,066)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation 245,828
------------
Net increase in net assets resulting from
operations 260,240
============================================================================================================================
BENEFICIAL INTEREST Net increase in net assets resulting from
TRANSACTIONS beneficial interest transactions - Note
2:
Class A
6,782,716
Class B
2,375,429
Class C
591,506
============================================================================================================================
NET ASSETS Total increase
10,009,891
- ----------------------------------------------------------------------------------------------------
Beginning of period
--
------------
End of period (including undistributed
net investment
income of $26,478)
$10,009,891
============
</TABLE>
1. For the period from March 25, 1996
(commencement of
operations) to May 31, 1996.
See accompanying Notes to Financial
Statements.
10 Oppenheimer International Growth Fund
<PAGE>
================================================================================
FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
CLASS A
CLASS B CLASS C
---------------
--------------- ---------------
PERIOD ENDED
PERIOD ENDED PERIOD ENDED
MAY 31, 1996(1)
MAY 31, 1996(1) MAY 31, 1996(1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
<C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $10.00
$10.00 $10.00
- ------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .03
.02 .01
Net realized and unrealized gain .42
.40 .41
- ------------------------------------------------------------------------------------------------------------------
Total income from investment operations .45
.42 .42
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.45
$10.42 $10.42
=====================================================================
==================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(2) 4.50%
4.20% 4.20%
==================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $6,986
$2,421 $603
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,819
$1,181 $292
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets(3):
Net investment income 2.47%
1.77% 1.57%
Expenses 1.73%
2.56% 2.57%
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 6.5%
6.5% 6.5%
Average brokerage commission rate(5) $0.0154
$0.0154 $0.0154
</TABLE>
1. For the period from March 25, 1996 (commencement of
operations) to
May 31, 1996.
2. Assumes a hypothetical initial investment on the business day
before the
first day of the fiscal period, with all dividends and
distributions reinvested
in additional shares on the reinvestment date, and redemption at
the net asset
value calculated on the last business day of the fiscal period.
Sales charges
are not reflected in the total returns. Total returns are not
annualized for
periods of less than one full year.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a
period,
divided by the monthly average of the market value of portfolio
securities owned
during the period. Securities with a maturity or expiration date
at the time of
acquisition of one year or less are excluded from the
calculation. Purchases and
sales of investment securities (excluding short-term securities)
for the period
ended May 31, 1996 were $9,577,541 and $290,264, respectively.
5. Total brokerage commissions paid on applicable purchases and
sales of
portfolio securities for the period divided by the total number
of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
11 Oppenheimer International Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer International Growth Fund (the Fund) is
registered under the
Investment Company Act of 1940, as amended, as a
diversified, open-end
management investment company. The Fund's investment
objective is capital
appreciation. The Fund's investment advisor is
OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C
shares. Class A
shares are sold with a front-end sales charge. Class B and
Class C shares
may be subject to a contingent deferred sales charge. All
three classes of
shares have identical rights to earnings, assets and voting
privileges,
except that each class has its own distribution and/or
service plan,
expenses directly attributable to a particular class and
exclusive voting
rights with respect to matters affecting a single class.
Class B shares
will automatically convert to Class A shares six years after
the date of
purchase. The following is a summary of significant
accounting policies
consistently followed by the Fund.
INVESTMENT VALUATION. Portfolio securities are valued at the
close of the
New York Stock Exchange on each trading day. Listed and
unlisted securities
for which such information is regularly reported are valued
at the last
sale price of the day or, in the absence of sales, at values
based on the
closing bid or asked price or the last sale price on the
prior trading day.
Long-term and short-term "non-money market" debt securities
are valued by a
portfolio pricing service approved by the Board of Trustees.
Such
securities which cannot be valued by the approved portfolio
pricing service
are valued using dealer-supplied valuations provided the
Manager is
satisfied that the firm rendering the quotes is reliable and
that the
quotes reflect current market value, or are valued under
consistently
applied procedures established by the Board of Trustees to
determine fair
value in good faith. Short- term "money market type" debt
securities having
a remaining maturity of 60 days or less are valued at cost
(or last
determined market value) adjusted for amortization to
maturity of any
premium or discount. Forward foreign currency exchange
contracts are valued
based on the closing prices of the forward currency contract
rates in the
London foreign exchange markets on a daily basis as provided
by a reliable
bank or dealer.
FOREIGN CURRENCY TRANSLATION. The accounting records of the
Fund are
maintained in U.S. dollars. Prices of securities
denominated in foreign
currencies are translated into U.S. dollars at the closing
rates of
exchange. Amounts related to the purchase and sale of
securities and
investment income are translated at the rates of exchange
prevailing on the
respective dates of such transactions.
The effect of changes in foreign currency exchange rates on
investments is
separately identified from fluctuations arising from changes
in market
values of securities held and reported with all other
foreign currency
gains and losses in the Fund's Statement of Operations.
REPURCHASE AGREEMENTS. The Fund requires the custodian to
take possession,
to have legally segregated in the Federal Reserve Book Entry
System or to
have segregated within the custodian's vault, all securities
held as
collateral for repurchase agreements. The market value of
the underlying
securities is required to be at least 102% of the resale
price at the time
of purchase. If the seller of the agreement defaults and the
value of the
collateral declines, or if the seller enters an insolvency
proceeding,
realization of the value of the collateral by the Fund may
be delayed or
limited.
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES.
Income, expenses
(other than those attributable to a specific class) and
gains and losses
are allocated daily to each class of shares based upon the
relative
proportion of net assets represented by such class.
Operating expenses
directly attributable to a specific class are charged
against the
operations of that class.
FEDERAL TAXES. The Fund intends to continue to comply with
provisions of
the Internal Revenue Code applicable to regulated investment
companies and
to distribute all of its taxable income, including any net
realized gain on
investments not offset by loss carryovers, to shareholders.
Therefore, no
federal income or excise tax provision is required.
12 Oppenheimer International Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement
plan for the Fund's independent trustees. Benefits are based
on years of
service and fees paid to each trustee during the years of
service.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions
to shareholders
are recorded on the ex-dividend date.
ORGANIZATION COSTS. The Manager advanced $15,000 for
organization and
start-up costs of the fund. Such expenses are being
amortized over a
five-year period from the date operations commenced.
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income
(loss) and net realized gain (loss) may differ for financial
statement and
tax purposes primarily because of the recognition of certain
foreign
currency gains (losses) as ordinary income (loss) for tax
purposes. The
character of the distributions made during the year from net
investment
income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due
to timing of
dividend distributions, the fiscal year in which amounts are
distributed
may differ from the year that the income or realized gain
(loss) was
recorded by the Fund.
OTHER. Investment transactions are accounted for on the date
the
investments are purchased or sold (trade date) and dividend
income is
recorded on the ex-dividend date. Realized gains and losses
on investments
and unrealized appreciation and depreciation are determined
on an
identified cost basis, which is the same basis used for
federal income tax
purposes.
The preparation of financial statements in conformity with
generally
accepted accounting principles requires management to make
estimates and
assumptions that affect the reported amounts of assets and
liabilities and
disclosure of contingent assets and liabilities at the date
of the
financial statements and the reported amounts of income and
expenses during
the reporting period. Actual results could differ from those
estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value
shares of
beneficial interest. Transactions in shares of beneficial
interest were as
follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1996
(1)
SHARES
AMOUNT
- ----------------------------
Class A:
<S> <C>
<C>
Sold 678,486
$6,884,215
Redeemed (9,822)
(101,499)
--------
-----------
Net increase 668,664
$6,782,716
========
===========
Class B:
Sold 234,542
$2,397,781
Redeemed (2,154)
(22,352)
--------
-----------
Net increase 232,388
$2,375,429
========
===========
Class C:
Sold 57,853
$ 591,506
Redeemed --
--
--------
-----------
Net increase 57,853
$ 591,506
========
===========
</TABLE>
1. For the period from March 25, 1996 (commencement of
operations) to
May 31, 1996.
13 Oppenheimer International Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At May 31, 1996, net unrealized appreciation on investments
of $246,404 was
composed of gross appreciation of $431,337, and gross
depreciation of
$184,933.
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with
the investment
advisory agreement with the Fund which provides for a fee of
0.80% on the
first $250 million of average annual net assets, 0.77% on
the next $250
million, 0.75% of the next $500 million, 0.69% of the next
$1 billion, and
0.67% on net assets in excess of $2 billion. The Manager has
agreed to
reimburse the Fund if aggregate expenses (with specified
exceptions) exceed
the most stringent applicable regulatory limit on Fund
expenses.
For the six months ended May 31, 1996, commissions (sales
charges paid by
investors) on sales of Class A shares totaled $25,125, of
which $9,038 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a
subsidiary of the
Manager, as general distributor, and by an affiliated
broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the
Fund's Class B
and Class C shares totaled $23,380 and $2,763 of which
$1,195 was paid to
an affiliated broker/dealer for Class B shares .
OppenheimerFunds Services (OFS), a division of the Manager,
is the transfer
and shareholder servicing agent for the Fund, and for other
registered
investment companies. OFS's total costs of providing such
services are
allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI
for a portion of its costs incurred in connection with the
personal service
and maintenance of accounts that hold Class A shares.
Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the
average annual
net assets of Class A shares of the Fund. OFDI uses the
service fee to
reimburse brokers, dealers, banks and other financial
institutions
quarterly for providing personal service and maintenance of
accounts of
their customers that hold Class A shares.
The Fund has adopted compensation type Distribution and
Service Plans for
Class B and Class C shares to compensate OFDI for its
services and costs in
distributing Class B and Class C shares and servicing
accounts. Under the
Plans, the Fund pays OFDI an annual asset-based sales charge
of 0.75% per
year on Class B shares that are outstanding for 6 years or
less and on
Class C shares, as compensation for sales commissions paid
from its own
resources at the time of sale and associated financing
costs. If the Plans
are terminated by the Fund, the Board of Trustees may allow
the Fund to
continue payments of the asset-based sales charge to OFDI
for certain
expenses it incurred before the Plans were terminated. OFDI
also receives a
service fee of 0.25% per year as compensation for costs
incurred in
connection with the personal service and maintenance of
accounts that hold
shares of the Fund, including amounts paid to brokers,
dealers, banks and
other financial institutions. Both fees are computed on the
average annual
net assets of Class B and Class C shares, determined as of
the close of
each regular business day. During the six months ended May
31, 1996, OFDI
retained $2,100 and $519, respectively, as compensation for
Class B and
Class C sales commissions and service fee advances, as well
as financing
costs.
14 Oppenheimer International Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward
contract) is a
commitment to purchase or sell a foreign currency at a
future date, at a
negotiated rate.
The Fund uses forward contracts to seek to manage foreign
currency risks.
They may also be used to tactically shift portfolio currency
risk. The Fund
generally enters into forward contracts as a hedge upon the
purchase or
sale of a security denominated in a foreign currency. In
addition, the Fund
may enter into such contracts as a hedge against changes in
foreign
currency exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of
the forward
currency contract rates in the London foreign exchange
markets on a daily
basis as provided by a reliable bank or dealer. The Fund
will realize a
gain or loss upon the closing or settlement of the forward
transaction.
Securities held in segregated accounts to cover net exposure
on outstanding
forward contracts are noted in the Statement of Investments
where
applicable. Gains and losses on outstanding contracts
(unrealized
appreciation or depreciation on forward contracts) are
reported in the
Statement of Assets and Liabilities. Realized gains and
losses are reported
with all other foreign currency gains and losses in the
Fund's Statement of
Operations.
Risks include the potential inability of the counterparty to
meet the terms
of the contract and unanticipated movements in the value of
a foreign
currency relative to the U.S. dollar.
At May 31, 1996, outstanding forward contracts to purchase
foreign
currencies were as follows:
<TABLE>
<CAPTION>
CONTRACT
EXPIRATION AMOUNT
VALUATION AS OF UNREALIZED UNREALIZED
CONTRACTS TO PURCHASE DATE (000S)
MAY 31, 1996 APPRECIATION DEPRECIATION
--------------------- ------------- -----------
--------------- ------------ ------------
<S> <C> <C>
<C> <C> <C>
Canadian Dollar (CAD) 6/3/96-6/4/96 8,858 CAD
$ 6,461 $ -- $ 8
British Pound Sterling (GBP) 6/3/96-6/6/96 54,770 GBP
84,939 902 --
Netherlands Guilder (NLG) 6/4/96 34,939 NLG
20,411 3 --
Philippines Peso (PHP) 6/3/96-6/4/96 827,331 PHP
31,591 -- 109
Thailand Baht (THB) 6/5/96 787,800 THB
31,106 -- 8
--------- ----- -----
$174,507 $905 $125
========= ===== =====
</TABLE>
<PAGE>
Independent Auditors' Report
--------------------------------
The Board of Trustees and Shareholder
Oppenheimer International Growth Fund:
We have audited the accompanying statement of assets and
liabilities of Oppenheimer International Growth Fund as of February
23, 1996. This financial statement is the responsibility of the
Fund's management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statement. Our procedures
include confirmation of cash in bank by correspondence with the
custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to
above presents fairly, in all material respects, the financial
position of Oppenheimer International Growth Fund at February 23,
1996 in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Denver, Colorado
February 27, 1996
<PAGE>
Oppenheimer International Growth Fund
Statement of Assets and Liabilities
February 23, 1996
<TABLE>
<CAPTION>
Assets: Composite Class A Class B Class C
--------- -------- ------- -------
<S> <C> <C> <C> <C>
Cash $102,000
Deferred Organization Costs-Note 3 15,000
---------
Total Assets 117,000
LIABILITIES - Payable to ---------
OppenheimerFunds, Inc.-Note 3 $ 15,000
---------
Net Assets $102,000
=========
NET ASSETS - Applicable to 10,000
Class A shares, 100 Class B shares,
and 100 Class C shares of beneficial
interest outstanding $102,000 $100,00 $1,000 $1,000
NET ASSET VALUE PER SHARE (net assets
divided by 10,000, 100, and 100 shares
of beneficial interest for Class A,
Class B, and Class C, respectively) $10.00 $10.00 $10.00
MAXIMUM OFFERING PRICE PER SHARE (net
asset value plus sales charge of
5.75% of offering price for
Class A shares) $10.81 $10.00 $10.00
</TABLE>
Notes:
1. Oppenheimer International Growth (the "Fund"), a diversified,
open-end management investment company, was formed on December
13, 1995, and has had no operations through March 15, 1996 other
than those relating to organizational matters and the sale and
issuance of 10,000 Class A shares, 100 Class B and 100 Class C
shares of beneficial interest to OppenheimerFunds, Inc. (OFI).
2. On February 22, 1996, the Fund's Board approved an Investment
Advisory Agreement for Class A shares and Service and
Distribution Plans and Agreements for Class B and Class C shares
of the Fund with OppenheimerFunds Distributor, Inc. (OFDI) and
a General Distributor's Agreement with OFDI as explained in the
Fund's Prospectus and Statement of Additional Information.
3. OFI will advance all organizational and start-up costs of the
Fund. Such expenses will be capitalized and amortized over a
five-year period from the date operations commence. On the
first day that total assets exceed $5 million, the Fund will
reimburse OFI for all start-up expenses. In the event that all
or part of OFI's initial investment in shares of the Fund is
withdrawn during the amortization period, by any holder thereof,
the redemption proceeds will be reduced by the ratio that the
number of shares redeemed bears to the number of initial shares
outstanding at the time of such redemption.
4. The Fund intends to comply in its initial fiscal year and
thereafter with provisions of the Internal Revenue Code
applicable to regulated investment companies and as such, will
not be subject to federal income taxes on otherwise taxable
income (including net realized capital gains) distributed to
shareholders.
<PAGE>
Appendix A
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
APPENDIX B: DESCRIPTION OF RATINGS
Categories of Rating Services
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds which are rated "Aaa" are judged to be the best
quality and to carry the smallest degree of investment risk.
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various
protective elements are likely to change, the changes that can be
expected are most unlikely to impair the fundamentally strong
position of such issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality
by all standards. Together with the "Aaa" group, they comprise what
are generally known as "high-grade" bonds. They are rated lower
than the best bonds because margins of protection may not be as
large as with "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than
those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment sometime in the future.
The investments in which the Fund will principally invest will
be in the lower-rated categories described below.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and have
speculative characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often
the protection of interest and principal payments may be very
moderate and not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may
be in default or there may be present elements of danger with
respect to principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated "C" are the lowest rated class of
bonds and can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Description of Standard & Poor's Corporation Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation
and indicates an extremely strong capacity to pay principal and
interest.
AA: Bonds rated "AA" also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very
strong, and in the majority of instances they differ from "AAA"
issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions.
The investments in which the Fund will principally invest will
be in the lower-rated categories, described below.
BBB: Bonds rated "BBB" are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally
exhibit protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category
than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are
regarded, on balance, as predominantly speculative with respect to
the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree. While
such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
C: Bonds on which no interest is being paid are rated "C".
D: Bonds rated "D" are in payment default and payment of
interest and/or repayment of principal is in arrears.
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
