Registration No. 333-05579
File No. 811-07657
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 5 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 6 / /
Oppenheimer Developing Markets Fund
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
(Address of Principal Executive Offices)
212-323-0200
(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ x / On December 20, 1999, pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/ / On (date) pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
<PAGE>
Oppenheimer Developing Markets Fund
Prospectus dated December 20, 1999
Oppenheimer Developing Markets Fund is a mutual fund that aggressively seeks
long-term capital appreciation to make your investment grow. It invests mainly
in common stocks of issuers in emerging and developing markets throughout the
world.
This Prospectus contains important information about the Fund's objective, its
investment policies, strategies and risks. It also contains important
information about how to buy and sell shares of the Fund and other account
features. Please read this Prospectus carefully before you invest and keep it
for future reference about your account.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the Fund's securities nor has it determined that this
Prospectus is accurate or complete. It is a criminal offense to represent
otherwise.
(OppenheimerFunds logo)
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Contents
ABOUT THE FUND
The Fund's Investment Objective and Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
Fees and Expenses of the Fund
About the Fund's Investments
How the Fund is Managed
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Web Site
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Financial Highlights
<PAGE>
About the Fund
The Fund's Investment Objective and Strategies
WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund aggressively seeks capital
appreciation.
WHAT DOES THE FUND INVEST IN? The Fund invests mainly in common stocks of
issuers in emerging and developing markets throughout the world. o The Fund will
invest at least 65% of its total assets in at least three developing markets in
equity securities of issuers whose principal activities are in developing
markets. o The Fund can (but is not required to) invest up to 100% of its total
assets in foreign securities. o The Fund will emphasize investments in common
stocks and other equity securities. o The Fund will emphasize investments in
growth companies, which can be in any market capitalization range.
What Are "Developing Markets?"
In general, developing markets are countries outside the U.S. and most of
Western Europe, Canada, Japan, Australia and New Zealand that have economies,
industries and stock markets that the Manager believes are growing and gaining
more stability and offer attractiv4e long-term investment prospects.
HOW DOES THE PORTFOLIO MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for the Fund, the Fund's portfolio manager looks primarily
for foreign companies in developing markets with high growth potential. He uses
fundamental analysis of a company's financial statements, management structure,
operations and product development, and considers the special factors and risks
of the country in which the issuer operates. In seeking broad diversification of
the Fund's portfolio, the portfolio manager currently searches for:
o Companies of different capitalization ranges with strong market positions and
the ability to take advantage of barriers to competition in their industry, such
as high start-up costs
o Companies with management that has a proven record
o Companies with newer or established businesses that are entering into a growth
cycle o Companies with the potential to withstand high market volatility
o Companies with strong earnings growth whose stock is selling at a reasonable
price.
In applying these and other selection criteria, the portfolio manager
considers the effect of worldwide trends on the growth of various business
sectors, and looks for companies that may benefit from four main global trends:
development of new technologies, corporate restructuring, the growth of mass
affluence and demographic changes. This strategy may change over time.
WHO IS THE FUND DESIGNED FOR? The Fund is designed primarily for aggressive
investors seeking capital growth over the long term. Those investors should be
willing to assume the substantial risks of short-term share price fluctuations
and losses that are typical for an aggressive growth fund focusing on stock
investments in developing and emerging markets. The Fund does not seek current
income and the income from its investments will likely be small, so it is not
designed for investors needing income. Because of its focus on long-term growth,
the Fund may be appropriate for some portion of a retirement plan investment for
investors with a high-risk tolerance, but should not represent an investor's
complete investment program.
Main Risks of Investing in the Fund
All investments have risks to some degree. The Fund's investments are
subject to changes in their value from a number of factors, described below.
There is also the risk that poor security selection by the Fund's investment
Manager, OppenheimerFunds, Inc., will cause the Fund to undeperform other funds
having similar objectives.
These risks collectively form the risk profile of the Fund and can
affect the value of the Fund's investments, its investment performance and its
price per share. These risks mean that you can lose money by investing in the
Fund. When you redeem your shares, they may be worth more or less than what you
paid for them. There is no assurance that the Fund will achieve its investment
objective.
RISKS OF INVESTING IN STOCKS. Because the Fund invests primarily in stocks of
foreign growth companies, the value of the Fund's portfolio will be affected by
changes in the foreign stock markets and the special economic and other factors
that might primarily affect the prices of markets in particular regions, such as
Asia, Latin America, and eastern Europe. Market risk will affect the Fund's net
asset value per share, which will fluctuate as the values of the Fund's
portfolio securities change. The prices of individual stocks do not all move in
the same direction uniformly or at the same time. Different stock markets may
behave differently from each other.
Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer or
its industry.
SPECIAL RISKS OF GROWTH STOCKS. Stocks of growth companies may provide greater
opportunities for capital appreciation but may be more volatile than other
stocks. That volatility is likely to be even greater for growth companies in
emerging markets.
The Fund can buy stocks of companies in any capitalization range and
focuses its investments on securities of companies the Manager thinks have
growth possibilities. Newer small companies may offer greater opportunities for
capital appreciation, but they involve substantially greater risks of loss and
price fluctuations. Their stocks may be less liquid than those of larger
issuers. That means the Fund could have greater difficulty selling a security of
a smaller issuer at an acceptable price, especially in periods of market
volatility. That factor increases the potential for losses to the Fund. Also, it
may take a substantial period of time before the Fund realizes a gain on an
investment in a small-cap company, if it realizes any gain at all.
RISKS OF FOREIGN INVESTING. While foreign securities offer special investment
opportunities, there are also special risks. The change in value of a foreign
currency against the U.S. dollar will result in a change in the U.S. dollar
value of securities denominated in that foreign currency. Foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. Securities issued by a foreign government may not be
supported by the "full faith and credit" of the government. The value of foreign
investments may be affected by exchange control regulations, expropriation or
nationalization of a company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy in the U.S. or
abroad, or other political and economic factors.
Special Risks of Emerging and Developing Markets. Securities in emerging and
developing market countries may offer special investment opportunities but
investments in these countries present risks not found in more mature markets.
Securities may be more difficult to sell at an acceptable price and their prices
may be more volatile than securities of companies in more developed markets.
Settlements of trades may be subject to greater delays so that the Fund may not
receive the proceeds of a sale of a security on a timely basis.
Emerging markets may have less developed trading markets and exchanges.
Emerging countries may have less developed legal and accounting systems and
investments may be subject to greater risks of government restrictions on
withdrawing the sales proceeds of securities from the country. Economies of
developing countries may be more dependent on relatively few industries that may
be highly vulnerable to local and global changes. Governments may be more
unstable and present greater risks of nationalization or restrictions on foreign
ownership of stocks of local companies. These investments may be substantially
more volatile than stocks of issuers in the U.S. and other developed countries
and may be very speculative.
HOW RISKY IS THE FUND OVERALL? The Fund is an aggressive investment vehicle, and
in the short term, its share prices can be expected to be volatile. The Fund
generally does not use income-oriented investments to help cushion the Fund's
total return from changes in stock prices. The Fund is designed for investors
willing to assume greater risks in the hope of achieving long-term capital
appreciation. It is likely to be subject to greater fluctuations in its share
prices than funds that emphasize large capitalization domestic stocks, or funds
that do not invest in foreign securities or emerging market securities, or funds
that focus on both stocks and bonds.
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
The Fund's Past Performance
The bar chart and table below show one measure of the risks of
investing in the Fund, by showing changes in the Fund's performance (for its
Class A shares) for the full calendar years since the Fund's inception and by
showing how the average annual total returns of the Fund's shares compare to
those of a broad-based market index. The Fund's past performance is not
necessarily an indication of how the Fund will perform in the future.
Annual Total Returns (Class A) (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing annual total returns]
For the period from 1/1/99 through 9/30/99, the cumulative return (not
annualized) for Class A shares was 30.92%. Sales charges are not included in the
calculations of return in this bar chart, and if those charges were included,
the returns would be less than those shown. During the period shown in the bar
chart, the highest return (not annualized) for a calendar quarter was 14.88%
(1stQ'97) and the lowest return (not annualized) for a calendar quarter was
- -23.18% (3rd Q'98).
Average Annual Total Returns for the periods
ending December 31, 1998 Past 1 Year Life of Class
Class A Shares -24.00% -5.85%
Morgan Stanley Capital Int'l Emerging Free -27.52% -19.93%
Mkts. Index
Class B Shares -23.92% -5.26%
Class C Shares -20.77% -3.94%
Inception dates of all classes: 11/18/96. The index performance is shown from
11/30/96. The Fund's average annual total returns include the applicable sales
charge: for Class A, the current maximum initial sales charge of 5.75%; for
Class B, the contingent deferred sales charges of 5% (1-year) and 3% (life of
class); and for Class C, the 1% contingent deferred sales charge for the 1-year
period.
The returns measure the performance of a hypothetical account and assume that
all dividends and capital gains distributions have been reinvested in additional
shares. The Fund's performance is compared to the Morgan Stanley Capital
International Emerging Markets Free Index, an unmanaged index of equity
securities of issuers in 25 developing markets. The index performance reflects
the reinvestment of income but does not consider the effects of transaction
costs.
Fees and Expenses of the Fund
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services. Those
expenses are subtracted from the Fund's assets to calculate the Fund's net asset
values 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 meant to help you understand the
fees and expenses you may pay if you buy and hold shares of the Fund. The
numbers below are based on the Fund's expenses during its fiscal year ended
August 31, 1999.
Shareholder Fees (charges paid directly from your investment):
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge (Load) on
purchases 5.75% None None
(as % of offering price)
Maximum Deferred Sales Charge
(Load) (as % of the lower of the
original offering price or None 1 5% 2 1% 3
redemption proceeds)
1. A contingent deferred sales charge may apply to redemptions of investments of
$1 million or more ($500,000 for retirement plan accounts) of Class A shares.
See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent deferred
sales charge declines to 1% in the sixth year and is eliminated after that. 3.
Applies to shares redeemed within 12 months of purchase.
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
Class A Shares Class B Shares Class C Shares
Management Fees 1.00% 1.00% 1.00%
Distribution and/or
Service Fees (12b-1) 0.25% 1.00% 1.00%
Other Expenses 1.11% 1.10% 1.08%
Total Annual
Operating Expenses 2.36% 3.10% 3.08%
Expenses may vary in future years. "Other expenses" include transfer agent fees,
custodial expenses, and accounting and legal expenses the Fund pays.
EXAMPLES. The following examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in a class of shares of the Fund for the
time periods indicated and reinvest your dividends and distributions.
The first example assumes that you redeem all of your shares at the end
of those periods. The second example assumes that you keep your shares. Both
examples also assume that your investment has a 5% return each year and that the
class's operating expenses remain the same. Your actual costs may be higher or
lower because expenses will vary over time. Based on these assumptions your
expenses would be as follows:
If shares are redeemed: 1 Year 3 Years 5 Years 10 Years 1
Class A Shares $800 $1,269 $1,763 $3,116
Class B Shares $813 $1,257 $1,825 $3,083
Class C Shares $411 $951 $1,616 $3,392
If shares are
not redeemed: 1 Year 3 Years 5 Years 10 Years 1
Class A Shares $800 $1,269 $1,763 $3,116
Class B Shares $313 $957 $1,625 $3,083
Class C Shares $311 $951 $1,616 $3,392
In the first example, expenses include the initial sales charge for Class A and
the applicable Class B or Class C contingent deferred sales charges. In the
second example, the Class A expenses include the sales charge, but Class B and
Class C expenses do not include the contingent deferred sales charges. 1. Class
B expenses for years 7 through 10 are based on Class A expenses, since Class B
shares automatically convert to Class A after 6 years.
About the Fund's Investments
THE FUND'S PRINCIPAL INVESTMENT POLICIES. The allocation of the Fund's portfolio
among different investments will vary over time based upon the Manager's
evaluation of economic and market trends. The Fund's portfolio might not always
include all of the different types of investments described below. The Statement
of Additional Information contains more detailed information about the Fund's
investment policies and risks.
The Manager tries to reduce risks by carefully researching securities
before they are purchased. The Fund attempts to reduce its exposure to market
risks by diversifying its investments, that is, by not holding a substantial
amount of stock of any one company and by not investing too great a percentage
of the Fund's assets in any one company. Also, the Fund does not concentrate 25%
or more of its assets its investments in any one industry. However, changes in
the overall market prices of securities can occur at any time. The share price
of the Fund will change daily based on changes in market prices of securities
and market conditions, and in response to other economic events.
To determine if an issuer's principal activities are in a developing
market, the Manager considers a number of factors, such as where the issuer is
organized, the principal trading market for its securities, the sources of its
revenues and the location of its assets.
Investments in Stocks of Growth Companies. The Manager looks for stocks of
companies that have growth potential. Growth companies may be companies that are
developing new products or services, that have relatively favorable prospects,
or that are expanding into new and growing markets. Growth companies include
established companies that are entering a growth cycle, they can also include
newer companies, whose securities pose greater risks of loss and can result in
greater volatility in the Fund's share prices.
Growth companies may be providing new products or services that can
enable them to capture a dominant or important market position. They may have a
special area of expertise or the capability to take advantage of changes in
demographic factors in a more profitable way than larger, more established
companies.
Newer growth companies tend to retain a large part of their earnings
for research, development or investment in capital assets. Therefore, they do
not tend to emphasize paying dividends, and may not pay any dividends for some
time. They are selected for the Fund's portfolio because the Manager believes
the price of the stock will increase over the long term.
o Cyclical Opportunities. The Fund may seek to take advantage of
changes in the business cycle by investing in companies that are
sensitive to those changes if the Manager believes they have
growth potential. For example, when the economy is expanding,
companies in the consumer durables and technology sectors might
benefit and present long-term growth opportunities. The Fund may
try to take tactical advantage of short-term market movements or
events affecting particular issuers or industries. If those events
do not occur, the value of the Fund's investment could decline.
o Industry and Regional Focus. At times, the Fund might increase the
relative emphasis of its investments in a particular industry or
group of industries or in a particular region of the world. Stocks
of issuers in a particular industry or region might be affected by
changes in economic conditions or by changes in government
regulations, availability of basic resources or supplies, or other
events that affect that industry or region more than others. If
the Fund has a greater emphasis on investments in a particular
industry or group of industries or region, its share values may
fluctuate in response to events affecting those industries or that
region.
Can the Fund's Investment Objective and Policies Change? The Fund's Board of
Trustees can change non-fundamental investment policies without shareholder
approval, although significant changes will be described in amendments to this
Prospectus. Fundamental policies cannot be changed without the approval of a
majority of the Fund's outstanding voting shares. The Fund's objective is a
fundamental policy. Other investment restrictions that are fundamental policies
are listed in the Statement of Additional Information. An investment policy is
not fundamental unless this Prospectus or the Statement of Additional
Information says that it is.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Fund can use the
investment techniques and strategies described below. The Fund might not always
use all of them. These techniques have risks, although some are designed to help
reduce overall investment or market risks.
Other Equity Securities. While the Fund mainly buys common stocks, it can also
buy preferred stocks and securities convertible into common stock and can hold
rights and warrants. The Manager considers some convertible securities to be
"equity equivalents" because of the conversion feature and in that case their
rating has less impact on the investment decision than in the case of other debt
securities.
Investing in Special Situations. At times the Fund can use aggressive investment
techniques, seeking to benefit from what the portfolio manager perceives to be
special situations. These include mergers, reorganizations or other unusual
events expected to affect a particular issuer. However, there is a risk that the
expected change or event might not occur, which could cause the price of the
security to fall.
Investing in Small, Unseasoned Companies. The Fund can invest in small,
unseasoned companies. These are companies that have been in operation less than
three years, including the operations of any predecessors. These securities
might have limited liquidity and their prices can be very volatile.
Domestic Securities. The Fund does not expect to hold significant amounts of
investments in U.S. issuers. However, it can hold common and preferred stocks of
U.S. companies as well as their debt securities.
Debt Securities. The Fund can invest up to 35% of its assets in debt securities.
They can be debt securities of foreign companies and governments, including
those in developing countries. However, the Fund does not invest for income and
does not expect to invest significant amounts in debt securities, unless they
are convertible securities considered to be "equity equivalents," or debt
securities purchased for temporary defensive or liquidity purposes.
Illiquid and Restricted Securities. Investments may be illiquid because they do
not have 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 15% of its net assets in illiquid or restricted securities. Certain
restricted securities that are eligible for resale to qualified institutional
purchasers are not subject to that limit. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether to sell any
holdings to maintain adequate liquidity.
Derivative Investments. The Fund can invest in a number of different kinds of
"derivative" investments. In general terms, a derivative investment is an
investment contract whose value depends on or is derived from the value of an
underlying asset, interest rate or index. In the broadest sense, options,
futures contracts, and other hedging instruments the Fund might use may be
considered "derivative" investments. The Fund can use derivatives to hedge
investment risks or to seek increased returns. The Fund currently does not use
derivatives to a significant degree and is not required to use them in seeking
its objective.
Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, the Fund can lose money on the investment. The
underlying security or investment on which a derivative is based, and the
derivative itself, might not perform the way the Manager expected it to. As a
result of these risks, the Fund could lose money on its investment or its hedge
might be unsuccessful. As a result, the Fund's share prices could fall. Certain
derivative investments held by the Fund may be illiquid.
Hedging. The Fund can buy and sell future contracts, put and call
options, and forward contracts. These are all referred to as "hedging
instruments." The Fund does not currently use hedging extensively nor for
speculative purposes. It has limits on its use of hedging. The Fund is not
required to use hedging instruments in seeking its goal. Some hedging strategies
could hedge the Fund's portfolio against price fluctuations. Other hedging
strategies would tend to increase the Fund's exposure to the securities market.
Forward contracts could be used to try to manage foreign currency risks on the
Fund's foreign investments.
There are also special risks in particular hedging strategies. Options
trading involves the payment of premiums and has special tax effects on the
Fund. If the Manager used a hedging instrument at the wrong time or judged
market conditions incorrectly, the strategy could reduce the Fund's return.
Temporary Defensive Investments. In times of adverse or unstable market or
economic conditions, the Fund can invest up to 100% of its assets in temporary
defensive investments. Generally they would be cash or cash equivalents (such as
commercial paper), money market instruments, high-quality debt securities
including U.S. government securities, or repurchase agreements. The Fund can
also hold these types of securities pending the investment of proceeds from the
sale of Fund shares or portfolio securities or to meet anticipated redemptions
of Fund shares. To the extent the Fund invests defensively in these securities,
it might not achieve its investment objective of capital appreciation.
How the Fund Is Managed
THE MANAGER. The Manager chooses the Fund's investments and handles its
day-to-day business. The Manager carries out its duties, subject to the policies
established by the Fund's Board of Trustees, under an investment advisory
agreement that states the Manager's responsibilities. The agreement sets the
fees the Fund pays 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 January 1960.
The Manager (including subsidiaries) managed more than $110 billion in assets as
of November 30, 1999, including other Oppenheimer funds with more than 5 million
shareholder accounts. The Manager is located at Two World Trade Center, 34th
Floor, New York, New York 10048-0203.
Portfolio Manager. The portfolio manager of the Fund is Rajeev Bhaman. Mr.
Bhaman has been principally responsible for the day-to-day management of the
Fund's portfolio since its inception in 1996. He is a Vice President of the Fund
and of the Manager. Prior to joining the Manager in 1996, Mr. Bhaman was Vice
President for Asian Equities of Barclays de Zoete Wedd Inc., a money management
firm.
Advisory Fees. Under the investment advisory agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines on additional assets as
the Fund grows: 1.00% of the first $250 million of average annual net assets of
the Fund, 0.95% of the next $250 million, 0.90% of the next $500 million; and
0.85% of average annual net assets over $1 billion. The Fund's management fee
for its last fiscal year ended August 31, 1999 was 1.00% of average annual net
assets for each class of shares.
YEAR 2000 ISSUES. Because many computer software systems in use today cannot
distinguish the year 2000 from the year 1900, the markets for securities in
which the Fund invests could be detrimentally affected by computer failures
beginning January 1, 2000. Failure of computer systems used for securities
trading could result in settlement and liquidity problems for the Fund and other
investors. That failure could have a negative impact on handling securities
trades, pricing and accounting services. Data processing errors by government
issuers of securities could result in economic uncertainties, and issuers may
incur substantial costs in attempting to prevent or fix such errors, all of
which could have a negative effect on the Fund's investments and returns.
The Manager, the Distributor and the Transfer Agent have been working
on necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted in time for that event, although there
cannot be assurance of success. Additionally, the services they provide depend
on the interaction of their computer systems with those of brokers, information
services, the Fund's Custodian and other parties. Therefore, any failure of the
computer systems of those parties to deal with the year 2000 may also have a
negative effect on the services they provide to the Fund. The extent of that
risk cannot be ascertained at this time.
About Your Account
How to Buy Shares
HOW DO YOU BUY SHARES? You can buy shares several ways, as described below. The
Fund's Distributor, OppenheimerFunds Distributor, Inc., may appoint servicing
agents to accept purchase (and redemption) orders. The Distributor, in its sole
discretion, may reject any purchase order for the Fund's shares.
Buying Shares Through Your Dealer. You can buy shares through any dealer,
broker, or financial institution that has a sales agreement with the
Distributor. Your dealer will place your order with the Distributor on your
behalf.
Buying Shares Through the Distributor. Complete an OppenheimerFunds New Account
Application and return it with a check payable to "OppenheimerFunds Distributor,
Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you don't list a
dealer on the application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment with a financial
advisor before your make a purchase to be sure that the Fund is appropriate for
you.
o Paying by Federal Funds Wire. Shares purchased through the Distributor
may be paid for by Federal Funds wire. The minimum investment is
$2,500. Before sending a wire, call the Distributor's Wire Department
at 1.800.525.7048 to notify the Distributor of the wire, and to receive
further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
you pay for shares by electronic funds transfers from your bank
account. Shares are purchased for your account by a transfer of money
from your bank account through the Automated Clearing House (ACH)
System. You can provide those instructions automatically, under an
Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to
"AccountLink," below for more details.
o Buying Shares Through Asset Builder Plans. You may purchase shares of
the Fund (and up to four other Oppenheimer funds) automatically each
month from your account at a bank or other financial institution under
an Asset Builder Plan with AccountLink. Details are in the Asset
Builder Application and the Statement of Additional Information.
HOW MUCH MUST YOU INVEST? You can buy Fund shares with a minimum initial
investment of $1,000. You can make additional investments at any time with as
little as $25. There are reduced minimum investments under special investment
plans.
o With Asset Builder Plans, 403(b) plans, Automatic Exchange Plans
and military allotment plans, you can make initial and subsequent
investments for as little as $25. You can make additional purchases
of at least $25 by telephone through AccountLink.
o Under retirement plans, such as IRAs, pension and profit-sharing
plans and 401(k) plans, you can start your account with as little
as $250. If your IRA is started under an Asset Builder Plan, the
$25 minimum applies. Additional purchases may be as little as $25.
o The minimum investment requirement does not apply to reinvesting
dividends from the Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or reinvesting
distributions from unit investment trusts that have made
arrangements with the Distributor.
AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price, which is
the net asset value per share plus any initial sales charge that applies. The
offering price that applies to a purchase order is based on the next calculation
of the net asset value per share that is made after the Distributor receives the
purchase order at its offices in Denver, Colorado, or after any agent appointed
by the Distributor receives the order and sends it to the Distributor.
Net Asset Value. The Fund calculates the net asset value of each class of shares
as of the close of The New York Stock Exchange, on each day the Exchange is open
for trading (referred to in this Prospectus as a "regular business day"). The
Exchange normally closes at 4:00 P.M., New York time, but may close earlier on
some days. All references to time in this Prospectus mean "New York time".
The net asset value per share is determined by dividing the value of
the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. To determine net asset value, the Fund's Board of
Trustees has established procedures to value the Fund's securities, in general
based on market value. The Board has adopted special procedures for valuing
illiquid and restricted securities and obligations for which market values
cannot be readily obtained. Because foreign securities trade in market and
exchanges that operate on holidays and weekends, the values of the Fund's
foreign investments may change on days when investors cannot buy or redeem Fund
shares.
The Offering Price. To receive the offering price for a particular day, in most
cases the Distributor or its designated agent must receive your order by the
time of day The New York Stock Exchange closes that day. If your order is
received on a day when the Exchange is closed or after it has closed, the order
will receive the next offering price that is determined after your order is
received.
Buying Through a Dealer. If you buy shares through a dealer, your dealer must
receive the order by the close of The New York Stock Exchange and transmit it to
the Distributor so that it is received before the Distributor's close of
business on a regular business day (normally 5:00 P.M.) to receive that day's
offering price. Otherwise, the order will receive the next offering price that
is determined.
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors three
different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are
subject to different expenses and will likely have different share prices.
When you buy shares, be sure to specify the class of shares. If you do not
choose a class, your investment will be made in Class A shares.
Class A Shares. If you buy Class A shares, you pay an initial sales charge (on
investments up to $1 million for regular accounts or $500,000 for certain
retirement plans). The amount of that sales charge will vary depending on the
amount you invest. The sales charge rates are listed in "How Can You Buy Class A
Shares?" below.
Class B Shares. If you buy Class B shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge. If
you sell your shares within six years of buying them, you will normally pay
a contingent deferred sales charge. That contingent deferred sales charge
varies depending on how long you own your shares, as described in "How Can
You Buy Class B Shares?" below.
Class C Shares. If you buy Class C shares, you pay no sales charge at the time
of purchase, but you will pay an annual asset-based sales charge. If you sell
your shares within 12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%, as described in "How Can You Buy Class C Shares?"
below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is best
suited to your needs depends on a number of factors that you should discuss with
your financial advisor. Some factors to consider are how much you plan to invest
and how long you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you should
re-evaluate those factors to see if you should consider another class of shares.
The Fund's operating costs that apply to a class of shares and the effect of the
different types of sales charges on your investment will vary your investment
results over time.
The discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are different.
You should review these factors with your financial advisor. The discussion
below assumes that you will purchase only one class of shares, and not a
combination of shares of different classes.
How Long Do You Expect to Hold Your Investment? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold your
investment will assist you in selecting the appropriate class of shares. Because
of the effect of class-based expenses, your choice will also depend on how much
you plan to invest. For example, the reduced sales charges available for larger
purchases of Class A shares may, over time, offset the effect of paying an
initial sales charge on your investment, compared to the effect over time of
higher class-based expenses on shares of Class B or Class C .
o Investing for the Shorter Term. While the Fund is meant to be a
long-term investment, if you have a relatively short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares. That is because of
the effect of the Class B contingent deferred sales charge if you
redeem within six years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then as your investment horizon increases toward six years,
Class C shares might not be as advantageous as Class A shares. That
is because the annual asset-based sales charge on Class C shares
will have a greater impact on your account over the longer term
than the reduced front-end sales charge available for larger
purchases of Class A shares.
And for investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how
long you intend to hold your shares. For that reason, the
Distributor normally will not accept purchase orders of $500,000 or
more of Class B shares or $1 million or more of Class C shares from
a single investor.
o Investing for the Longer Term. If you are investing less than
$100,000 for the longer-term, for example for retirement, and do
not expect to need access to your money for seven years or more,
Class B shares may be appropriate.
Of course, these examples are based on approximations of the effect
of current sales charges and expenses projected over time, and do
not detail all of the considerations in selecting a class of
shares. You should analyze your options carefully with your
financial advisor before making that choice.
Are There Differences in Account Features That Matter to You? Some account
features may not be available to Class B or Class C shareholders. Other features
may not be advisable (because of the effect of the contingent deferred sales
charge) for Class B or Class C shareholders. Therefore, you should carefully
review how you plan to use your investment account before deciding which class
of shares to buy.
Additionally, the dividends payable to Class B and Class C shareholders
will be reduced by the additional expenses borne by those classes that are not
borne by Class A shares, such as the Class B and Class C asset-based sales
charge described below and in the Statement of Additional Information. Share
certificates are not available for Class B and Class C shares, and if you are
considering using your shares as collateral for a loan, that may be a factor to
consider.
How Does It Affect Payments to My Broker? A salesperson, such as a broker, may
receive different compensation for selling one class of shares than for selling
another class. It is important to remember that Class B and Class C contingent
deferred sales charges and asset-based sales charges have the same purpose as
the front-end sales charge on sales of Class A shares: to compensate the
Distributor for commissions and expenses it pays to dealers and financial
institutions for selling shares. The Distributor may pay additional compensation
from its own resources to securities dealers or financial institutions based
upon the value of shares of the Fund owned by the dealer or financial
institution for its own account or for its customers.
SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS. Appendix B to the Statement of
Additional Information details the conditions for the waiver of sales charges
that apply in certain cases, and the special sales charge rates that apply to
purchases of shares of the Fund by certain groups, or under specified retirement
plan arrangements or in other special types of transactions. To receive a waiver
or special sales charge rate, you must advise the Distributor when purchasing
shares or the Transfer Agent when redeeming shares that the special conditions
apply.
HOW CAN YOU BUY CLASS A SHARES? Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However, in some
cases, described below, purchases are not subject to an initial sales charge,
and the offering price will be the net asset value. In other cases, reduced
sales charges may be available, as described below or in the Statement of
Additional Information. Out of the amount you invest, the Fund receives the net
asset value to invest for your account.
The sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor or allocated to
your dealer as commission. The Distributor reserves the right to reallow the
entire commission to dealers. The current sales charge rates and commissions
paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Sales Front-End Sales
Charge As a Charge As a Commission As
Percentage of Percentage of Net Percentage of
Offering Price Amount Invested Offering Price
Amount of Purchase
<S> <C> <C> <C>
------------------------------------ ------------------------ ------------------------- -------------------------
------------------------------------ ------------------------ ------------------------- -------------------------
Less than $25,000 5.75% 6.10% 4.75%
------------------------------------ ------------------------ ------------------------- -------------------------
------------------------------------ ------------------------ ------------------------- -------------------------
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
------------------------------------ ------------------------ ------------------------- -------------------------
------------------------------------ ------------------------ ------------------------- -------------------------
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
------------------------------------ ------------------------ ------------------------- -------------------------
------------------------------------ ------------------------ ------------------------- -------------------------
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
------------------------------------ ------------------------ ------------------------- -------------------------
------------------------------------ ------------------------ ------------------------- -------------------------
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
------------------------------------ ------------------------ ------------------------- -------------------------
------------------------------------ ------------------------ ------------------------- -------------------------
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
------------------------------------ ------------------------ ------------------------- -------------------------
</TABLE>
Class A Contingent Deferred Sales Charge. There is no initial sales charge on
purchases of Class A shares of any one or more of the Oppenheimer funds
aggregating $1 million or more or for certain purchases by particular types of
retirement plans described in the Appendix to the Statement of Additional
Information. The Distributor pays dealers of record commissions in an amount
equal to 1.0% of purchases of $1 million or more other than by those retirement
accounts. For those retirement plan accounts, the commission is 1.0% of the
first $2.5 million, plus 0.5% of the next $2.5 million, plus 0.25% of purchases
over $5 million, based on the cumulative purchases during the prior 12 months
ending with the current purchase. In either case, the commission will be paid
only on purchases that were not previously subject to a front-end sales charge
and dealer commission.1 That commission will not be paid on purchases of shares
in amounts of $1 million or more (including any right of accumulation by a
retirement plan that pays for the purchase with the redemption of Class C shares
of one or more Oppenheimer funds held by the plan for more than one year.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called the
"Class A contingent deferred sales charge") may be deducted from the redemption
proceeds. That sales charge will be equal to 1.0% of the lesser of (1) the
aggregate net asset value of the redeemed shares at the time of redemption
(excluding shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original net asset value of the redeemed shares.
However, the Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your dealer on all
purchases of Class A shares of all Oppenheimer funds you made that were subject
to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable
when shares are redeemed, the Fund will first redeem shares that are not subject
to the sales charge, including shares purchased by reinvestment of dividends and
capital gains. Then the Fund will redeem other shares in the order in which you
purchased them.
The Class A contingent deferred sales charge is not charged on
exchanges of shares under the Fund's exchange privilege (described below).
However, if the shares acquired by exchange are redeemed within 18 calendar
months of the end of the calendar month in which the exchanged shares were
originally purchased, then the sales charge will apply.
Can You Reduce Class A Sales Charges? You may be eligible to buy Class A shares
at reduced sales charge rates under the Fund's "Right of Accumulation" or a
Letter of Intent, as described in "Reduced Sales Charges" in the Statement of
Additional Information.
HOW CAN YOU BUY CLASS B SHARES? Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are redeemed
within 6 years of their purchase, a contingent deferred sales charge will be
deducted from the redemption proceeds. The Class B contingent deferred sales
charge is paid to compensate the Distributor for its expenses of providing
distribution-related services to the Fund in connection with the sale of Class B
shares.
The contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the original
offering price (which is the original net asset value). The contingent deferred
sales charge is not imposed on: o the amount of your account value represented
by an increase in net asset value over the initial purchase price, o shares
purchased by the reinvestment of dividends or capital gains distributions, or o
shares redeemed in the special circumstances described in Appendix B to the
Statement of Additional Information.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
(1) shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 6 years, and (3) shares held
the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge on
Years Since Beginning of Month in Which Redemptions in That Year
Purchase Order was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. In applying the sales
charge, all purchases are considered to have been made on the first regular
business day of the month in which the purchase was made.
Automatic Conversion of Class B Shares. Class B shares automatically convert to
Class A shares 72 months after you purchase them. 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 any Class B shares you hold
convert, a prorated portion of your Class B shares that were acquired by the
reinvesting of dividends and distributions on the converted shares will also
convert to Class A shares. The conversion feature is subject to the continued
availability of a tax ruling described in the Statement of Additional
Information.
HOW CAN YOU BUY CLASS C SHARES? Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are redeemed
within 12 months of their purchase, a contingent deferred sales charge of 1.0%
will be deducted from the redemption proceeds. The Class C contingent deferred
sales charge is paid to compensate the Distributor for its expenses of providing
distribution-related services to the Fund in connection with the sale of Class C
shares.
The contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the original
net asset value. The contingent deferred sales charge is not imposed on:
o the amount of your account value represented by the increase in net asset
value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains
distributions, or
o shares redeemed in the special circumstances described in Appendix B to
the Statement of Additional Information.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
(1) shares acquired by reinvestment of dividends and capital gains
distributions,
(2) shares held for over 12 months, and
(3) shares held the longest during the 12-month period.
DISTRIBUTION AND SERVICE (12b-1) PLANS.
Service Plan for Class A Shares. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor currently uses all of those fees to
compensate dealers, brokers, banks and other financial institutions quarterly
for providing personal service and maintenance of accounts of their customers
that hold Class A shares.
Distribution and Service Plans for Class B and Class C Shares. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to pay the
Distributor for its services and costs in distributing Class B and Class C
shares and servicing accounts. Under the plans, the Fund pays the Distributor an
annual asset-based sales charge of 0.75% per year on Class B shares and on Class
C shares. The Distributor also receives a service fee of 0.25% per year under
each plan.
The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.00% of the net assets per year of the respective class.
Because these fees are paid out of the Fund's assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more
than other types of sales charges.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C shares.
The Distributor pays the 0.25% service fees to dealers in advance for the first
year after the shares are sold by the dealer. After the shares have been held
for a year, the Distributor pays the service fees to dealers on a quarterly
basis.
The Distributor currently pays sales commission of 3.75% of the
purchase price of Class B shares to dealers from its own resources at the time
of sale. Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sales of Class B shares is therefore
4.00% of the purchase price. The Distributor retains the Class B asset-based
sales charge.
The Distributor currently pays sales commissions of 0.75% of the
purchase price of Class C shares to dealers from its own resources at the time
of sale. Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is therefore
1.00% of the purchase price. The Distributor pays the asset-based sales charge
as an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
Special Investor Services
ACCOUNTLINK. You can use our AccountLink feature to link your Fund account
with an account at a U.S. bank or other financial institution. It must be
an Automated Clearing House (ACH) member. AccountLink lets you:
o transmit funds electronically to purchase shares by telephone (through a
service representative or by PhoneLink) or automatically under Asset
Builder Plans, or
o have the Transfer Agent send redemption proceeds or transmit dividends
and distributions directly to your bank account. Please call the Transfer
Agent for more information.
You may purchase shares by telephone only after your account has been
established. To purchase shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1.800.852.8457. The purchase payment
will be debited from your bank account.
AccountLink privileges should be requested on your Application or your
dealer's settlement instructions if you buy your shares through a dealer. After
your account is established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent. AccountLink privileges
will apply to each shareholder listed in the registration on your account as
well as to your dealer representative of record unless and until the Transfer
Agent receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank account
information must be made by signature-guaranteed instructions to the Transfer
Agent signed by all shareholders who own the account.
PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions automatically
using a touch-tone phone. PhoneLink may be used on already-established Fund
accounts after you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number, 1.800.533.3310.
o Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1.800.533.3310. You must have
established AccountLink privileges to link your bank account with
the Fund to pay for these purchases.
o Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone
from your Fund account to another OppenheimerFunds account you
have already established by calling the special PhoneLink number.
o Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the
proceeds directly to your AccountLink bank account. Please refer
to "How to Sell Shares," below for details.
CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for certain
types of account transactions to the Transfer Agent by fax (telecopier). Please
call 1.800.525.7048 for information about which transactions may be handled this
way. Transaction requests submitted by fax are subject to the same rules and
restrictions as written and telephone requests described in this Prospectus.
OPPENHEIMERFUNDS INTERNET WEB SITE. You can obtain information about the Fund,
as well as your account balance, on the OppenheimerFunds Internet web site, at
http://www.oppenheimerfunds.com. Additionally, shareholders listed in the
account registration (and the dealer of record) may request certain account
transactions through a special section of that web site. To perform account
transactions, you must first obtain a personal identification number (PIN) by
calling the Transfer Agent at 1.800.533.3310. If you do not want to have
Internet account transaction capability for your account, please call the
Transfer Agent at 1.800.525.7048.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that enable
you to sell shares automatically or exchange them to another OppenheimerFunds
account on a regular basis. Please call the Transfer Agent or consult the
Statement of Additional Information for details.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other Oppenheimer funds
without paying a sales charge. This privilege applies only to Class A shares
that you purchased subject to an initial sales charge and to Class A or Class B
shares on which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must be sure to ask
the Distributor for this privilege when you send your payment.
RETIREMENT PLANS. You may buy shares of the Fund for your retirement plan
account. If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that individuals
and employers can use:
o Individual Retirement Accounts (IRAs). These included regular IRAs, Roth
IRAs, SIMPLE IRAs, rollover IRAs and Education IRAs.
o SEP-IRAs. These are Simplified Employee Pensions Plan IRAs for small
business owners or self-employed individuals.
o 403(b)(7) Custodial Plans. These are tax deferred plans for employees of
eligible tax-exempt organizations, such as schools, hospitals and
charitable organizations.
o 401(k) Plans. These are special retirement plans for businesses.
o Pension and Profit-Sharing Plans. These plans are designed for businesses
and self-employed individuals.
Please call the Distributor for OppenheimerFunds retirement plan
documents, which include applications and important plan information.
How to Sell Shares
You can sell (redeem) some or all of your shares on any regular
business day. Your shares will be sold at the next net asset value calculated
after your order is received in proper form (which means that it must comply
with the procedures described below) and is accepted by the Transfer Agent. The
Fund lets you sell your shares by writing a letter or by telephone. You can also
set up Automatic Withdrawal Plans to redeem shares on a regular basis. If you
have questions about any of these procedures, and especially if you are
redeeming shares in a special situation, such as due to the death of the owner
or from a retirement plan account, please call the Transfer Agent first, at
1.800.525.7048, for assistance.
Certain Requests Require a Signature Guarantee. To protect you and the Fund from
fraud, the following redemption requests must be in writing and must include a
signature guarantee (although there may be other situations that also require a
signature guarantee):
o You wish to redeem more than $100,000 and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement o The redemption check is not sent to the address of
record on your account statement o Shares are being transferred to a
Fund account with a different owner or name o Shares are being redeemed
by someone (such as an Executor) other than the owners
Where Can You Have Your 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.
Retirement Plan Accounts. There are special procedures to sell shares in an
OppenheimerFunds retirement plan account. Call the Transfer Agent for a
distribution request form. Special income tax withholding requirements apply to
distributions from retirement plans. You must submit a withholding form with
your redemption request to avoid delay in getting your money and if you do not
want tax withheld. If your employer holds your retirement plan account for you
in the name of the plan, you must ask the plan trustee or administrator to
request the sale of the Fund shares in your plan account.
HOW DO YOU SELL SHARES BY MAIL? Write a letter of instructions that includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as the account is
registered, and
o Any special documents requested by the Transfer Agent to assure proper
authorization of the person asking to sell the shares.
Use the following address for requests
by mail: Send courier or express requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217-5270 Denver, Colorado 80231
HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption price
calculated on a particular business day, your call must be received by the
Transfer Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. You may not redeem shares
held in an OppenheimerFunds retirement plan account or under a share certificate
by telephone.
o To redeem shares through a service representative, call
1.800.852.8457 o To redeem shares automatically on PhoneLink, call
1.800.533.3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.
ARE THERE LIMITS ON AMOUNTS REDEEMED BY TELEPHONE?
Telephone Redemptions Paid by Check. Up to $100,000 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.
CAN YOU SELL SHARES THROUGH YOUR DEALER? The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. If your shares are held in the
name of your dealer, you must redeem them through your dealer.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer funds
at net asset value per share at the time of exchange, without sales charge.
Shares of the Fund can be purchased by exchange of shares of other Oppenheimer
funds on the same basis. To exchange shares, you must meet several conditions: o
Shares of the fund selected for exchange must be available for sale in your
state of residence.
o The prospectuses of both funds must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them. After the account is open 7
days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose shares
you purchase by exchange.
o Before exchanging into a fund you must obtain and read its prospectus.
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another fund. In
some cases, sales charges may be imposed on exchange transactions. For tax
purposes, exchanges of shares involve a sale of the shares of the fund you own
and a purchase of the shares of the other fund, which may result in a capital
gain or loss. Please refer to "How to Exchange Shares" in the Statement of
Additional Information for more details.*
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.
HOW DO YOU SUBMIT EXCHANGE REQUESTS? 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
address on the Back Cover. Exchanges of shares held under certificate cannot be
processed unless the Transfer Agent receives the certificates with the request.
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.
ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that conforms to the policies described above. It must be
received by the close of The New York Stock Exchange that day,
which is normally 4:00 P.M. but may be earlier on some days.
However, either fund may delay the purchase of shares of the fund
you are exchanging into up to seven days if it determines it would
be disadvantaged by a same-day exchange. For example, the receipt
of multiple exchange requests from a "market timer" might require
the Fund to sell securities at a disadvantageous time or price.
o Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that it believes will disadvantage it, or to refuse
multiple exchange requests submitted by a shareholder or dealer.
o The Fund may amend, suspend or terminate the exchange privilege at
any time. The Fund will provide you notice whenever it is required
to do so by applicable law, but it may impose these changes at any
time for emergency purposes.
o If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
More information about the Fund's policies and procedures for buying, selling,
and exchanging shares is contained 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 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. The Transfer Agent and the Fund will not be liable for
losses or expenses arising out of telephone instructions reasonably believed to
be genuine.
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 value of
the securities in the Fund's portfolio fluctuates. The redemption price, which
is the net asset value per share, will normally differ for each class of shares.
The redemption value of your shares may be more or less than their original
cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by check
or through AccountLink (as elected by the shareholder) within seven days after
the Transfer Agent receives redemption instructions in proper form. However,
under unusual circumstances determined by the Securities and Exchange
Commission, payment may be delayed or suspended. For accounts registered in the
name of a broker-dealer, payment will normally be forwarded within three
business days after redemption.
The Transfer Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the purchase payment
has cleared. That delay may be as much as 10 days from the date the shares were
purchased. That delay may be avoided if you purchase shares by Federal Funds
wire or certified check, or arrange with your bank to provide telephone or
written assurance to the Transfer Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the account
value has fallen below $200 for reasons other than the fact that the market
value of shares has dropped. In some cases involuntary redemptions may be made
to repay the Distributor for losses from the cancellation of share purchase
orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a lack of
liquidity in the Fund's portfolio to meet redemptions). This means that the
redemption proceeds will be paid with liquid securities from the Fund's
portfolio.
"Backup Withholding" of Federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges) if you
fail to furnish the Fund your correct, certified Social Security or Employer
Identification Number when you sign your application, or if you under-report
your income to the Internal Revenue Service.
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 intends to declare dividends separately for each class of
shares from net investment income annually and to pay dividends to shareholders
in December on a date selected by the Board of Trustees. Dividends and
distributions paid on Class A shares will generally be higher than dividends for
Class B and Class C shares, which normally have higher expenses than Class A.
The Fund has no fixed dividend rate and cannot guarantee that it will pay any
dividends or distributions.
CAPITAL GAINS. The Fund may realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term or
long-term capital gains in December of each year. The Fund may make supplemental
distributions of dividends and capital gains following the end of its fiscal
year. There can be no assurance that the Fund will pay any capital gains
distributions in a particular year.
WHAT ARE YOUR CHOICES FOR RECEIVING DISTRIBUTIONS? When you open your account,
specify on your application how you want to receive your dividends and
distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and capital gains distributions in additional shares of the Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some distribution
(dividends, short-term capital gains or long-term capital gains distributions)
in the Fund while receiving the other types of distributions by check or having
them sent to your bank account through AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all
dividends and capital gains distributions or have them sent to your bank through
AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can
reinvest all distributions in the same class of shares of another
OppenheimerFunds account you have established.
TAXES. If your shares are not held in a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the Fund.
Distributions are subject to federal income tax and may be subject to state or
local taxes. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Long-term capital gains are taxable as
long-term capital gains when distributed to shareholders. It does not matter how
long you have held your shares. Whether you reinvest your distributions in
additional shares or take them in cash, the tax treatment is the same.
If more than 50% of the Fund's assets are invested in foreign
securities at the end of any fiscal year, the Fund may elect under the Internal
Revenue Code to permit shareholders to take a credit or deduction on their
federal income tax returns for foreign taxes paid by the Fund.
Every year the Fund will send you and the IRS a statement showing the
amount of any taxable distribution you received in the previous year. Any
long-term capital gains will be separately identified in the tax information the
Fund sends you after the end of the calendar year.
Avoid "Buying a Dividend". If you buy shares on or just before the ex-dividend
date or just before the Fund declares a capital gain distribution, you will pay
the full price for the shares and then receive a portion of the price back as a
taxable dividend or capital gain.
Remember There May be Taxes on Transactions. Because the Fund's share prices
fluctuate, you may have a capital gain or loss when you sell or exchange your
shares. A capital gain or loss is the difference between the price you paid for
the shares and the price you received when you sold them. Any capital gain is
subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If that
occurs, it will be identified in notices to shareholders.
This information is only a summary of certain federal income tax
information about your investment. You should consult with your tax adviser
about the effect of an investment in the Fund on your particular tax situation.
Financial Highlights
The Financial Highlights Table is presented to help you understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by KPMG LLP, the Fund's independent auditors, whose
report, along with the Fund's financial statements, is included in the Statement
of Additional Information, which is available on request.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A YEAR ENDED AUGUST 31, 1999 1998 1997(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 7.76 $12.82 $ 10.00
- -----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .10 .11 .07
Net realized and unrealized gain (loss) 3.71 (4.62) 2.75
-------------------------------
Total income (loss) from investment
operations 3.81 (4.51) 2.82
- -----------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.10) (.09) --
Distributions from net realized gain (.07) (.46) --
-------------------------------
Total dividends and distributions
to shareholders (.17) (.55) --
- -----------------------------------------------------------------------------------------
Net asset value, end of period $11.40 $ 7.76 $12.82
-------------------------------
-------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 49.92% (36.33)% 28.20%
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $40,046 $23,663 $37,613
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $29,183 $35,864 $17,852
- -----------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 1.11% 0.87% 1.45%
Expenses 2.36% 2.18%(4) 1.94%(4)
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 78% 27%(1)
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 August 31, 1999, were $26,143,811 and $18,275,385, respectively.
22 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
<TABLE>
<CAPTION>
CLASS B YEAR ENDED AUGUST 31, 1999 1998 1997(1)
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 7.69 $12.73 $ 10.00
- --------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .01 .03
Net realized and unrealized gain (loss) 3.68 (4.57) 2.70
----------------------------
Total income (loss) from investment
operations 3.72 (4.56) 2.73
- --------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) (.02) --
Distributions from net realized gain (.07) (.46) --
----------------------------
Total dividends and distributions
to shareholders (.11) (.48) --
- --------------------------------------------------------------------------------------
Net asset value, end of period $11.30 $ 7.69 $12.73
----------------------------
----------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 48.81% (36.85)% 27.30%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 21,028 $12,788 $20,470
- --------------------------------------------------------------------------------------
Average net assets (in thousands) $ 16,430 $18,673 $7,802
- --------------------------------------------------------------------------------------
Ratios to average net assets(3)
Net investment income 0.37% 0.07% 0.87%
Expenses 3.10% 2.95%(4) 2.78%(4)
- --------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 78% 27%(1)
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 August 31, 1999, were $26,143,811 and $18,275,385, respectively.
23 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C Year Ended August 31, 1999 1998 1997(1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 7.68 $12.74 $ 10.00
- --------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .02 .04
Net realized and unrealized gain (loss) 3.69 (4.58) 2.70
--------------------------
Total income (loss) from investment operations 3.73 (4.56) 2.74
- --------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.03) (.04) --
Distributions from net realized gain (.07) (.46) --
--------------------------
Total dividends and distributions to shareholders (.10) (.50) --
- --------------------------------------------------------------------------------------
Net asset value, end of period $11.31 $ 7.68 $12.74
--------------------------
--------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 48.98% (36.88)% 27.40%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $5,064 $3,061 $3,713
- --------------------------------------------------------------------------------------
Average net assets (in thousands) $4,022 $4,206 $1,560
- --------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 0.41% 0.24% 0.98%
Expenses 3.08% 2.95%(4) 2.77%(4)
- --------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 78% 27%(1)
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 August 31, 1999, were $26,143,811 and $18,275,385, respectively.
24 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
FOR MORE INFORMATION ABOUT OPPENHEIMER DEVELOPING MARKETS FUND:
The following additional information about the Fund is available without charge
upon request:
STATEMENT OF ADDITIONAL INFORMATION
This document includes additional information about the Fund's investment
policies, risks, and operations. It is incorporated by reference into this
Prospectus (which means it is legally part of this Prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments and performance is available
in the Fund's Annual and Semi-Annual Reports to shareholders. The Annual Report
includes a discussion of market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, and other information about the Fund or your account:
By Telephone:
Call OppenheimerFunds Services toll-free:
1.800.525.7048
By Mail:
Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
On the Internet:
You can send a request by e-mail or read or down-load documents on the
OppenheimerFunds web site: http://www.oppenheimerfunds.com You can also obtain
copies of the Statement of Additional Information and other Fund documents and
reports by visiting the SEC's Public Reference Room in Washington, D.C. (Phone
1.202.942.8090) or the EDGAR database on the SEC's Internet web site at
http://www.sec.gov. Copies may be obtained after payment of a duplicating fee by
electronic request at the SEC's e-mail address: [email protected]. or writing
to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to make
any representations about the Fund other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any state
or other jurisdiction where it is unlawful to make such an offer.
The Fund's shares are distributed by:
OppenheimerFunds Distributor, Inc.
SEC File No. 811-07657
PR0785.001.1299 Printed on recycled paper.
Appendix to Prospectus of
Oppenheimer Developing Markets Fund
Graphic material included in the Prospectus of Oppenheimer Developing
Markets Fund (the "Fund") under the heading: "Annual Total Return (Class A) (%
as of 12/31 each year)":
A bar chart will be included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares of the
Fund for each of the ten most recent calendar years, without deducting sales
charges. Set forth below is the relevant data point that will appear on the bar
chart:
Year Ended Annual Total Return
12/31/97 14.09%
12/31/98 -19.36%
<PAGE>
Oppenheimer Developing Markets Fund
Two World Trade Center, New York, New York 10048-0203
1.800.525.7048
Statement of Additional Information dated December 20, 1999
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated December 20, 1999. It should be read
together with the Prospectus. You can obtain the Prospectus by writing to the
Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver,
Colorado 80217, or by calling the Transfer Agent at the toll-free number shown
above, or by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.
Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks.... 2
The Fund's Investment Policies................................... .. 2
Other Investment Techniques and Strategies.......................... 8
Investment Restrictions............................................. 25
How the Fund is Managed ................................................. 27
Organization and History............................................ 27
Trustees and Officers............................................... 28
The Manager......................................................... 34
Brokerage Policies of the Fund........................................... 35
Distribution and Service Plans........................................... 37
Performance of the Fund.................................................. 41
About Your Account
How To Buy Shares........................................................ 45
How To Sell Shares...................................................... 54
How To Exchange Shares................................................... 59
Dividends, Capital Gains and Taxes....................................... 61
Additional Information About the Fund.................................... 63
Financial Information About the Fund
Independent Auditors' Report............................................. 64
Financial Statements..................................................... 65
Appendix A: Industry Classifications..................................... A-1
Appendix B: Special Sales Charge Arrangements and Waivers................ B-1
<PAGE>
A B O U T T H E F U N D
Additional Information About the Fund's Investment Policies and Risks
The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those policies
and risks and the types of securities that the Fund's investment Manager,
OppenheimerFunds, Inc., can select for the Fund. Additional information is also
provided about the strategies that the Fund may use to try to achieve its
objective.
The Fund's Investment Policies. The composition of the Fund's portfolio and the
techniques and strategies that the Fund's Manager may use in selecting portfolio
securities will vary over time. The Fund is not required to use all of the
investment techniques and strategies described below at all times in seeking its
goal. It may use some of the special investment techniques and strategies at
some times or not at all.
In selecting securities for the Fund's portfolio, the Manager evaluates
the merits of securities primarily through the exercise of its own investment
analysis. That analysis includes a number of factors, some of which are
discussed in the Prospectus. Additionally, the Manager may evaluate
o the strength of an issuer's management and the history of its operations,
o the soundness of its financial and accounting policies and its financial
condition,
o the issuer's pending product developments and developments by
competitors,
o the effect of general market conditions on the issuer's business and the
prospects for the industry of which the issuer is a part, and
o legislative proposals that might affect the issuer.
In addition, the Manager ordinarily looks for one of the following
characteristics: an above-average earnings growth per share; high return on
invested capital; effective research and product development; pricing
flexibility; and general operating characteristics that might enable the issuer
to compete successfully in its intended markets.
The Fund intends to spread its investments among at least three
developing markets under normal market conditions. In determining an appropriate
distribution of investments among the various countries and geographic regions
in which the Fund may invest, the Manager generally considers the following
factors:
o prospects for relative economic growth, the balance of payments,
o anticipated levels of inflation,
o governmental policies influencing business conditions,
o the outlook for currency relationships and
o the range of individual investment opportunities available to
international investors among the various counties and geographic regions.
The percentage of the Fund's assets invested in particular developing markets
will vary from time to time based on the Manager's assessment of these factors,
the appreciation possibilities of particular issuers 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. The fact that a security has a low yield or does not
pay current income will not be an adverse factor in considering it for the
Fund's portfolio unless the Manager believes that the lack of yield might
adversely affect appreciation possibilities.
|X| Growth Companies. Growth companies are those companies that the
Manager believes are entering into a growth cycle in their business, with the
expectation that their stock will increase in value. They may be established
companies as well as newer companies in the development stage.
Growth companies may have a variety of characteristics that in the
Manager's view define them as "growth" issuers. They may be generating or
applying new technologies, new or improved distribution techniques or new
services. They may own or develop natural resources. They may be companies that
can benefit from changing consumer demands or lifestyles, or companies that have
projected earnings in excess of the average for their sector or industry. In
each case, they have prospects that the Manager believes are favorable for the
long term. The portfolio manager of the Fund looks for growth companies with
strong, capable management sound financial and accounting policies, successful
product development and marketing and other factors.
|X| Investments in Equity Securities. The Fund focuses its investments
in equity securities of foreign companies whose principal activities are in
developing markets. Equity securities include common stocks, preferred stocks,
rights and warrants, and securities convertible into common stock. The Fund's
investment primarily include stocks of what the Manager believes are growth
companies. They may have a market capitalization of any range, small, medium or
large.
The Manager selects securities primarily on the basis of its view of a
security's potential for capital appreciation.
Small-cap growth companies may offer greater opportunities for capital
appreciation than securities of large, more established companies. However,
these securities also involve greater risks than securities of larger companies.
Securities of small capitalization issuers may be subject to greater price
volatility in general than securities of large-cap and mid-cap companies.
Therefore, to the degree that the Fund has investments in smaller capitalization
companies at times of market volatility, the Fund's share price may fluctuate
more. As noted below, the Fund may invest without limit in unseasoned small cap
issuers.
|_| Convertible Securities. While some convertible securities
are a form of debt security, in many cases their conversion feature (allowing
conversion into equity securities) causes them to be regarded by the Manger more
as "equity equivalents." As a result, the rating assigned to the security has
less impact on the Manager's investment decision than in the case of
non-convertible debt fixed income securities.
The value of a convertible security is a function of its "investment
value" and its "conversion value." If the investment value exceeds the
conversion value, the security will behave more like a debt security and the
security's price will likely increase when interest rates fall and decrease when
interest rates rise. If the conversion value exceeds the investment value, the
security will behave more like an equity security. In that case it will likely
sell at a premium over its conversion value and its price will tend to fluctuate
directly with the price of the underlying security.
To determine whether convertible securities should be regarded as
"equity equivalents," the Manager examines the following factors:
(1) whether, at the option of the investor, the convertible security can be
exchanged for a fixed number of shares of common stock of the issuer,
(2) whether the issuer of the convertible securities has restated its
earnings per share of common stock on a fully diluted basis (considering
the effect of conversion of the convertible securities), and
(3) the extent to which the convertible security may be a defensive "equity
substitute," providing the ability to participate in any appreciation in
the price of the issuer's common stock.
|_| Rights and Warrants. The Fund may invest in warrants or
rights. Warrants basically are options to purchase equity securities at specific
prices valid for a specific period of time. Their prices do not necessarily move
parallel to the prices of the underlying securities. Rights are similar to
warrants, but normally have a short duration and are distributed directly by the
issuer to its shareholders. Rights and warrants have no voting rights, receive
no dividends and have no rights with respect to the assets of the issuer.
|X| Foreign Securities. The Fund emphasizes investments in equity
securities issued or guaranteed by foreign companies. "Foreign securities"
include equity and debt securities of companies organized under the laws of
countries other than the United States and of governments other than the U.S.
government. They also include securities of companies (including those that are
located in the U.S. or organized under U.S. law) that derive a significant
portion of their revenue or profits from foreign businesses, investments or
sales, or that have a significant portion of their assets abroad. They may be
traded on foreign securities exchanges or in the foreign over-the-counter
markets.
Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or traded
in the U.S. over-the-counter markets are considered "foreign securities" for the
purpose of the Fund's investment allocations. They are subject to some of the
special considerations and risks, discussed below, that apply to foreign
securities traded and held abroad.
Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers. They include the
opportunity to invest in foreign issuers that appear to offer growth potential,
or in foreign countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by taking
advantage of foreign stock markets that do not move in a manner parallel to U.S.
markets. The Fund will hold foreign currency only in connection with the
purchase or sale of foreign securities.
|_| Risks of Foreign Investing. Investments in foreign
securities may offer special opportunities for investing but also present
special additional risks and considerations not typically associated with
investments in domestic securities. Some of these additional risks are:
o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency
rates or currency control regulations (for example, currency blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards in
foreign countries comparable to those applicable to domestic issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the
U.S.;
o less governmental regulation of foreign issuers, stock exchanges and
brokers than in the U.S.; o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or loss
of certificates for portfolio securities;
o possibilities in some countries of expropriation, confiscatory taxation,
political, financial or social instability or adverse diplomatic
developments; and
o unfavorable differences between the U.S. economy and foreign economies.
In the past, U.S. Government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other restrictions,
and it is possible that such restrictions could be re-imposed.
|_| Developing Markets and Their Special Risks. Emerging and
developing markets abroad may also offer special opportunities for growth
investing but have greater risks than markets in the United States or more
developed foreign markets, such as those in Western Europe, Canada, Australia,
New Zealand and Japan. Some of those special risks are described below.
|_| Settlement of Transactions. Settlement procedures in
developing markets may differ from those of more established securities markets.
Settlements may also be delayed by operational problems, including "Year 2000"
problems caused by a failure to adapt computers to using four-digit years after
1999. Securities issued by developing countries and by issuers located in those
countries may be subject to extended settlement periods. Delays in settlement
could result in temporary periods during which a portion of the Fund's assets is
uninvested and no return is earned on those assets. The inability of the Fund to
make intended purchases of securities due to settlement problems could cause the
Fund to miss investment opportunities. The Fund could suffer losses from the
inability to dispose of portfolio securities due to settlement problems. As a
result there could be subsequent declines in the value of the portfolio
security, a decrease in the level of liquidity of the Fund's portfolio or, if
the Fund has entered into a contract to sell the security, a possible liability
to the purchaser.
|_| Price Volatility. Securities prices in developing markets
may be significantly more volatile than is the case in more developed nations of
the world. In particular, countries with emerging markets may have relatively
unstable governments. That presents the risk of nationalization of businesses,
restrictions on foreign ownership or prohibitions of repatriation of assets.
These countries may have less protection of property rights than more developed
countries. The economies of developing countries may be predominantly based on
only a few industries and, as such, may be highly vulnerable to changes in local
or global trade conditions.
|_| Less Developed Securities Markets. Developing market
countries may have less well-developed securities markets and exchanges.
Consequently they have lower trading volume than the securities markets of more
developed countries. These markets may be unable to respond effectively to
increases in trading volume. Therefore, prompt liquidation of substantial
portfolio holdings may be difficult at times. As a result, these markets may be
substantially less liquid than those of more developed countries, and the
securities of issuers located in these markets may have limited marketability.
|_| Government Restrictions. In certain developing countries,
government approval may be required for the repatriation of investment income,
capital or the proceeds of sales of securities by foreign investors, such as the
Fund. Also, a government might impose temporary restrictions on remitting
capital abroad if the country's balance of payments deteriorates, or it might do
so for other reasons. If government approval were delayed or refused, the Fund
could be adversely affected. Additionally, the Fund could be adversely affected
by the imposition of restrictions on investments by foreign entities.
Among the countries that the Manager has identified as developing or
emerging markets in which the Fund will consider investing are the following
countries. The Fund might not invest in all of these countries and the list may
change.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Algeria Greece Mexico Sri Lanka
Argentina Guyana Morocco Swaziland
Bangladesh Hong Kong Myanmar Taiwan
Bolivia Hungary Namibia Tanzania
Botswana India Nigeria Thailand
Brazil Indonesia Pakistan Tunisia
Bulgaria Iran Paraguay Turkey
Chile Israel Peru Ukraine
China Ivory Coast Philippines Uruguay
Colombia Jamaica Poland Venezuela
Costa Rica Jordan Portugal Vietnam
Cyprus Kenya Russia Zambia
Czech Republic Latvia Singapore Zimbabwe
Ecuador Lebanon Slovakia Republic
Egypt Lithuania Slovenia
Estonia Malaysia South Africa
Ghana Mauritius South Korea
</TABLE>
|_| Risks of Conversion to Euro. There may be transaction cost
and risks relating to the conversion of certain European currencies to the Euro
that commenced in January 1999. However, their current currencies (for example,
the franc, the mark, and the lira) will also continue in use until January 1,
2002. After that date, it is expected that only the euro will be used in those
countries. A common currency is expected to confer some benefits in those
markets, by consolidating the government debt market for those countries and
reducing some currency risks and costs. But the conversion to the new currency
will affect the Fund operationally and also has potential risks, some of which
are listed below. Among other things, the conversion will affect:
o issuers in which the Fund invests, because of changes in the
competitive environment from a consolidated currency market and
greater operational costs from converting to the new currency.
This might depress stock values.
o vendors the Fund depends on to carry out its business, such as its
custodian bank (which holds the foreign securities the Fund buys),
the Manager (which must price the Fund's investments to deal with
the conversion to the euro) and brokers, foreign markets and
securities depositories. If they are not prepared, there could be
delays in settlements and additional costs to the Fund.
o exchange contracts and derivatives that are outstanding during the
transition to the euro. The lack of currency rate calculations
between the affected currencies and the need to update the Fund's
contracts could pose extra costs to the Fund.
The Manager is upgrading (at its expense) its computer and bookkeeping
systems to deal with the conversion. The Fund's custodian bank has advised the
Manager of its plans to deal with the conversion, including how it will update
its record keeping systems and handle the redenomination of outstanding foreign
debt. The Fund's portfolio manager will also monitor the effects of the
conversion on the issuers in which the Fund invests. The possible effect of
these factors on the Fund's investments cannot be determined with certainty at
this time, but they may reduce the value of some of the Fund's holdings and
increase its operational costs.
|X| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its last fiscal year. For
example, if a fund sold all of its securities during the year, its portfolio
turnover rate would have been 100%. The Fund's portfolio turnover rate will
fluctuate from year to year, although the Fund does not expect to have a
portfolio turnover rate of more than 100% annually.
Increased portfolio turnover creates higher brokerage and transaction
costs for the Fund, which may reduce its overall performance. Additionally, the
realization of capital gains from selling portfolio securities may result in
distributions of taxable long-term capital gains to shareholders, since the Fund
will normally distribute all of its capital gains realized each year, to avoid
excise taxes under the Internal Revenue Code.
The Fund may engage in short-term trading to try to achieve its
objective, but does not expect to have a portfolio turnover rate in excess of
100% annually. Portfolio turnover affects brokerage costs the Fund pays. If the
Fund realizes capital gains when it sells its portfolio investments, it must
generally pay those gains out to shareholders, increasing their taxable
distributions. The Financial Highlights table below shows the Fund's portfolio
turnover rates during prior fiscal years.
Other Investment Techniques and Strategies. In seeking its objective, the Fund
may from time to time use the types of investment strategies and investments
described below. It is not required to use all of these strategies at all times,
and at times may not use them.
|X| Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have been in
operation for less than three years, including the operations of any
predecessors. Securities of these companies may be subject to volatility in
their prices. They may have a limited trading market, which may adversely affect
the Fund's ability to dispose of them and can reduce the price the Fund might be
able to obtain for them. Other investors that own a security issued by a small,
unseasoned issuer for which there is limited liquidity might trade the security
when the Fund is attempting to dispose of its holdings of that security. In that
case the Fund might receive a lower price for its holdings than might otherwise
be obtained. The Fund has no limit on the amount of its net assets that may be
invested in those securities.
|X| Debt Securities. While the Fund does not invest for the purpose of
seeking current income, at times certain debt securities (other than convertible
debt securities described above under the description of equity investments) may
be selected for investment by the Fund for investment or defensive purposes, as
described below. Certain debt securities may be selected for the Fund's
portfolio for defensive purposes (including debt securities that the Manager
believes may offer some opportunities for capital appreciation when stocks are
disfavored). Up to 35% of the Fund's assets may be invested in any combination
of debt securities of government or corporate issuers in developing countries,
equity and debt securities of issuers in developed countries (including the
United States) and cash and money market instruments. For example, when the
stock market is volatile, or when the portfolio manager believes that growth
opportunities in stocks are not attractive, certain debt securities might
provide not only offer defensive opportunities but also some opportunities for
capital appreciation. These investments could include corporate bonds and notes
of foreign or U.S. companies, as well as U.S. and foreign government securities.
It is not expected that this will be a significant portfolio strategy of the
Fund under normal market circumstances.
While the Fund will not invest in debt securities rates less than C or
that are in default, the Fund can invest in below-investment grade debt
securities. Often, debt securities of developing markets issuers are below
investment grade or are unrated by rating organizations. Below investment grade
securities are subject to a number of risks, including a greater risk of default
by the issuer in making timely payments of interest and principal (this is
called "credit risk"). As debt securities, they are also subject to changes in
value from fluctuations in prevailing interest rates, which means that their
value could go down when interest rates rise, or go up when interest rates fall
(this is called "interest rate risk"). A discussion of these risks and rating
categories of rating agencies is in the Statement of Additional Information.
|_| Credit Risk. Debt securities are subject to credit risk.
Credit risk relates to the ability of the issuer of a debt security to make
interest or principal payments on the security as they become due. If the issuer
fails to pay interest, the Fund's income may be reduced and if the issuer fails
to repay principal, the value of that bond and of the Fund's shares may be
reduced. The Manager may rely to some extent on credit ratings by nationally
recognized rating agencies in evaluating the credit risk of securities selected
for the Fund's portfolio. It may also use its own research and analysis. Many
factors affect an issuer's ability to make timely payments, and the credit risks
of a particular security may change over time. The Fund may invest in
higher-yielding lower-grade debt securities (that is, securities below
investment grade), which have special risks. Those are securities rated below
the four highest rating categories of Standard & Poor's Rating Service or
Moody's Investors Service, Inc., or equivalent ratings of other rating agencies
or ratings assigned to a security by the Manager.
|_| Special Risks of 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 or lower than "BBB" by Standard & Poor's or
Duff & Phelps, or similar ratings by other rating organizations. If they are
unrated, and are determined by the Manager to be of comparable quality to debt
securities rated below investment grade, they are included in limitation on the
percentage of the Fund's assets that can be invested in lower-grade securities.
The Fund will not invest in securities rated "C" or "D" or which are in default.
Among the special credit risks of lower-grade securities is the greater
risk that the issuer may default on its obligation to pay interest or to repay
principal than in the case of investment grade securities. The issuer's low
creditworthiness may increase the potential for its insolvency. An overall
decline in values in the high yield bond market is also more likely during a
period of a general economic downturn. An economic downturn or an increase in
interest rates could severely disrupt the market for high yield bonds, adversely
affecting the values of outstanding bonds as well as the ability of issuers to
pay interest or repay principal. In the case of foreign high yield bonds, these
risks are in addition to the special risk of foreign investing discussed in the
Prospectus and in this Statement of Additional Information. To the extent they
can be converted into stock, convertible securities may be less subject to some
of these risks than non-convertible high yield bonds, since stock may be more
liquid and less affected by some of these risk factors.
While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's
or Duff & Phelps are investment grade and are not regarded as junk bonds, those
securities may be subject to special risks, and have some speculative
characteristics.
|_| Interest Rate Risks. In addition to credit risks, debt
securities are subject to changes in value when prevailing interest rates
change. When interest rates fall, the values of outstanding debt securities
generally rise, and the bonds may sell for more than their face amount. When
interest rates rise, the values of outstanding debt securities generally
decline, and the bonds may sell at a discount from their face amount. The
magnitude of these price changes is generally greater for bonds with longer
maturities. Therefore, when the average maturity of the Fund's debt securities
is longer, its share price may fluctuate more when interest rates change.
|X| Privatization Programs. The governments in some developing
countries have been engaged in programs to sell all or part of their interests
in government-owned or controlled enterprises. Privatization programs may offer
opportunities for significant capital appreciation, and the Manager may invest
Fund assets in privatization programs in what it considers to be appropriate
circumstances. In certain developing countries, the ability of foreign entities
such as the Fund to participate in privatization programs may be limited by
local law. Additionally, the terms on which the Fund might be permitted to
participate may be less advantageous than those afforded local investors. There
can be no assurance that privatization programs will be successful.
|X| Investments in Other Investment Companies. The Fund may be able to
invest in certain developing countries solely or primarily through
governmentally-authorized investment vehicles or companies. The Fund can invest
up to 10% of its total assets in shares of other investment companies. It can
invest up to 5% of its total assets in any one investment company. Each
investment must not represent more than 3% of the outstanding voting securities
of the acquired investment company. These limitations do not apply in the case
of investment company securities that the Fund purchases or acquires as part of
a plan of merger, consolidation, reorganization or acquisition.
Investing in another investment company may involve the payment of
substantial premiums above the value of the investment company's portfolio
securities. These investments are subject to limitations under the Investment
Company Act and market availability. The Fund does not intend to invest in other
investment companies unless, in the judgment of the Manager, the potential
benefits of the investment justify the payment of any applicable premiums or
sales charge. As a shareholder in an investment company, the Fund would bear its
ratable share of that investment company's expenses, including its advisory and
administration fees. At the same time, the Fund would continue to pay its own
management fees and other expenses.
|X| "When-Issued" and Delayed-Delivery Transactions. The Fund can
purchase securities on a "when-issued" basis and may purchase or sell securities
on a "delayed-delivery" or "forward commitment basis. These terms refer to
securities that have been created and for which a market exists, but which are
not available for immediate delivery. There may be a risk of loss to the Fund if
the value of the security declines prior to the settlement date.
When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made. Delivery
and payment for the securities take place at a later date (generally within 45
days of the date the offer is accepted). The securities are subject to change in
value from market fluctuations during the period until settlement. The value at
delivery may be less than the purchase price. For example, changes in interest
rates in a direction other than that expected by the Manager before settlement
will affect the value of such securities and may cause a loss to the Fund.
During the period between purchase and settlement, no payment is made by the
Fund to the issuer and no interest accrues to the Fund from the investment.
The Fund will engage in when-issued transactions to secure what the
Manager considers to be an advantageous price and yield at the time of entering
into the obligation. When the Fund enters into a when-issued or delayed-delivery
transaction, it relies on the other party to complete the transaction. Its
failure to do so may cause the Fund to lose the opportunity to obtain the
security at a price and yield the Manager considers to be advantageous.
When the Fund engages in when-issued and delayed-delivery transactions,
it does so for the purpose of acquiring or selling securities consistent with
its investment objective and policies for its portfolio or for delivery pursuant
to options contracts it has entered into, and not for the purpose of investment
leverage. Although the Fund will enter into delayed-delivery or when-issued
purchase transactions to acquire securities, it may dispose of a commitment
prior to settlement. If the Fund chooses to dispose of the right to acquire a
when-issued security prior to its acquisition or to dispose of its right to
delivery or receive against a forward commitment, it may incur a gain or loss.
At the time the Fund makes the commitment to purchase or sell a
security on a when-issued or delayed delivery basis, it records the transaction
on its books and reflects the value of the security purchased in determining the
Fund's net asset value. In a sale transaction, it records the proceeds to be
received. The Fund will identify on its books liquid obligations at least equal
in value to the value of the Fund's purchase commitments until the Fund pays for
the investment.
When-issued and delayed-delivery transactions can be used by the Fund
as a defensive technique to hedge against anticipated changes in interest rates
and prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward commitment
basis to attempt to limit its exposure to anticipated falling prices. In periods
of falling interest rates and rising prices, the Fund might sell portfolio
securities and purchase the same or similar securities on a when-issued or
delayed-delivery basis to obtain the benefit of currently higher cash yields.
|X| Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It may do so for liquidity purposes to meet anticipated
redemptions of Fund shares, or pending the investment of the proceeds from sales
of Fund shares, or pending the settlement of portfolio securities transactions,
or for temporary defensive purposes, as described below.
In a repurchase transaction, the Fund buys a security from, and
simultaneously resells it to, an approved vendor for delivery on an agreed-upon
future date. 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. Approved vendors include U.S. commercial
banks, U.S. branches of foreign banks, or broker-dealers that have been
designated as primary dealers in government securities. They must meet credit
requirements set by the Fund's Board of Trustees from time to time.
The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the purchase.
Repurchase agreements having a maturity beyond seven days are subject to the
Fund's limits on holding illiquid investments. The Fund will not enter into a
repurchase agreement that causes more than 10% of its net assets to be subject
to repurchase agreements having a maturity beyond seven days. There is no limit
on the amount of the Fund's net assets that may be subject to repurchase
agreements having maturities of seven days or less.
Repurchase agreements, considered "loans" under the Investment Company
Act, are collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the value of the collateral must equal or exceed the repurchase price to
fully collateralize the repayment obligation. However, if the vendor fails to
pay the resale price on the delivery date, the Fund may incur costs in disposing
of the collateral and may experience losses if there is any delay in its ability
to do so. The Manager will monitor the vendor's creditworthiness to confirm that
the vendor is financially sound and will continuously monitor the collateral's
value.
|X| Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager determines
the liquidity of certain of the Fund's investments. To enable the Fund to sell
its holdings of a restricted security not registered under the Securities Act of
1933, the Fund may have to cause those securities to be registered. The expenses
of registering restricted securities may be negotiated by the Fund with the
issuer at the time the Fund buys the securities. When the Fund must arrange
registration because the Fund wishes to sell the security, a considerable period
may elapse between the time the decision is made to sell the security and the
time the security is registered so that the Fund could sell it. The Fund would
bear the risks of any downward price fluctuation during that period.
The Fund can also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions might limit the Fund's ability to dispose of the
securities and might lower the amount the Fund could realize upon the sale.
The Fund has limitations that apply to purchases of restricted
securities, as stated in the Prospectus. Those percentage restrictions do not
limit purchases of restricted securities that are eligible for sale to qualified
institutional purchasers under Rule 144A of the Securities Act of 1933, if those
securities have been determined to be liquid by the Manager under Board-approved
guidelines. Those guidelines take into account the trading activity for such
securities and the availability of reliable pricing information, among other
factors. If there is a lack of trading interest in a particular Rule 144A
security, the Fund's holdings of that security may be considered to be illiquid.
Illiquid securities include repurchase agreements maturing in more than
seven days and participation interests that do not have puts exercisable within
seven days.
|X| Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund can lend its portfolio securities to brokers, dealers and
other types of financial institutions approved by the Fund's Board of Trustees.
These loans are limited to not more than 10% of the value of the Fund's total
assets. The Fund currently does not intend to engage in loans of securities in
the coming year, but if it does so, such loans will not likely exceed 5% of the
Fund's total assets.
There are some risks in connection with securities lending. The Fund
might experience a delay in receiving additional collateral to secure a loan, or
a delay in recovery of the loaned securities if the borrower defaults. The Fund
must receive collateral for a loan. Under current applicable regulatory
requirements (which are subject to change), on each business day the loan
collateral must be at least equal to the value of the loaned securities. It must
consist of cash, bank letters of credit, securities of the U.S. Government or
its agencies or instrumentalities, or other cash equivalents in which the Fund
is permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. The terms of the letter of credit and the issuing bank both
must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the
dividends or interest on loaned securities. It also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and (c)
interest on any short-term debt securities purchased with such loan collateral.
Either type of interest may be shared with the borrower. The Fund may also pay
reasonable finder's, custodian bank and administrative fees in connection with
these loans. The terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned securities on
five days' notice or in time to vote on any important matter.
|X| Borrowing for Leverage and Liquidity. The Fund has the ability to
borrow up to 10% of the value of its net assets from banks on an unsecured basis
to invest the borrowed funds in portfolio securities. This speculative technique
is known as "leverage." The Fund can also borrow from banks for temporary or
emergency purposes. The Fund may borrow only from banks. Under current
regulatory requirements, borrowings can be made only to the extent that the
value of the Fund's assets, less its liabilities other than borrowings, is equal
to at least 300% of all borrowings (including the proposed borrowing). If the
value of the Fund's assets fails to meet this 300% asset coverage requirement,
the Fund will reduce its bank debt within three days to meet the requirement. To
do so, the Fund might have to sell a portion of its investments at a
disadvantageous time.
The Fund will pay interest on these loans, and that interest expense
will raise the overall expenses of the Fund and reduce its returns. The Fund
does not expect to borrow for leverage as a normal investment technique. If it
does borrow, its expenses will be greater than comparable funds that do not
borrow for leverage. Additionally, the Fund's net asset value per share might
fluctuate more than that of funds that do not borrow.
|X| Derivatives. The Fund can invest in a variety of derivative
investments to seek income for liquidity needs or for hedging purposes. Some
derivative investments the Fund can use are the hedging instruments described
below in this Statement of Additional Information. However, the Fund does not
use, and does not currently contemplate using, derivatives or hedging
instruments to a significant degree in the coming year.
Some of the derivative investments the Fund can use include debt
exchangeable for common stock of an issuer or "equity-linked debt securities" of
an issuer. At maturity, the debt security is exchanged for common stock of the
issuer or it is payable in an amount based on the price of the issuer's common
stock at the time of maturity. Both alternatives present a risk that the amount
payable at maturity will be less than the principal amount of the debt because
the price of the issuer's common stock might not be as high as the Manager
expected.
|X| Hedging. Although the Fund does not anticipate the extensive use of
hedging instruments, the Fund can use hedging instruments. To attempt to protect
against declines in the market value of the Fund's portfolio, to permit the Fund
to retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons, the
Fund could: o sell futures contracts, o buy puts on such futures or on
securities, or o write covered calls on securities or futures. Covered calls can
also be used to increase the Fund's income, but the Manager does not expect to
engage extensively in that practice.
The Fund can use hedging to establish a position in the securities
market as a temporary substitute for purchasing particular securities. In that
case the Fund would normally seek to purchase the securities and then terminate
that hedging position. The Fund might also use this type of hedge to attempt to
protect against the possibility that its portfolio securities would not be fully
included in a rise in value of the market. To do so the Fund could: o buy
futures, or o buy calls on such futures or on securities.
The Fund is not obligated to use hedging instruments, even though it is
permitted to use them in the Manager's discretion, as described below. The
Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's activities in the underlying cash market. The
particular hedging instruments the Fund can use are described below. The Fund
may employ new hedging instruments and strategies when they are developed, if
those investment methods are consistent with the Fund's investment objective and
are permissible under applicable regulations governing the Fund.
|_| Futures. The Fund can buy and sell futures contracts that relate to
(1) broadly-based stock indices (these are referred to as stock index
futures),
(2) other broadly based securities indices (these are referred to as
financial futures),
(3) debt securities (these are referred to as interest rate futures),
(4) foreign currencies (these are referred to as forward contracts), and
(5) commodities (these are referred to as commodity futures).
A broadly-based stock index is used as the basis for trading stock
index futures. They may in some cases be based on stocks of issuers in a
particular industry or group of industries. A stock index assigns relative
values to the common stocks included in the index and its value fluctuates in
response to the changes in value of the underlying stocks. A stock index cannot
be purchased or sold directly. Financial futures are similar contracts based on
the future value of the basket of securities that comprise the index. These
contracts obligate the seller to deliver, and the purchaser to take, cash to
settle the futures transaction. There is no delivery made of the underlying
securities to settle the futures obligation. Either party may also settle the
transaction by entering into an offsetting contract.
An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specified type of debt security to settle the
futures transaction. Either party could also enter into an offsetting contract
to close out the position.
The Fund can invest a portion of its assets in commodity futures
contracts. Commodity futures may be based upon commodities within five main
commodity groups:
(1) energy, which includes crude oil, natural gas, gasoline and heating
oil;
(2) livestock, which includes cattle and hogs;
(3) agriculture, which includes wheat, corn, soybeans, cotton, coffee,
sugar and cocoa;
(4) industrial metals, which includes aluminum, copper, lead, nickel, tin
and zinc; and
(5) precious metals, which includes gold, platinum and silver. The Fund may
purchase and sell commodity futures contracts, options on futures contracts and
options and futures on commodity indices with respect to these five main
commodity groups and the individual commodities within each group, as well as
other types of commodities.
No money is paid or received by the Fund on the purchase or sale of a
future. Upon entering into a futures transaction, the Fund will be required to
deposit an initial margin payment with the futures commission merchant (the
"futures broker"). Initial margin payments will be deposited with the Fund's
custodian bank in an account registered in the futures broker's name. However,
the futures broker can gain access to that account only under specified
conditions. As the future is marked to market (that is, its value on the Fund's
books is changed) to reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the futures broker
daily.
At any time prior to expiration of the future, the Fund may elect to
close out its position by taking an opposite position, at which time a final
determination of variation margin is made and any additional cash must be paid
by or released to the Fund. Any loss or gain on the future is then realized by
the Fund for tax purposes. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are traded.
|_| Put and Call Options. The Fund may buy and sell certain
kinds of put options ("puts") and call options ("calls"). The Fund may buy and
sell exchange-traded and over-the-counter put and call options, including index
options, securities options, currency options, commodities options, and options
on the other types of futures described above.
|_| Writing Covered Call Options. The Fund can write (that is,
sell) covered calls. If the Fund sells a call option, it must be covered. That
means the Fund must own the security subject to the call while the call is
outstanding, or, for certain types of calls, the call may be covered by liquid
assets identified on the Fund's books to enable the Fund to satisfy its
obligations if the call is exercised. Up to 25% of the Fund's total assets may
be subject to calls the Fund writes.
When the Fund writes a call on a security, it receives cash (a
premium). The Fund agrees to sell the underlying security to a purchaser of a
corresponding call on the same security during the call period at a fixed
exercise price regardless of market price changes during the call period. The
call period is usually not more than nine months. The exercise price may differ
from the market price of the underlying security. The Fund has the risk of loss
that the price of the underlying security may decline during the call period.
That risk may be offset to some extent by the premium the Fund receives. If the
value of the investment does not rise above the call price, it is likely that
the call will lapse without being exercised. In that case the Fund would keep
the cash premium and the investment.
When the Fund writes a call on an index, it receives cash (a premium).
If the buyer of the call exercises it, the Fund will pay an amount of cash equal
to the difference between the closing price of the call and the exercise price,
multiplied by a specified multiple that determines the total value of the call
for each point difference. If the value of the underlying investment does not
rise above the call price, it is likely that the call will lapse without being
exercised. In that case, the Fund would keep the cash premium.
The Fund's custodian bank, or a securities depository acting for the
custodian bank, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC"), as to the investments on which the
Fund has written calls traded on exchanges or as to other acceptable escrow
securities. In that way, no margin will be required for such transactions. OCC
will release the securities on the expiration of the option or when the Fund
enters into a closing transaction.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. government securities dealer which will
establish a formula price at which the Fund will have the absolute right to
repurchase that OTC option. The formula price will generally be based on a
multiple of the premium received for the option, plus the amount by which the
option is exercisable below the market price of the underlying security (that
is, the option is "in the money"). When the Fund writes an OTC option, it will
treat as illiquid (for purposes of its restriction on holding illiquid
securities) the mark-to-market value of any OTC option it holds, unless the
option is subject to a buy-back agreement by the executing broker.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." The Fund will
then realize a profit or loss, depending upon whether the net of the amount of
the option transaction costs and the premium received on the call the Fund wrote
is more or less than the price of the call the Fund purchases to close out the
transaction. The Fund may realize a profit if the call expires unexercised,
because the Fund will retain the underlying security and the premium it received
when it wrote the call. Any such profits are considered short-term capital gains
for federal income tax purposes, as are the premiums on lapsed calls. When
distributed by the Fund they are taxable as ordinary income. If the Fund cannot
effect a closing purchase transaction due to the lack of a market, it will have
to hold the callable securities until the call expires or is exercised.
The Fund may also write calls on a futures contract without owning the
futures contract or securities deliverable under the contract. To do so, at the
time the call is written, the Fund must cover the call by identifying an
equivalent dollar amount of liquid assets on the Fund's books. The Fund will
identify additional liquid assets on the Fund's books if the value of the
identified assets drops below 100% of the current value of the future. Because
of this identification requirement, in no circumstances would the Fund's receipt
of an exercise notice as to that future require the Fund to deliver a futures
contract. It would simply put the Fund in a short futures position, which is
permitted by the Fund's hedging policies.
|_| Writing Put Options. The Fund can sell put options. A put
option on securities gives the purchaser the right to sell, and the writer the
obligation to buy, the underlying investment at the exercise price during the
option period. The Fund will not write puts if, as a result, more than 50% of
the Fund's net assets would be required to be identified on the Fund's books to
cover such put options.
If the Fund writes a put, the put must be covered by liquid assets
identified on the Fund's books. The premium the Fund receives from writing a put
represents a profit, as long as the price of the underlying investment remains
equal to or above the exercise price of the put. However, the Fund also assumes
the obligation during the option period to buy the underlying investment from
the buyer of the put at the exercise price, even if the value of the investment
falls below the exercise price. If a put the Fund has written expires
unexercised, the Fund realizes a gain in the amount of the premium less the
transaction costs incurred. If the put is exercised, the Fund must fulfill its
obligation to purchase the underlying investment at the exercise price. That
price will usually exceed the market value of the investment at that time. In
that case, the Fund may incur a loss if it sells the underlying investment. That
loss will be equal to the sum of the sale price of the underlying investment and
the premium received minus the sum of the exercise price and any transaction
costs the Fund incurred.
When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will identify liquid assets with a
value equal to or greater than the exercise price of the underlying securities.
The Fund therefore forgoes the opportunity of investing the identified assets or
writing calls against those assets.
As long as the Fund's obligation as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through which the put was sold.
That notice will require the Fund to take delivery of the underlying security
and pay the exercise price. The Fund has no control over when it may be required
to purchase the underlying security, since it may be assigned an exercise notice
at any time prior to the termination of its obligation as the writer of the put.
That obligation terminates upon expiration of the put. It may also terminate if,
before it receives an exercise notice, the Fund effects a closing purchase
transaction by purchasing a put of the same series as it sold. Once the Fund has
been assigned an exercise notice, it cannot effect a closing purchase
transaction.
The Fund may decide to effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent the
underlying security from being put. Effecting a closing purchase transaction
will also permit the Fund to write another put option on the security, or to
sell the security and use the proceeds from the sale for other investments. The
Fund will realize a profit or loss from a closing purchase transaction depending
on whether the cost of the transaction is less or more than the premium received
from writing the put option. Any profits from writing puts are considered
short-term capital gains for federal tax purposes, and when distributed by the
Fund, are taxable as ordinary income.
|_| Purchasing Calls and Puts. The Fund can purchase calls to
protect against the possibility that the Fund's portfolio will not participate
in an anticipated rise in the securities market. When the Fund buys a call
(other than in a closing purchase transaction), it pays a premium. The Fund then
has the right to buy the underlying investment from a seller of a corresponding
call on the same investment during the call period at a fixed exercise price.
The Fund benefits only if it sells the call at a profit or if, during the call
period, the market price of the underlying investment is above the sum of the
call price plus the transaction costs and the premium paid for the call and the
Fund exercises the call. If the Fund does not exercise the call or sell it
(whether or not at a profit), the call will become worthless at its expiration
date. In that case the Fund will have paid the premium but lost the right to
purchase the underlying investment.
The Fund can buy puts whether or not it holds the underlying investment
in its portfolio. When the Fund purchases a put, it pays a premium and, except
as to puts on indices, has the right to sell the underlying investment to a
seller of a put on a corresponding investment during the put period at a fixed
exercise price. Buying a put on securities or futures the Fund owns enables the
Fund to attempt to protect itself during the put period against a decline in the
value of the underlying investment below the exercise price by selling the
underlying investment at the exercise price to a seller of a corresponding put.
If the market price of the underlying investment is equal to or above the
exercise price and, as a result, the put is not exercised or resold, the put
will become worthless at its expiration date. In that case the Fund will have
paid the premium but lost the right to sell the underlying investment. However,
the Fund may sell the put prior to its expiration.
That sale may or may not be at a profit.
When the Fund purchases a call or put on an index or future, it pays a
premium, but settlement is in cash rather than by delivery of the underlying
investment to the Fund. Gain or loss depends on changes in the index in question
(and thus on price movements in the securities market generally) rather than on
price movements in individual securities or futures contracts.
The Fund may buy a call or put only if, after the purchase, the value
of all call and put options held by the Fund will not exceed 5% of the Fund's
total assets.
|_| Buying and Selling Options on Foreign Currencies. The Fund
can buy and sell calls and puts on foreign currencies. They include puts and
calls that trade on a securities or commodities exchange or in the
over-the-counter markets or are quoted by major recognized dealers in such
options. The Fund could use these calls and puts to try to protect against
declines in the dollar value of foreign securities and increases in the dollar
cost of foreign securities the Fund wants to acquire.
If the Manager anticipates a rise in the dollar value of a foreign
currency in which securities to be acquired are denominated, the increased cost
of those securities may be partially offset by purchasing calls or writing puts
on that foreign currency. If the Manager anticipates a decline in the dollar
value of a foreign currency, the decline in the dollar value of portfolio
securities denominated in that currency might be partially offset by writing
calls or purchasing puts on that foreign currency. However, the currency rates
could fluctuate in a direction adverse to the Fund's position. The Fund will
then have incurred option premium payments and transaction costs without a
corresponding benefit.
A call the Fund writes on a foreign currency is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or it can do so for additional cash consideration identified on
the Fund's books) upon conversion or exchange of other foreign currency held in
its portfolio.
The Fund could write a call on a foreign currency to provide a hedge
against a decline in the U.S. dollar value of a security which the Fund owns or
has the right to acquire and which is denominated in the currency underlying the
option. That decline might be one that occurs due to an expected adverse change
in the exchange rate. This is known as a "cross-hedging" strategy. In those
circumstances, the Fund covers the option by maintaining cash, U.S. government
securities or other liquid, high grade debt securities in an amount equal to the
exercise price of the option, identified on the Fund's books.
|_| Risks of Hedging with Options and Futures. The use of
hedging instruments requires special skills and knowledge of investment
techniques that are different than what is required for normal portfolio
management. If the Manager uses a hedging instrument at the wrong time or judges
market conditions incorrectly, hedging strategies may reduce the Fund's return.
The Fund could also experience losses if the prices of its futures and options
positions were not correlated with its other investments.
The Fund's option activities could affect its portfolio turnover rate
and brokerage commissions. The exercise of calls written by the Fund might 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 could pay a brokerage commission each time it buys a call or
put, sells a call or put, or buys or sells an underlying investment in
connection with the exercise of a call or put. Those commissions could be higher
on a relative basis than the commissions for direct purchases or sales of the
underlying investments. Premiums paid for options are small in relation to the
market value of the underlying investments. Consequently, put and call options
offer large amounts of leverage. The leverage offered by trading in options
could result in the Fund's net asset value being more sensitive to changes in
the value of the underlying investment.
If a covered call written by the Fund is exercised on an investment
that has increased in value, the Fund will be required to sell the investment at
the call price. It will not be able to realize any profit if the investment has
increased in value above the call price.
An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no assurance that
a liquid secondary market will exist for any particular option. The Fund might
experience losses if it could not close out a position because of an illiquid
market for the future or option.
There is a risk in using short hedging by selling futures or purchasing
puts on broadly-based indices or futures to attempt to protect against declines
in the value of the Fund's portfolio securities. The risk is that the prices of
the futures or the applicable index will correlate imperfectly with the behavior
of the cash prices of the Fund's securities. For example, it is possible that
while the Fund has used hedging instruments in a short hedge, the market might
advance and the value of the securities held in the Fund's portfolio might
decline. If that occurred, the Fund would lose money on the hedging instruments
and also experience a decline in the value of its portfolio securities. However,
while this could occur for a very brief period or to a very small degree, over
time the value of a diversified portfolio of securities will tend to move in the
same direction as the indices upon which the hedging instruments are based.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable index.
To compensate for the imperfect correlation of movements in the price of the
portfolio securities being hedged and movements in the price of the hedging
instruments, the Fund might use hedging instruments in a greater dollar amount
than the dollar amount of portfolio securities being hedged. It might do so if
the historical volatility of the prices of the portfolio securities being hedged
is more than the historical volatility of the applicable index.
The ordinary spreads between prices in the cash and futures markets are
subject to distortions, due to differences in the nature of those markets.
First, all participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities markets. Therefore,
increased participation by speculators in the futures market may cause temporary
price distortions.
The Fund can use hedging instruments to establish a position in the
securities markets as a temporary substitute for the purchase of individual
securities (long hedging) by buying futures and/or calls on such futures,
broadly-based indices or on securities. It is possible that when the Fund does
so the market might decline. If the Fund then concludes not to invest in
securities because of concerns that the market might decline further or for
other reasons, the Fund will realize a loss on the hedging instruments that is
not offset by a reduction in the price of the securities purchased.
|_| Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for future
delivery at a fixed price. The Fund uses them to "lock in" the U.S. dollar price
of a security denominated in a foreign currency that the Fund has bought or
sold, or to protect against possible losses from changes in the relative values
of the U.S. dollar and a foreign currency. The Fund limits its exposure in
foreign currency exchange contracts in a particular foreign currency to the
amount of its assets denominated in that currency or a closely-correlated
currency. The Fund may also use "cross-hedging" where the Fund hedges against
changes in currencies other than the currency in which a security it holds is
denominated.
Under a forward contract, one party agrees to purchase, and another
party agrees to sell, a specific currency at a future date. That date may be any
fixed number of days from the date of the contract agreed upon by the parties.
The transaction price is set at the time the contract is entered into. These
contracts are traded in the inter-bank market conducted directly among currency
traders (usually large commercial banks) and their customers.
The Fund may use forward contracts to protect against uncertainty in
the level of future exchange rates. The use of forward contracts does not
eliminate the risk of fluctuations in the prices of the underlying securities
the Fund owns or intends to acquire, but it does fix a rate of exchange in
advance. Although forward contracts may reduce the risk of loss from a decline
in the value of the hedged currency, at the same time they limit any potential
gain if the value of the hedged currency increases.
When the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when it anticipates receiving
dividend payments in a foreign currency, the Fund might desire to "lock-in" the
U.S. dollar price of the security or the U.S. dollar equivalent of the dividend
payments. To do so, the Fund could enter into a forward contract for the
purchase or sale of the amount of foreign currency involved in the underlying
transaction, in a fixed amount of U.S. dollars per unit of the foreign currency.
This is called a "transaction hedge." The transaction hedge will protect the
Fund against a loss from an adverse change in the currency exchange rates during
the period between the date on which the security is purchased or sold or on
which the payment is declared, and the date on which the payments are made or
received.
The Fund could also use forward contracts to lock in the U.S. dollar
value of portfolio positions. This is called a "position hedge." When the Fund
believes that foreign currency might suffer a substantial decline against the
U.S. dollar, it could enter into a forward contract to sell an amount of that
foreign currency approximating the value of some or all of the Fund's portfolio
securities denominated in that foreign currency. When the Fund believes that the
U.S. dollar might suffer a substantial decline against a foreign currency, it
could enter into a forward contract to buy that foreign currency for a fixed
dollar amount. Alternatively, the Fund might enter into a forward contract to
sell a different foreign currency for a fixed U.S. dollar amount if the Fund
believes that the U.S. dollar value of the foreign currency to be sold pursuant
to its forward contract will fall whenever there is a decline in the U.S. dollar
value of the currency in which portfolio securities of the Fund are denominated.
That is referred to as a "cross hedge."
The Fund will cover its short positions in these cases by identifying
to its custodian bank assets having a value equal to the aggregate amount of the
Fund's commitment under forward contracts. The Fund will not enter into forward
contracts or maintain a net exposure to such contracts if the consummation of
the contracts would obligate the Fund to deliver an amount of foreign currency
in excess of the value of the Fund's portfolio securities or other assets
denominated in that currency or another currency that is the subject of the
hedge.
However, to avoid excess transactions and transaction costs, the Fund
may maintain a net exposure to forward contracts in excess of the value of the
Fund's portfolio securities or other assets denominated in foreign currencies if
the excess amount is "covered" by liquid securities denominated in any currency.
The cover must be at least equal at all times to the amount of that excess. As
one alternative, the Fund may purchase a call option permitting the Fund to
purchase the amount of foreign currency being hedged by a forward sale contract
at a price no higher than the forward contract price. As another alternative,
the Fund may purchase a put option permitting the Fund to sell the amount of
foreign currency subject to a forward purchase contract at a price as high or
higher than the forward contact price.
The precise matching of the amounts under forward contracts and the
value of the securities involved generally will not be possible because the
future value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is entered
into and the date it is sold. In some cases the Manager might decide to sell the
security and deliver foreign currency to settle the original purchase
obligation. If the market value of the security is less than the amount of
foreign currency the Fund is obligated to deliver, the Fund might have to
purchase additional foreign currency on the "spot" (that is, cash) market to
settle the security trade. If the market value of the security instead exceeds
the amount of foreign currency the Fund is obligated to deliver to settle the
trade, the Fund might have to sell on the spot market some of the foreign
currency received upon the sale of the security. There will be additional
transaction costs on the spot market in those cases.
The projection of short-term currency market movements is extremely
difficult, and the successful execution of a short-term hedging strategy is
highly uncertain. Forward contracts involve the risk that anticipated currency
movements will not be accurately predicted, causing the Fund to sustain losses
on these contracts and to pay additional transactions costs. The use of forward
contracts in this manner might reduce the Fund's performance if there are
unanticipated changes in currency prices to a greater degree than if the Fund
had not entered into such contracts.
At or before the maturity of a forward contract requiring the Fund to
sell a currency, the Fund might sell a portfolio security and use the sale
proceeds to make delivery of the currency. In the alternative the Fund might
retain the security and offset its contractual obligation to deliver the
currency by purchasing a second contract. Under that contract the Fund will
obtain, on the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund might close out a forward contract
requiring it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity date
of the first contract. The Fund would realize a gain or loss as a result of
entering into such an offsetting forward contract under either circumstance. The
gain or loss will depend on the extent to which the exchange rate or rates
between the currencies involved moved between the execution dates of the first
contract and offsetting contract.
The costs to the Fund of engaging in forward contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no brokerage fees or commissions are
involved. Because these contracts are not traded on an exchange, the Fund must
evaluate the credit and performance risk of the counterparty under each forward
contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund may convert foreign currency from time to time, and
will incur costs in doing so. Foreign exchange dealers do not charge a fee for
conversion, but they do seek to realize a profit based on the difference between
the prices at which they buy and sell various currencies. Thus, a dealer might
offer to sell a foreign currency to the Fund at one rate, while offering a
lesser rate of exchange if the Fund desires to resell that currency to the
dealer.
|_| Regulatory Aspects of Hedging Instruments. When using
futures and options on futures, the Fund is required to operate within certain
guidelines and restrictions with respect to the use of futures as established by
the Commodities Futures Trading Commission (the "CFTC"). In particular, the Fund
is exempted from registration with the CFTC as a "commodity pool operator" if
the Fund complies with the requirements of Rule 4.5 adopted by the CFTC. The
Rule does not limit the percentage of the Fund's assets that may be used for
futures margin and related options premiums for a bona fide hedging position.
However, under the Rule, the Fund must limit its aggregate initial futures
margin and related options premiums to not more than 5% of the Fund's net assets
for hedging strategies that are not considered bona fide hedging strategies
under the Rule. Under the Rule, the Fund must also use short futures and options
on futures solely for bona fide hedging purposes within the meaning and intent
of the applicable provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by the option exchanges. The exchanges limit the maximum number of
options that may be written or held by a single investor or group of investors
acting in concert. Those limits apply regardless of whether the options were
written or purchased on the same or different exchanges or are held in one or
more accounts or through one or more different exchanges or through one or more
brokers. Thus, the number of options that the Fund may write or hold may be
affected by options written or held by other entities, including other
investment companies having the same Advisor as the Fund (or an Advisor that is
an affiliate of the Fund's Advisor). The exchanges also impose position limits
on Futures transactions. An exchange may order the liquidation of positions
found to be in violation of those limits and may impose certain other sanctions.
Under the Investment Company Act, when the Fund purchases a future, it
must maintain cash or readily marketable short-term debt instruments in an
amount equal to the market value of the securities underlying the future, less
the margin deposit applicable to it.
|_| Tax Aspects of Certain Hedging Instruments. Certain
foreign currency exchange contracts in which the Fund may invest are treated as
"Section 1256 contracts" under the Internal Revenue Code. In general, gains or
losses relating to Section 1256 contracts are characterized as 60% long-term and
40% short-term capital gains or losses under the Code. However, foreign currency
gains or losses arising from Section 1256 contracts that are forward contracts
generally are treated as ordinary income or loss. In addition, Section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market," and unrealized gains or losses are treated as though they
were realized. These contracts also may be marked-to-market for purposes of
determining the excise tax applicable to investment company distributions and
for other purposes under rules prescribed pursuant to the Internal Revenue Code.
An election can be made by the Fund to exempt those transactions from this
marked-to-market treatment.
Certain forward contracts the Fund enters into may result in
"straddles" for federal income tax purposes. The straddle rules may affect the
character and timing of gains (or losses) recognized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position making
up a straddle is allowed only to the extent that the loss exceeds any
unrecognized gain in the offsetting positions making up the straddle. Disallowed
loss is generally allowed at the point where there is no unrecognized gain in
the offsetting positions making up the straddle, or the offsetting position is
disposed of.
Under the Internal Revenue Code, the following gains or losses are
treated as ordinary income or loss: (1) gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities, and
(2) gains or losses attributable to fluctuations in the value of a
foreign currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward contracts
and the date of disposition.
Currency gains and losses are offset against market gains and losses on
each trade before determining a net "Section 988" gain or loss under the
Internal Revenue Code for that trade, which may increase or decrease the amount
of the Fund's investment income available for distribution to its shareholders.
|X| Temporary Defensive Investments. When market conditions are
unstable, or the Manager believes it is otherwise appropriate to reduce
holdings in stocks, the Fund can invest in a variety of debt securities for
defensive purposes. The Fund can also purchase these securities for
liquidity purposes to meet cash needs due to the redemption of Fund shares,
or to hold while waiting reinvest cash received from the sale of other
portfolio securities. The Fund can hold cash or buy: o high-quality (rated
in the top rating categories of nationally-recognized rating organizations
or deemed by the Manager to be of comparable quality), short-term money
market instruments, including those issued by the U. S. Treasury or other
government agencies,
o commercial paper (short-term, unsecured, promissory notes of domestic or
foreign companies) rated in the top two rating categories of a nationally
recognizes rating organization,
o debt obligations of corporate or foreign government issuers, rated
investment grade (rated at least Baa by Moody's Investors Service, Inc. or
at least BBB by Standard & Poor's Corporation, or a comparable rating by
another rating organization), or unrated securities judge by the Manager to
have a comparable quality to rated securities in those categories,
o certificates of deposit and bankers' acceptances of domestic and foreign
banks and savings and loan associations, and
o repurchase agreements.
Short-term debt securities would normally be selected for defensive or
cash management purposes because they can normally be disposed of quickly, are
not generally subject to significant fluctuations in principal value and their
value will be less subject to interest rate risk than longer-term debt
securities.
Investment Restrictions
|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Fund has adopted to govern its investments that can be changed
only by the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, a "majority" vote is defined as the vote of
the holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a
shareholder meeting, if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or
o more than 50% of the outstanding shares.
The Fund's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such. The Fund's Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Fund's most significant investment policies are described in
the Prospectus.
|_| Does the Fund Have Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.
o The Fund cannot buy securities issued or guaranteed by any one
issuer if more than 5% of its total assets would be invested in
securities of that issuer or if it would then own more than 10%
of that issuer's voting securities. That restriction applies to
75% of the Fund's total assets. The limit does not apply to
securities issued by the U.S. government or any of its agencies
or instrumentalities.
o The Fund cannot concentrate investments in any particular
industry. That means it cannot invest 25% or more of its total
assets in companies in any one industry.
o The Fund cannot lend money. However, the Fund can enter into
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 they are publicly
distributed. Investments in obligations that are not publicly
distributed are 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.
o The Fund cannot invest in real estate or interests in real
estate. However, the Fund can purchase readily-marketable
securities of companies holding real estate or interests in real
estate.
o The Fund cannot issue "senior securities," but this does not
prohibit certain investment activities for which assets of the
Fund are designated as segregated, or margin, collateral or
escrow arrangements are established, to cover the related
obligations. Examples of those activities include borrowing
money, reverse repurchase agreements, delayed-delivery and
when-issued arrangements for portfolio securities transactions,
and contracts to buy or sell derivatives, hedging instruments,
options or futures.
o The Fund cannot underwrite securities of other companies. A
permitted exception is in case it is deemed to be an underwriter
under the Securities Act of 1933 when reselling any securities
held in its own portfolio
o The Fund cannot invest in commodities or commodity contracts,
other than the hedging instruments permitted by any of its other
investment policies. It does not matter whether the hedging
instrument is considered to be a commodity or commodity
contract.
Another fundamental policy adopted by the Fund permits it to invest all
of its assets in the securities of a single open-end management investment
company for which the Manager, one of its subsidiaries or a successor is the
investment Advisor or sub-Advisor. That fund must have substantially the same
fundamental investment objective, policies and limitations as the Fund. This
policy would permit the Fund to adopt a "master-feeder" structure. Under that
structure, the Fund would be a "feeder" fund and would invest all of its assets
in a single pooled "master fund" in which other feeder funds could also invest.
This could enable the Fund to take advantage of potential operational and cost
efficiencies in the master-feeder structure. The Fund has no present intention
of adopting the master-feeder structure. If it did so, the Prospectus and this
Statement of Additional Information would be revised accordingly. In addition,
the Fund may invest in funds selected by a Trustee of the Fund under its
Deferred Compensation Plan for Disinterested Trustees.
|X| Does the Fund Have Any Restrictions That Are Not Fundamental? The Fund
has a number of other investment restrictions that are not fundamental policies,
which means that they can be changed by the Board of Trustees without
shareholder approval.
o The Fund cannot invest in companies for the purpose of acquiring control or
management of them.
o The Fund cannot purchase securities on margin. However, the Fund
may make margin deposits in connection with any of the hedging
instruments permitted by any of its other investment policies.
o The Fund cannot invest in or hold securities of any issuer if
officers and Trustees of the Fund or the Manager individually
beneficially own more than 1/2 of 1% of the securities of that
issuer and together own more than 5% of the securities of that
issuer.
o The Fund cannot mortgage or pledge any of its assets. However,
this 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.
Unless the Prospectus or this Statement of Additional Information
states that a percentage restriction applies on an ongoing basis, it applies
only at the time the Fund makes an investment. The Fund need not sell securities
to meet the percentage limits if the value of the investment increases in
proportion to the size of the Fund.
For purposes of the Fund's policy not to concentrate its investments
as described above, the Fund has adopted the industry classifications set
forth in Appendix A to this Statement of Additional Information. This is
not a fundamental policy.
How the Fund is Managed
Organization and History. The Fund is an open-end, diversified management
investment company with an unlimited number of authorized shares of beneficial
interest. The Fund was organized as a Massachusetts business trust in May, 1996.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The Trustees
meet periodically throughout the year to oversee the Fund's activities, review
its performance, and review the actions of the Manager.
|X| Classes of Shares. The Board of Trustees has the power, without
shareholder approval, to divide unissued shares of the Fund into two or
more classes. The Board has done so, and the Fund currently has three
classes of shares: Class A, Class B, and Class C. All classes invest in the
same investment portfolio. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different
classes, o may have a different net asset value,
o may have separate voting rights on matters in which interests of one
class are different from interests of another class, and
o votes as a class on matters that affect that class alone.
Shares are freely transferable, and each share of each class has one
vote at shareholder meetings, with fractional shares voting proportionally on
matters submitted to the vote of shareholders. Each share of the Fund represents
an interest in the Fund proportionately equal to the interest of each other
share of the same class.
The Trustees are authorized to create new series and classes of shares.
The Trustees may reclassify unissued shares of the Fund into additional series
or classes of shares. The Trustees also may divide or combine the shares of a
class into a greater or lesser number of shares without changing the
proportionate beneficial interest of a shareholder in the Fund. Shares do not
have cumulative voting rights or preemptive or subscription rights. Shares may
be voted in person or by proxy at shareholder meetings.
|X| Meetings of Shareholders. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law. It will also do so when a
shareholder meeting is called by the Trustees or upon proper request of the
shareholders.
Shareholders have the right, upon the declaration in writing or vote of
two-thirds of the outstanding shares of the Fund, to remove a Trustee. The
Trustees will call a meeting of shareholders to vote on the removal of a Trustee
upon the written request of the record holders of 10% of its outstanding shares.
If the Trustees receive a request from at least 10 shareholders stating that
they wish to communicate with other shareholders to request a meeting to remove
a Trustee, the Trustees will then either make the Fund's shareholder list
available to the applicants or mail their communication to all other
shareholders at the applicants' expense. The shareholders making the request
must have been shareholders for at least six months and must hold shares of the
Fund valued at $25,000 or more or constituting at least 1% of the Fund's
outstanding shares, whichever is less. The Trustees may also take other action
as permitted by the Investment Company Act.
|_| Shareholder and Trustee Liability. The Fund's Declaration
of Trust contains an express disclaimer of shareholder or Trustee liability for
the Fund's obligations. It also provides for indemnification and reimbursement
of expenses out of the Fund's property for any shareholder held personally
liable for its obligations. The Declaration of Trust also states that upon
request, the Fund shall assume the defense of any claim made against a
shareholder for any act or obligation of the Fund and shall satisfy any judgment
on that claim. Massachusetts law permits a shareholder of a business trust (such
as the Fund) to be held personally liable as a "partner" under certain
circumstances. However, the risk that a Fund shareholder will incur financial
loss from being held liable as a "partner" of the Fund is limited to the
relatively remote circumstances in which the Fund would be unable to meet its
obligations.
The Fund's contractual arrangements state that any person doing
business with the Fund (and each shareholder of the Fund) agrees under its
Declaration of Trust to look solely to the assets of the Fund for satisfaction
of any claim or demand that may arise out of any dealings with the Fund.
Additionally, the Trustees shall have no personal liability to any such person,
to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and their
principal occupations and business affiliations and occupations during the past
five years are listed below. Trustees denoted with an asterisk (*) below are
deemed to be "interested persons" of the Fund under the Investment Company Act.
All of the Trustees are Trustees or Directors of the following New York-based
Oppenheimer funds1:
Oppenheimer California Municipal Fund Oppenheimer Large Cap Growth Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Money Market Fund, Inc
Oppenheimer Capital Preservation Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Developing Markets Fund Oppenheimer Multi-Sector Income Trust
Oppenheimer Discovery Fund Oppenheimer Multi-State Municipal Trust
Oppenheimer Enterprise Fund Oppenheimer Municipal Bond Fund
Oppenheimer Europe Fund Oppenheimer New York Municipal Fund
Oppenheimer Global Fund Oppenheimer Series Fund, Inc.
Oppenheimer Global Growth & Income
Fund Oppenheimer Trinity Core Fund
Oppenheimer Gold & Special Minerals
Fund Oppenheimer Trinity Growth Fund
Oppenheimer Growth Fund Oppenheimer Trinity Valve Fund
Oppenheimer International Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer International Small Company
Fund Oppenheimer World Bond Fund
Ms. Macaskill and Messrs. Donohue, Wixted, Zack, Bishop and Farrar
respectively hold the same offices with the other New York-based Oppenheimer
funds as with the Fund. As of December 3, 1999, the Trustees and officers of the
Fund as a group owned of record 3.3% of class A shares and beneficially less
than 1% of class B and class C shares of the Fund. The foregoing statement does
not reflect ownership of shares of the Fund held of record by an employee
benefit plan for employees of the Manager, other than the shares beneficially
owned under the plan by the officers of the Fund listed above. Ms. Macaskill and
Mr. Donohue are trustees of that plan.
Leon Levy, Chairman of the Board of Trustees; Age: 74.
280 Park Avenue, New York, NY 10017
General Partner of Odyssey Partners, L.P. (investment partnership) (since
1982) and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee; Age: 66.
19750 Beach Road, Jupiter, FL 33469
A Trustee or Director of other Oppenheimer funds. Formerly he held the
following positions: Vice Chairman of the Manager, OppenheimerFunds, Inc.
(October 1995 - December 1997); Executive Vice President of the Manager
(December 1977 - October 1995); Executive Vice President and a director
(April 1986 - October 1995) of HarbourView Asset Management Corporation, an
investment advisor subsidiary of the Manager.
Phillip A. Griffiths, Trustee; Age 61.
97 Olden Lane, Princeton, N. J. 08540
The Director of the Institute for Advanced Study, Princeton, N.J. (since
1991) and a member of the National Academy of Sciences (since 1979);
formerly a director of Bankers Trust Corporation (1994 through June, 1999),
Provost and Professor of Mathematics at Duke University (1983 - 1991), a
director of Research Triangle Institute, Raleigh, N.C. (1983 - 1991), and a
Professor of Mathematics at Harvard University (1972 - 1983).
Benjamin Lipstein, Trustee; Age: 76.
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
Bridget A. Macaskill, President and Trustee; Age: 51.*
Two World Trade Center, New York, New York 10048-0203
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView Asset Management Corporation, an investment advisor
subsidiary of the Manager Chairman and a director of Shareholder Services, Inc.
(since August 1994) and Shareholder Financial Services, Inc. (since September
1995), transfer agent subsidiaries of the Manager; President (since September
1995) and a director (since October 1990) of Oppenheimer Acquisition Corp., the
Manager's parent holding company; President (since September 1995) and a
director (since November 1989) of Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund management
subsidiary of the Manager and of Oppenheimer Millennium Funds plc; President and
a director of other Oppenheimer funds; a director of Prudential Corporation plc
(a U.K. financial service company).
Elizabeth B. Moynihan, Trustee; Age: 70.
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institute), Executive Committee of Board of Trustees of the
National Building Museum; a member of the Trustees Council, Preservation League
of New York State.
Kenneth A. Randall, Trustee; Age: 72.
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), and Prime Retail,
Inc. (real estate investment trust); formerly President and Chief Executive
Officer of The Conference Board, Inc. (international economic and business
research) and a director of Lumbermens Mutual Casualty Company, American
Motorists Insurance Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age: 69.
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 director of RBAsset
(real estate manager); a director of OffitBank; Trustee, Financial Accounting
Foundation (FASB and GASB); formerly New York State Comptroller and trustee, New
York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 68.
8 Sound Shore Drive, Greenwich, Connecticut 06830
Chairman of The Directorship Group, Inc. (corporate governance
consulting and executive recruiting); a director of Professional Staff
Limited (a U.K. temporary staffing company); a life trustee of
International House (non-profit educational organization), and a trustee of
the Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Trustee; Age: 74.
399 Ski Trail, Smoke Rise, New Jersey 07405
Formerly Chairman (November 1987 - January 1991) and a director (January
1969 - August 1999) of the Manager; President and Director of the
Distributor (July 1978 - January 1992).
Pauline Trigere, Trustee; Age: 87.
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of P.T. Concept (design and sale of
women's fashions).
Clayton K. Yeutter, Trustee; Age: 69.
10475 E. Laurel Lane, Scottsdale, Arizona 85259
Of Counsel, Hogan & Hartson (a law firm); a director of Zurich Financial
Services (financial services), Zurich Allied AG and Allied Zurich p.l.c.
(insurance investment management); Caterpillar, Inc. (machinery), ConAgra, Inc.
(food and agricultural products), Farmers Insurance Company (insurance), FMC
Corp. (chemicals and machinery) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order), Counsellor to the President (Bush)
for Domestic Policy, Chairman of the Republican National Committee, Secretary of
the U.S.
Department of Agriculture, U.S. Trade Representative.
Rajeev Bhaman, Vice President and Portfolio Manager, Age: 46.
Two World Trade Center, New York, New York 10048-0203
Vice President of the Manager (since November 1997); prior to joining the
Manager in March 1996, he was Assistant Vice President of the Manager; formerly
Vice President for Asian Equities of Barclays de Zoete Wedd, Inc.
(October 1989 - February 1996).
Andrew J. Donohue, Secretary; Age: 49.
Two World Trade Center, New York, New York 10048-0203
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993) and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel and
a director of HarbourView Asset Management Corporation, Shareholder Services,
Inc., Shareholder Financial Services, Inc. and (since September 1995)
Oppenheimer Partnership Holdings, Inc.; President and a director of Centennial
Asset Management Corporation (since September 1995); President, General Counsel
and a director of Oppenheimer Real Asset Management, Inc. (since July 1996);
General Counsel (since May 1996) and Secretary (since April 1997) of Oppenheimer
Acquisition Corp.; Vice President and a director of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Brian W. Wixted, Treasurer; Age: 40.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since April 1999) of the
Manager; Treasurer of HarbourView Asset Management Corporation,
Shareholder Services, Inc., Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc. (since April 1999); Assistant
Treasurer of Oppenheimer Acquisition Corp. (since April 1999);
Assistant Secretary of Centennial Asset Management Corporation (since
April 1999); formerly Principal and Chief Operating Officer, Bankers
Trust Company - Mutual Fund Services Division (March 1995 - March
1999); Vice President and Chief Financial Officer of CS First Boston
Investment Management Corp. (September 1991 - March 1995); and Vice
President and Accounting Manager, Merrill Lynch Asset Management
(November 1987 - September 1991).
Robert J. Bishop, Assistant Treasurer; Age: 41.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 34.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer Funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994 - May 1996), and a Fund Controller
for the Manager.
Robert G. Zack, Assistant Secretary; Age: 51.
Two World Trade Center, New York, New York 10048-0203
Senior Vice President (since May 1985) and Associate General
Counsel (since May 1981) of the Manager, Assistant Secretary of
Shareholder Services, Inc. (since May 1985), and Shareholder Financial
Services, Inc. (since November 1989); Assistant Secretary of
OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds
plc (since October 1997); an officer of other Oppenheimer funds.
|X| Remuneration of Trustees. The officers of the Fund and a Trustee of
the Fund (Ms. Macaskill) who is affiliated with the Manager receives no salary
or fee from the Fund. Mr. Spiro was affiliated with the Manager until September
1, 1999. The remaining Trustees of the Fund received the compensation shown
below. The compensation from the Fund was paid during its fiscal period ended
August 31, 1999. The compensation from all of the New York-based Oppenheimer
funds (including the Fund) was received as a director, trustee or member of a
committee of the boards of those funds during the calendar year 1998.
<TABLE>
<CAPTION>
Total
Retirement Compensation
Benefits from all
Aggregate Compensation Accrued as Part New York based Oppenheimer
Trustee's Name from Fund of Fund Funds (26 Funds)1
and Position Expenses
<S> <C> <C> <C>
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Leon Levy $363 $0 $162,600
Chairman
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Robert G. Galli $182 $0 $113,8383
Study Committee Member
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Phillip Griffths $272 $0 None
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Benjamin Lipstein $313 $0 $140,550
Study Committee Chairman,3
Audit Committee Member
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Elizabeth B. Moynihan $221 $0 $99,000
Study Committee
Member
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Kenneth A. Randall $202 $0 $90,800
Audit Committee Member
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Edward V. Regan $200 $0 $89,800
Proxy Committee Chairman, Audit
Committee Member
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Russell S. Reynolds, Jr. $150 $0 $67,200
Proxy Committee
Member
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Pauline Trigere $134 $0 $60,000
- ------------------------------------ -------------------------- ------------------------- ----------------------------
- ------------------------------------ -------------------------- ------------------------- ----------------------------
Clayton K. Yeutter $150 4 $0 $67,200
Proxy Committee
Member
- ------------------------------------ -------------------------- ------------------------- ----------------------------
</TABLE>
- ----------------------------
1 For the 1998 calendar year.
2 Reflects fees from 6/5/99 to 8/31/99
3 Total compensation for the 1998 calendar year includes compensation
received for serving as Trustee or Director of 11 other Oppenheimer funds.
4 Includes $172 deferred under Deferred Compensation Plan described below.
|X| Retirement Plan for Trustees. The Fund has adopted a retirement
plan that provides for payments to retired Trustees. Payments are up to 80% of
the average compensation paid during a Trustee's five years of service in which
the highest compensation was received. A Trustee must serve as trustee for any
of the New York-based Oppenheimer funds for at least 15 years to be eligible for
the maximum payment. Each Trustee's retirement benefits will depend on the
amount of the Trustee's future compensation and length of service. Therefore the
amount of those benefits cannot be determined at this time, nor can we estimate
the number of years of credited service that will be used to determine those
benefits.
|X| Deferred Compensation Plan for Trustees. The Board of Trustees has
adopted a Deferred Compensation Plan for disinterested trustees that enables
them to elect to defer receipt of all or a portion of the annual fees they are
entitled to receive from the Fund. Under the plan, the compensation deferred by
a Trustee is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Trustee. The
amount paid to the Trustee under the plan will be determined based upon the
performance of the selected funds.
Deferral of Trustees' fees under the plan will not materially affect
the Fund's assets, liabilities or net income per share. The plan will not
obligate the Fund to retain the services of any Trustee or to pay any particular
level of compensation to any Trustee. Pursuant to an Order issued by the
Securities and Exchange Commission, the Fund may invest in the funds selected by
the Trustee under the plan without shareholder approval for the limited purpose
of determining the value of the Trustee's deferred fee account.
|X| Major Shareholders. As of December 3, 1999, no person was
known by the Fund to own beneficially 5% or more of the shares of any
class of the Fund's outstanding securities.
The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp.,
a holding company controlled by Massachusetts Mutual Life Insurance
Company.
|X| Code of Ethics. The Fund, the Manager and the Distributor 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. Covered persons include
persons with knowledge of the investments and investment intentions of the Fund
and other funds advised by the Manager. The Code of Ethics does permit personnel
subject to the Code to invest in securities, including securities that may be
purchased or held by the Fund, subject to a number of restrictions and controls.
Compliance with the Code of Ethics is carefully monitored and enforced by the
Manager.
|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities for
the Fund's portfolio and handles its day-to-day business. The portfolio manager
of the Fund is employed by the Manager and is the person who is principally
responsible for the day-to-day management of the Fund's portfolio. Other members
of the Manager's Equity Portfolio Team, in particular, Frank Jennings, who is a
Vice President of the Manager, and William Wilby, who is a Senior Vice President
of the Manager, provide the portfolio manager with counsel and support in
managing the Fund's portfolio.
The agreement requires the Manager, at its expense, to provide the Fund
with adequate office space, facilities and equipment. It also requires the
Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Fund.
Those responsibilities include the compilation and maintenance of records with
respect to its operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for continuous public
sale of shares of the Fund.
The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The advisory agreement lists examples of expenses paid by
the Fund. The major categories relate to interest, taxes, brokerage commissions,
fees to certain Trustees, legal and audit expenses, custodian bank and transfer
agent expenses, share issuance costs, certain printing and registration costs
and non-recurring expenses, including litigation costs. The management fees paid
by the Fund to the Manager are calculated at the rates described in the
Prospectus, which are applied to the assets of the Fund as a whole. The fees are
allocated to each class of shares based upon the relative proportion of the
Fund's net assets represented by that class.
Fiscal Years ended 8/31: Management Fees Paid to OppenheimerFunds, Inc.
1997* $211,914
1998 $588,067
1999 $495,616
* Fiscal period from inception, 11/18/96.
The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment advisory
agreement, the Manager is not liable for any loss resulting from a good faith
error or omission with respect to any of its duties under the agreement.
The agreement permits the Manager to act as investment Advisor for any
other person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as investment
Advisor or general distributor. If the Manager shall no longer act as investment
Advisor to the Fund, the Manager may withdraw the right of the Fund to use the
name "Oppenheimer" as part of its name.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the duties of
the Manager under the investment advisory agreement is to arrange the portfolio
transactions for the Fund. The advisory agreement contains provisions relating
to the employment of broker-dealers to effect the Fund's portfolio transactions.
The Manager is authorized by the advisory agreement to employ broker-dealers,
including "affiliated" brokers, as that term is defined in the Investment
Company Act. The Manager may employ broker-dealers that the Manager thinks, in
its best judgment based on all relevant factors will implement the policy of the
Fund to obtain, at reasonable expense, the "best execution" of the Fund's
portfolio transactions. "Best execution" means prompt and reliable execution at
the most favorable price obtainable. The Manager need not seek competitive
commission bidding. However, it is expected to be aware of the current rates of
eligible brokers and to minimize the commissions paid to the extent consistent
with the interests and policies of the Fund as established by its Board of
Trustees.
Under the investment advisory agreement, the Manager may select brokers
(other than affiliates) that provide brokerage and/or research services for the
Fund and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher than
another qualified broker would charge, if the Manager makes a good faith
determination that the commission is fair and reasonable in relation to the
services provided. Subject to those considerations, as a factor in selecting
brokers for the Fund's portfolio transactions, the Manager may also consider
sales of shares of the Fund and other investment companies for which the Manager
or an affiliate serves as investment Advisor.
Brokerage Practices Followed by the Manager. The Manager allocates brokerage for
the Fund subject to the provisions of the investment advisory agreement and the
procedures and rules described above. Generally, the Manager's portfolio traders
allocate brokerage based upon recommendations from the Manager's portfolio
managers. In certain instances, portfolio managers may directly place trades and
allocate brokerage. In either case, the Manager's executive officers supervise
the allocation of brokerage.
Transactions in securities other than those for which an exchange is the
primary market are generally done with principals or market makers. In
transactions on foreign exchanges, the Fund may be required to pay fixed
brokerage commissions and therefore would not have the benefit of negotiated
commissions available in U.S. markets. Brokerage commissions are paid primarily
for effecting transactions in listed securities or for certain fixed-income
agency transactions in the secondary market. Otherwise brokerage commissions are
paid only if it appears likely that a better price or execution can be obtained
by doing so. In an option transaction, the Fund ordinarily uses the same broker
for the purchase or sale of the option and any transaction in the securities to
which the option relates.
Other funds advised by the Manager have investment policies similar to
those of the Fund. Those other funds may purchase or sell the same securities as
the Fund at the same time as the Fund, which could affect the supply and price
of the securities. If two or more funds advised by the Manager purchase the same
security on the same day from the same dealer, the transactions under those
combined orders are averaged as to price and allocated in accordance with the
purchase or sale orders actually placed for each account.
Most purchases of debt obligations are principal transactions at net
prices. Instead of using a broker for those transactions, the Fund normally
deals directly with the selling or purchasing principal or market maker unless
the Manager determines that a better price or execution can be obtained by using
the services of a broker. Purchases of portfolio securities from underwriters
include a commission or concession paid by the issuer to the underwriter.
Purchases from dealers include a spread between the bid and asked prices. The
Fund seeks to obtain prompt execution of these orders at the most favorable net
price.
The investment advisory agreement permits the Manager to allocate
brokerage for research services. The research services provided by a particular
broker may be useful only to one or more of the advisory accounts of the Manager
and its affiliates. The investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more of the
Manager's other accounts. Investment research may be supplied to the Manager by
a third party at the instance of a broker through which trades are placed.
Investment research services include information and analysis on
particular companies and industries as well as market or economic trends and
portfolio strategy, market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Manager in a non-research capacity (such as bookkeeping
or other administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making process may
be paid in commission dollars.
The Board of Trustees permits the Manager to use stated commissions on
secondary fixed-income agency trades to obtain research if the broker represents
to the Manager that: (i) the trade is not from or for the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction.
The Board of Trustees permits the Manager to use concessions on fixed-price
offerings to obtain research, in the same manner as is permitted for agency
transactions.
The research services provided by brokers broadens the scope and
supplements the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager to
obtain market information for the valuation of securities that are either held
in the Fund's portfolio or are being considered for purchase. The Manager
provides information to the Board about the commissions paid to brokers
furnishing such services, together with the Manager's representation that the
amount of such commissions was reasonably related to the value or benefit of
such services.
Fiscal Years Ended 8/31: Total Brokerage Commissions Paid by the Fund 1
1997 2 $280,213
1998 $285,539
1999 $179,4943
1. Amounts do not include spreads or concessions on principal transactions
on a net trade basis.
2. Fiscal period from inception of Fund 11/18/96
3. In the fiscal year ended 8/31/99, the amount of transactions directed to
brokers for research services was $23,972,367 and the amount of the
commissions paid to broker-dealers for those services was $132,212.
Distribution and Service Plans
The Distributor. Under its General Distributor's Agreement with the Fund, the
Distributor acts as the Fund's principal underwriter in the continuous public
offering of the Fund's classes of shares. The Distributor is not obligated to
sell a specific number of shares. Expenses normally attributable to sales are
borne by the Distributor.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares since the Fund's inception is shown in the
table below.
<TABLE>
<CAPTION>
Aggregate Class A Front-End Commissions on Commissions on Commissions on
Fiscal Year Front-End Sales Sales Charges Class A Shares Class B Shares Class C Shares
Ended 8/31: Charges on Class Retained by Advanced by Advanced by Advanced by
A Shares Distributor Distributor 1 Distributor 1 Distributor 1
<S> <C> <C> <C> <C> <C>
- --------------- ------------------- ------------------- -------------------- ------------------- -------------------
- --------------- ------------------- ------------------- -------------------- ------------------- -------------------
19972 $260,494 $78,557 N/A $369,016 $23,133
- --------------- ------------------- ------------------- -------------------- ------------------- -------------------
- --------------- ------------------- ------------------- -------------------- ------------------- -------------------
1998 $297,560 $91,264 $12,542 $370,774 $31,465
- --------------- ------------------- ------------------- -------------------- ------------------- -------------------
- --------------- ------------------- ------------------- -------------------- ------------------- -------------------
1999 $129,143 $37,678 $13,821 $150,610 $13,447
- --------------- ------------------- ------------------- -------------------- ------------------- -------------------
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales
of Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
2. Fiscal period from inception of the Fund, 11/18/96.
<TABLE>
<CAPTION>
Class A Contingent Deferred Class B Contingent Deferred Class C Contingent Deferred
Fiscal Years Ended Sales Charges Retained by Sales Charges Retained by Sales Charges Retained by
8/31: Distributor Distributor Distributor
<S> <C> <C> <C>
- ----------------------- ----------------------------- ------------------------------ -------------------------------
- ----------------------- ----------------------------- ------------------------------ -------------------------------
1997* None None $9,165
- ----------------------- ----------------------------- ------------------------------ -------------------------------
- ----------------------- ----------------------------- ------------------------------ -------------------------------
1998 None $45,540 $3,495
- ----------------------- ----------------------------- ------------------------------ -------------------------------
- ----------------------- ----------------------------- ------------------------------ -------------------------------
1999 None $56,988 $2,250
- ----------------------- ----------------------------- ------------------------------ -------------------------------
</TABLE>
* From inception of the Fund, 11/18/96.
For additional information about distribution of the Fund's shares,
including fees and expenses, please refer to "Distribution and Service Plans,"
below.
Distribution and Service Plans. The Fund has adopted a Service Plan for Class A
shares and Distribution and Service Plans for Class B and Class C shares under
Rule 12b-1 of the Investment Company Act. Under those plans the Fund pays the
Distributor for all or a portion of its costs incurred in connection with the
distribution and/or servicing of the shares of the particular class. Each plan
has been approved by a vote of the Board of Trustees, including a majority of
the Independent Trustees2, cast in person at a meeting called for the purpose of
voting on that plan.
Under the plans, the Manager and the Distributor may make payments to
affiliates and in their sole discretion, from time to time may use their own
resources (at no direct cost to the Fund) to make payments to brokers, dealers
or other financial institutions for distribution and administrative services
they perform. The Manager may use its profits from the advisory fee it receives
from the Fund. In their sole discretion, the Distributor and the Manager may
increase or decrease the amount of payments they make from their own resources
to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Fund's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of
voting on continuing the plan. A plan may be terminated at any time by the vote
of a majority of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the outstanding shares
of that class.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount of
payments to be made under a plan must be approved by shareholders of the class
affected by the amendment. Because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund must obtain the approval
of both Class A and Class B shareholders for a proposed material amendment to
the Class A Plan that would materially increase payments under the Plan. That
approval must be by a "majority" (as defined in the Investment Company Act) of
the shares of each Class, voting separately by class.
While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports on the plans to the Board of Trustees at least
quarterly for its review. The Reports shall detail the amount of all payments
made under a plan and the purpose for which the payments were made. Those
reports are subject to the review and approval of the Independent Trustees.
Each Plan states that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in the selection and nomination process as long as the
final decision as to selection or nomination is approved by a majority of the
Independent Trustees.
Under the plan for a class, no payment will be made to any recipient in
any quarter in which the aggregate net asset value of all Fund shares of that
class held by the recipient for itself and its customers does not exceed a
minimum amount, if any, that may be set from time to time by a majority of the
Independent Trustees. The Board of Trustees has set no minimum amount of assets
to qualify for payments under the plans.
|X| Class A Service Plan Fees. Under the Class A service plan,
the Distributor currently uses the fees it receives from the Fund to pay
brokers, dealers and other financial institutions (they are referred to as
"recipients") for personal services and account maintenance services they
provide for their customers who hold Class A shares. The services include, among
others, answering customer inquiries about the Fund, assisting in establishing
and maintaining accounts in the Fund, making the Fund's investment plans
available and providing other services at the request of the Fund or the
Distributor. While the plan permits the Board to authorize payments to the
Distributor to reimburse itself for services under the plan, the Board has not
yet done so. The Distributor makes payments to plan recipients quarterly at an
annual rate not to exceed 0.25% of the average annual net assets consisting of
Class A shares held in the accounts of the recipients or their customers.
For the fiscal period ended August 31, 1999 payments under the Class A
Plan totaled $72,958, all of which was paid by the Distributor to recipients.
That included $6,851 paid to an affiliate of the Distributor's parent company.
Any unreimbursed expenses the Distributor incurs with respect to Class A shares
in any fiscal year cannot be recovered in subsequent years. The Distributor may
not use payments received under the Class A Plan to pay any of its interest
expenses, carrying charges, or other financial costs, or allocation of overhead.
|X| Class B and Class C Service and Distribution Plan Fees.
Under each plan, service fees and distribution fees are computed on the average
of the net asset value of shares in the respective class, determined as of the
close of each regular business day during the period. The plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plans during the period for which the fee is paid. The types of services
that recipients provide are similar to the services provided under the Class A
Service Plan, described above.
The Class B and the Class C Plans permit the Distributor to retain both
the asset-based sales charges and the service fees or to pay recipients the
service fee on a quarterly basis, without payment in advance. However, the
Distributor currently intends to pay the service fee to recipients in advance
for the first year after the shares are purchased. After the first year shares
are outstanding, the Distributor makes service fee payments quarterly on those
shares. The advance payment is based on the net asset value of shares sold.
Shares purchased by exchange do not qualify for the advance service fee payment.
If Class B or Class C shares are redeemed during the first year after their
purchase, the recipient of the service fees on those shares will be obligated to
repay the Distributor a pro rata portion of the advance payment of the service
fee made on those shares.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. It pays the asset-based sales charge
as an ongoing commission to the recipient on Class C shares outstanding for a
year or more. If a dealer has a special agreement with the Distributor, the
Distributor will pay the Class B and/or Class C service fee and the asset-based
sales charge to the dealer quarterly in lieu of paying the sales commissions and
service fee in advance at the time of purchase.
The asset-based sales charges on Class B and Class C shares allow
investors to buy shares without a front-end sales charge while allowing the
Distributor to 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. The payments are made to the
Distributor in recognition that the Distributor:
o pays sales commissions to authorized brokers and dealers at the time of
sale and pays service fees as described above,
o may finance payment of sales commissions and/or the advance of the
service fee payment to recipients under the plans, or may provide such
financing from its own resources or from the resources of an affiliate,
o employs personnel to support distribution of Class B and Class
C shares, and
o bears the costs of sales literature, advertising and prospectuses (other
than those furnished to current shareholders) and state "blue sky"
registration fees and certain other distribution expenses.
Distribution Fees Paid to the Distributor in the Fiscal Year Ended 8/31/99
<TABLE>
<CAPTION>
Distributor's
Distributor's Unreimbursed Expenses
Total Payments Under Amount Retained by Aggregate Unreimbursed as % of Net Assets of
Class: Plan Distributor Expenses Under Plan Class
<S> <C> <C> <C> <C>
---------------- ------------------------ ------------------------ ------------------------ ------------------------
---------------- ------------------------ ------------------------ ------------------------ ------------------------
Class B Plan $164,077 $134,322 $672,880 3.20%
---------------- ------------------------ ------------------------ ------------------------ ------------------------
---------------- ------------------------ ------------------------ ------------------------ ------------------------
Class C Plan $40,169 $28,153 $60,327 1.19%
---------------- ------------------------ ------------------------ ------------------------ ------------------------
</TABLE>
All payments under the Class B and the Class C plans are subject to the
limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses a variety of terms to
illustrate its investment performance. Those terms include "cumulative total
return," "average annual total return," "average annual total return at net
asset value" and "total return at net asset value." An explanation of how total
returns are calculated is set forth below. The charts below show the Fund's
performance as of the Fund's most recent fiscal year end. You can obtain current
performance information by calling the Fund's Transfer Agent at 1.800.525.7048
or by visiting the OppenheimerFunds Internet web site at
http://www.oppenheimerfunds.com.
The Fund's illustrations of its performance data in advertisements must
comply with rules of the Securities and Exchange Commission. Those rules
describe the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by the Fund of its performance data
must include the average annual total returns for the advertised class of shares
of the Fund. Those returns must be shown for the 1-, 5- and 10-year periods (or
the life of the class, if less) ending as of the most recently ended calendar
quarter prior to the publication of the advertisement (or its submission for
publication).
Use of standardized performance calculations enables an investor to
compare the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using the
Fund's performance information as a basis for comparison with other investments:
o Total returns measure the performance of a hypothetical account in the
Fund over various periods and do not show the performance of each
shareholder's account. Your account's performance will vary from the model
performance data if your dividends are received
o in cash, or you buy or sell shares during the period, or you bought your
shares at a different time and price than the shares used in the model.
o The Fund's performance returns do not reflect the effect of taxes on
dividends and capital gains distributions.
o An investment in the Fund is not insured by the FDIC or any other
government agency.
o The principal value of the Fund's shares and total returns are not
guaranteed and normally will fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or less
than their original cost.
o Total returns for any given past period represent historical performance
information and are not, and should not be considered, a prediction of
future returns.
The performance of each class of shares is shown separately, because
the performance of each class of shares will usually be different. That is
because of the different kinds of expenses each class bears. The total returns
of each class of shares of the Fund are affected by market conditions, the
quality of the Fund's investments, the maturity of debt investments, the types
of investments the Fund holds, and its operating expenses that are allocated to
the particular class.
|X| Total Return Information. There are different types of "total
returns" to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares
and that the investment is redeemed at the end of the period. Because of
differences in expenses for each class of shares, the total returns for each
class are separately measured. The cumulative total return measures the change
in value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period that
would produce the cumulative total return over the entire period. However,
average annual total returns do not show actual year-by-year performance. The
Fund uses standardized calculations for its total returns as prescribed by the
SEC. The methodology is discussed below.
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted from
the initial investment ("P") (unless the return is shown without sales charge,
as described below). For Class B shares, payment of the applicable contingent
deferred sales charge is applied, depending on the period for which the return
is shown: 5.0% in the first year, 4.0% in the second year, 3.0% in the third and
fourth years, 2.0% in the fifth year, 1.0% in the sixth year and none
thereafter. For Class C shares, the 1% contingent deferred sales charge is
deducted for returns for the 1-year period.
|_| Average Annual Total Return. The "average annual total
return" of each class is an average annual compounded rate of return for each
year in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n" in the formula) to achieve an
Ending Redeemable Value ("ERV" in the formula) of that investment, according to
the following formula:
1/n
( ERV )
( ----- ) - 1 = Average Annual Total Return
( P )
|_| Cumulative Total Return. The "cumulative total return"
calculation measures the change in value of a hypothetical investment of $1,000
over an entire period of years. Its calculation uses some of the same factors as
average annual total return, but it does not average the rate of return on an
annual basis.
Cumulative total return is determined as follows:
ERV - P
------------ = Total Return
P
? Total Returns at Net Asset Value. From time to time the Fund
may also quote a cumulative or an average annual total return "at net asset
value" (without deducting sales charges) for each class of 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 Fund's Total Returns for the Periods Ended 8/31/99
Cumulative Total Average Annual Total Returns
Classof Returns (Life of Class)
Shares
<TABLE>
<CAPTION>
1-Year Life-of-Class
After Without After Sales Without Sales After Sales Charge Without Sales Charge
Sales Sales Charge Charge
Charge Charge
<S> <C> <C> <C> <C> <C> <C>
- -------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
- -------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
Class A 15.33%1 22.36%1 41.30% 49.92% 5.25% 1 7.51%1
- -------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
- -------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
Class B 16.62%2 19.62%3 43.81% 48.81% 5.67% 2 6.64% 2
- -------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
- -------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
Class C 19.80%3 19.80%3 47.98% 48.98% 6.70% 3 6.70% 3
- -------------- ------------ ------------ ----------------- --------------- -------------------- ----------------------
</TABLE>
1. Inception of Class A: 11/18/96
2. Inception of Class B: 11/18/96
3. Inception of Class C: 11/18/96
Other Performance Comparisons. The Fund compares its performance annually to
that of an appropriate broadly-based market index in its Annual Report to
shareholders. You can obtain that information by contacting the Transfer Agent
at the addresses or telephone numbers shown on the cover of this Statement of
Additional Information. The Fund may also compare its performance to that of
other investments, including other mutual funds, or use rankings of its
performance by independent ranking entities. Examples of these performance
comparisons are set forth below.
|X| Lipper Rankings. From time to time the Fund may publish the ranking
of the performance of its classes of shares by Lipper Analytical Services, Inc.
Lipper is a widely-recognized independent mutual fund monitoring service. Lipper
monitors the performance of regulated investment companies, including the Fund,
and ranks their performance for various periods. The performance of the Fund is
ranked by Lipper against all other emerging markets funds. The Lipper
performance rankings are based on total returns that include the reinvestment of
capital gain distributions and income dividends but do not take sales charges or
taxes into consideration. Lipper also publishes "peer-group" indices of the
performance of all mutual funds in a category that it monitors and averages of
the performance of the funds in particular categories.
|X| Morningstar Rankings. From time to time the Fund may publish the
ranking and/or star rating of the performance of its classes of shares by
Morningstar, Inc., an independent mutual fund monitoring service. Morningstar
rates and ranks mutual funds in broad investment categories: domestic stock
funds, international stock funds, taxable bond funds and municipal bond funds.
The Fund is includes in the international stock funds category.
Morningstar proprietary star rankings reflect historical risk-adjusted
total investment return. Investment return measures a fund's (or class's) one-,
three-, five- and ten-year average annual total returns (depending on the
inception of the fund or class) in excess of 90-day U.S. Treasury bill returns
after considering the fund's sales charges and expenses. Risk is measured a
fund's (or class's) performance below 90-day U.S. Treasury bill returns. Risk
and investment return are combined to produce star ratings reflecting
performance relative to the other funds in the fund's category. Five stars is
the "highest" rating (top 10% of funds in a category), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The current star
rating is the fund's (or class's) overall rating, which is the fund's 3-year
rating or its combined 3- and 5-year rating (weighted 60%/40% respectively), or
its combined 3-, 5-, and 10-year rating (weighted 40%/30%/30%, respectively),
depending on the inception date of the fund (or class). Ratings are subject to
change monthly.
The Fund may also compare its total return ranking to that of other
funds in its Morningstar category, in addition to its star ratings. Those total
return rankings are percentages from one percent to one hundred percent and are
not risk adjusted. For example, if a fund is in the 94th percentile, that means
that 94% of the funds in the same category performed better than it did.
|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements and
sales literature performance information about the Fund cited in newspapers and
other periodicals such as The New York Times, The Wall Street Journal, Barron's,
or similar publications. That information may include performance quotations
from other sources, including Lipper and Morningstar. The performance of the
Fund's classes of shares may be compared in publications to the performance of
various market indices or other investments, and averages, performance rankings
or other benchmarks prepared by recognized mutual fund statistical services.
Investors may also wish to compare the returns on the Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed or insured by the
FDIC or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of return.
Repayment of principal and payment of interest on Treasury securities is backed
by the full faith and credit of the U.S. government.
From time to time, the Fund may publish rankings or ratings of the
Manager or Transfer Agent, and of the investor services provided by them to
shareholders of the Oppenheimer funds, other than performance rankings of the
Oppenheimer funds themselves. Those ratings or rankings of shareholder and
investor services by third parties may include comparisons of their services to
those provided by other mutual fund families selected by the rating or ranking
services. They may be based upon the opinions of the rating or ranking service
itself, using its research or judgment, or based upon surveys of investors,
brokers, shareholders or others.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Additional information is presented below about the methods that can be
used to buy shares of the Fund. Appendix C contains more information about the
special sales charge arrangements offered by the Fund, and the circumstances in
which sales charges may be reduced or waived for certain classes of investors.
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25. Shares will be purchased two regular business days following
the regular business day you instruct the Distributor to initiate the Automated
Clearing House ("ACH") transfer to buy the shares. That instruction must be
received prior to the close of The New York Stock Exchange that day. Dividends
will begin to accrue on shares purchased with the proceeds of ACH transfers on
the business day after the shares are purchased. The Exchange normally closes at
4:00 P.M., but may close earlier on certain days. The proceeds of ACH transfers
are normally received by the Fund 3 days after the transfers are initiated. If
the proceeds of the ACH transfer are not received on a timely basis, the
Distributor reserves the right to cancel the purchase order. The Distributor and
the Fund are not responsible for any delays in purchasing shares resulting from
delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge
rate may be obtained for Class A shares under Right of Accumulation and Letters
of Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in Appendix C to this
Statement of Additional Information because the Distributor or dealer or broker
incurs little or no selling expenses.
|X| Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together:
o Class A and Class B shares you purchase for your individual
accounts, or for your joint accounts, or for trust or custodial
accounts on behalf of your children who are minors, and
o current purchases of Class A and Class B shares of the Fund and
other Oppenheimer funds to reduce the sales charge rate that
applies to current purchases of Class A shares, and
o Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of
Class A shares, provided that you still hold your investment in
one of the Oppenheimer funds.
A fiduciary can count all shares purchased for a trust, estate or other
fiduciary account (including one or more employee benefit plans of the same
employer) that has multiple accounts. The Distributor will add the value, at
current offering price, of the shares you previously purchased and currently own
to the value of current purchases to determine the sales charge rate that
applies. The reduced sales charge will apply only to current purchases. You must
request it when you buy shares.
|X| The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the
sub-distributor and currently include the following:
Oppenheimer Bond Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Capital Appreciation
Fund Oppenheimer Main Street California
Municipal Fund
Oppenheimer California Municipal
Fund Oppenheimer Main Street Growth & Income
Fund
Oppenheimer Capital Income Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Preservation
Fund Oppenheimer MidCap Fund
Oppenheimer Champion Income Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Convertible Securities
Fund Oppenheimer Municipal Bond Fund
Oppenheimer Developing Markets Fund Oppenheimer New York Municipal Fund
Oppenheimer Disciplined Allocation
Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Disciplined Value Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Discovery Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Enterprise Fund Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Europe Fund Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Florida Municipal Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Global Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer Global Growth & Income
Fund Oppenheimer Quest Small Cap Value Fund
Oppenheimer Gold & Special Minerals
Fund Oppenheimer Real Asset Fund
Oppenheimer Growth Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer Insured Municipal Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer Intermediate Municipal
Fund Oppenheimer Trinity Core Fund
Oppenheimer International Bond Fund Oppenheimer Trinity Growth Fund
Oppenheimer International Growth
Fund Oppenheimer Trinity Value Fund
Oppenheimer International Small
Company Fund Oppenheimer U.S. Government Trust
Oppenheimer Large Cap Growth Fund Oppenheimer World Bond Fund
Limited-Term New York Municipal Fund
Rochester Fund Municipals
and the following money market funds:
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except the money market funds. Under certain
circumstances described in this Statement of Additional Information, redemption
proceeds of certain money market fund shares may be subject to a contingent
deferred sales charge.
Letters of Intent. Under a Letter of Intent, if you purchase Class A shares or
Class A and Class B shares of the Fund and other Oppenheimer funds during a
13-month period, you can reduce the sales charge rate that applies to your
purchases of Class A shares. The total amount of your intended purchases of both
Class A and Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. You can include purchases made up
to 90 days before the date of the Letter.
A Letter of Intent is an investor's statement in writing to the
Distributor of the intention to purchase Class A shares or Class A and Class B
shares of the Fund (and other Oppenheimer funds) during a 13-month period (the
"Letter of Intent period"). At the investor's request, this may include
purchases made up to 90 days prior to the date of the Letter. The Letter states
the investor's intention to make the aggregate amount of purchases of shares
which, when added to the investor's holdings of shares of those funds, will
equal or exceed the amount specified in the Letter. Purchases made by
reinvestment of dividends or distributions of capital gains and purchases made
at net asset value without sales charge do not count toward satisfying the
amount of the Letter.
A Letter enables an investor to count the Class A and Class B shares
purchased under the Letter to obtain the reduced sales charge rate on purchases
of Class A shares of the Fund (and other Oppenheimer funds) that applies under
the Right of Accumulation to current purchases of Class A shares. Each purchase
of Class A shares under the Letter will be made at the offering price (including
the sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares. However, if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the investor's
holdings of shares on the last day of that period, do not equal or exceed the
intended purchase amount, the investor agrees to pay the additional amount of
sales charge applicable to such purchases. That amount is described in "Terms of
Escrow," below (those terms may be amended by the Distributor from time to
time). The investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent subject to the
Terms of Escrow. Also, the investor agrees to be bound by the terms of the
Prospectus, this Statement of Additional Information and the Application used
for a Letter of Intent. If those terms are amended, as they may be from time to
time by the Fund, the investor agrees to be bound by the amended terms and that
those amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
total purchases. If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to qualify for
the next sales charge rate reduction set forth in the Prospectus, the sales
charges paid will be adjusted to the lower rate. That adjustment will be made
only if and when the dealer returns to the Distributor the excess of the amount
of commissions allowed or paid to the dealer over the amount of commissions that
apply to the actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such purchase,
promptly after the Distributor's receipt thereof.
The Transfer Agent will not hold shares in escrow for purchases of
shares of the Fund and other Oppenheimer funds by OppenheimerFunds prototype
401(k) plans under a Letter of Intent. If the intended purchase amount under a
Letter of Intent entered into by an OppenheimerFunds prototype 401(k) plan is
not purchased by the plan by the end of the Letter of Intent period, there will
be no adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of Intent
period will be deducted. It is the responsibility of the dealer of record and/or
the investor to advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All of such
purchases must be made through the Distributor.
|X| Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value up to 5% of the
intended purchase amount specified in the Letter shall be held in escrow by the
Transfer Agent. For example, if the intended purchase amount is $50,000, the
escrow shall be shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and capital gains
distributions on the escrowed shares will be credited to the investor's account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed shares
will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid if the
total amount purchased had been made at a single time. That sales charge
adjustment will apply to any shares redeemed prior to the completion of the
Letter. If the difference in sales charges is not paid within twenty days after
a request from the Distributor or the dealer, the Distributor will, within sixty
days of the expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and fractional
shares remaining after such redemption will be released from escrow. If a
request is received to redeem escrowed shares prior to the payment of such
additional sales charge, the sales charge will be withheld from the redemption
proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for redemption any
or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding of
which may be counted toward completion of a Letter) include:
(a) Class A shares sold with a front-end sales charge or subject
to a Class A contingent deferred sales charge,
(b) Class B shares of other Oppenheimer funds acquired subject to
a contingent deferred sales charge, and
(c) Class A or Class B shares acquired by exchange of either
(1) Class A shares of one of the other Oppenheimer funds that
were acquired subject to a Class A initial or contingent deferred
sales charge or
(2) Class B shares of one of the other Oppenheimer funds that
were acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares" and the escrow will
be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan to buy shares directly
from a bank account, you must enclose a check (the minimum is $25) for the
initial purchase with your application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption restrictions for
recent purchases described in the Prospectus. Asset Builder Plans are available
only if your bank is an ACH member. Asset Builder Plans may not be used to buy
shares for OppenheimerFunds employer-sponsored qualified retirement accounts.
Asset Builder Plans also enable shareholders of Oppenheimer Cash Reserves to use
their fund account to make monthly automatic purchases of shares of up to four
other Oppenheimer funds.
If you make payments from your bank account to purchase shares of the
Fund, your bank account will be debited automatically. Normally the debit will
be made two business days prior to the investment dates you selected on your
Application. Neither the Distributor, the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares that result from delays in ACH
transmissions.
Before you establish Asset Builder payments, you should obtain a
prospectus of the selected fund(s) from your financial advisor (or the
Distributor) and request an application from the Distributor. Complete the
application and return it. You may change the amount of your Asset Builder
payment or your can terminate these automatic investments at any time by writing
to the Transfer Agent. The Transfer Agent requires a reasonable period
(approximately 10 days) after receipt of your instructions to implement them.
The Fund reserves the right to amend, suspend, or discontinue offering Asset
Builder plans at any time without prior notice.
Retirement Plans. Certain types of Retirement Plans are entitled to purchase
shares of the Fund without sales charge or at reduced sales charge rates, as
described in Appendix B to this Statement of Additional Information. Certain
special sales charge arrangements described in that Appendix apply to retirement
plans whose records are maintained on a daily valuation basis by Merrill Lynch
Pierce Fenner & Smith, Inc. or an independent record keeper that has a contract
or special arrangement with Merrill Lynch. If on the date the plan sponsor
signed the Merrill Lynch record keeping service agreement the plan has less than
$3 million in assets (other than assets invested in money market funds) invested
in applicable investments, then the retirement plan may purchase only Class B
shares of the Oppenheimer funds. Any retirement plans in that category that
currently invest in Class B shares of the Fund will have their Class B shares
converted to Class A shares of the Fund when the plan's applicable investments
reach $5 million.
Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset value of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Classes of Shares. Each class of shares of the Fund represents an interest in
the same portfolio of investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class B or
Class C shares and the dividends payable on Class B or Class C shares will be
reduced by incremental expenses borne solely by that class. Those expenses
include the asset-based sales charges to which Class B and Class C are subject.
The availability of different classes of shares permits an investor to
choose the method of purchasing shares that is more appropriate for the
investor. That may depend on the amount of the purchase, the length of time the
investor expects to hold shares, and other relevant circumstances. Class A
shares normally are sold subject to an initial sales charge. While Class B and
Class C shares have no initial sales charge, the purpose of the deferred sales
charge and asset-based sales charge on Class B and Class C shares is the same as
that of the initial sales charge on Class A shares - to compensate the
Distributor and brokers, dealers and financial institutions that sell shares of
the Fund. A salesperson who is entitled to receive compensation from his or her
firm for selling Fund shares may receive different levels of compensation for
selling one class of shares rather than another.
The Distributor will not accept any order in the amount of $500,000 or
more for Class B shares or $1 million or more for Class C shares on behalf of a
single investor (not including dealer "street name" or omnibus accounts). That
is because generally it will be more advantageous for that investor to purchase
Class A shares of the Fund.
|X| Class B Conversion. The conversion of Class B shares to Class A
shares after six years is subject to the continuing availability of a private
letter ruling from the Internal Revenue Service, or an opinion of counsel or tax
Advisor, to the effect that the conversion of Class B shares does not constitute
a taxable event for the shareholder 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 shareholder, and absent
such exchange, Class B shares might continue to be subject to the asset-based
sales charge for longer than six years.
|X| Allocation of Expenses. The Fund pays expenses related to its daily
operations, such as custodian bank fees, Trustees' fees, transfer agency fees,
legal fees and auditing costs. Those expenses are paid out of the Fund's assets
and are not paid directly by shareholders. However, those expenses reduce the
net asset value of shares, and therefore are indirectly borne by shareholders
through their investment.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are allocated
pro rata to the shares of all classes. The allocation is based on the percentage
of the Fund's total assets that is represented by the assets of each class, and
then equally to each outstanding share within a given class. Such general
expenses include management fees, legal, bookkeeping and audit fees, printing
and mailing costs of shareholder reports, Prospectuses, Statements of Additional
Information and other materials for current shareholders, fees to unaffiliated
Trustees, custodian bank expenses, share issuance costs, organization and
start-up costs, interest, taxes and brokerage commissions, and non-recurring
expenses, such as litigation costs.
Other expenses that are directly attributable to a particular class are
allocated equally to each outstanding share within that class. Examples of such
expenses include distribution and service plan (12b-1) fees, transfer and
shareholder servicing agent fees and expenses, and shareholder meeting expenses
(to the extent that such expenses pertain only to a specific class).
Determination of Net Asset Values Per Share. The net asset values per share
of each class of shares of the Fund are determined as of the close of
business of The New York Stock Exchange on each day that the Exchange is
open. The calculation is done by dividing the value of the Fund's net
assets attributable to a class by the number of shares of that class that
are outstanding. The Exchange normally closes at 4:00 P.M., New York time,
but may close earlier on some other days (for example, in case of weather
emergencies or on days falling before a U.S. holiday). The Exchange's most
recent annual announcement (which is subject to change) states that it will
close on New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days.
Dealers other than Exchange members may conduct trading in certain
securities on days on which the Exchange is closed (including weekends and U.S.
holidays) or after 4:00 P.M. on a regular business day. The Fund's net asset
values will not be calculated on those days, and the values of some of the
Fund's portfolio securities may change significantly on those days, when
shareholders may not purchase or redeem shares. Trading on European and Asian
stock exchanges and over-the-counter markets normally is completed before the
close of The New York Stock Exchange.
Changes in the values of securities traded on foreign exchanges or
markets as a result of events that occur after the prices of those securities
are determined, but before the close of The New York Stock Exchange, will not be
reflected in the Fund's calculation of its net asset values that day unless the
Board of Trustees determines that the event is likely to effect a material
change in the value of the security. The Manager may make that determination,
under procedures established by the Board.
|X| Securities Valuation. The Fund's Board of Trustees has
established procedures for the valuation of the Fund's securities. In
general those procedures are as follows:
|_| Equity securities traded on a U.S. securities exchange or on
NASDAQ are valued as follows:
(1) if last sale information is regularly reported, they are valued at
the last reported sale price on the principal exchange on which they
are traded or on NASDAQ, as applicable, on that day, or (2) if last
sale information is not available on a valuation date, they are valued
at the last reported sale price preceding the valuation date if it is
within the spread of the closing "bid" and "asked" prices on the
valuation date or, if not, at the closing "bid" price on the valuation
date.
|_| Equity securities traded on a foreign securities exchange
generally are valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by
the Board of Trustees, or (2) at the last sale price obtained by the
Manager from the report of the principal exchange on which the security
is traded at its last trading session on or immediately before the
valuation date, or (3) at the mean between the "bid" and "asked" prices
obtained from the principal exchange on which the security is traded
or, on the basis of reasonable inquiry, from two market makers in the
security.
|_| 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.
|_| The following securities are valued at the mean between
the "bid" and "asked" prices determined by a pricing service approved by the
Fund's Board of Trustees or obtained by the Manager from two active market
makers in the security on the basis of reasonable inquiry:
(1) debt instruments that have a maturity of more than 397 days
when issued,
(2) debt instruments that had a maturity of 397 days or less when
issued and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397
days or less when issued and which have a remaining maturity of 60
days or less.
|_| The following securities are valued at cost, adjusted for
amortization of premiums and accretion of discounts: (1) money market
debt securities held by a non-money market fund that had a maturity of
less than 397 days when issued that have a remaining maturity of 60
days or less, and (2) debt instruments held by a money market fund
that have a remaining maturity of 397 days or less.
|_| Securities (including restricted securities) not having
readily-available market quotations are valued at fair value determined under
the Board's procedures. If the Manager is unable to locate two market makers
willing to give quotes, a security may be priced at the mean between the "bid"
and "asked" prices provided by a single active market maker (which in certain
cases may be the "bid" price if no "asked" price is available).
In the case of U.S. government securities, mortgage-backed securities,
corporate bonds and foreign government securities, when last sale information is
not generally available, the Manager may use pricing services approved by the
Board of Trustees. The pricing service may use "matrix" comparisons to the
prices for comparable instruments on the basis of quality, yield, and maturity.
Other special factors may be involved (such as the tax-exempt status of the
interest paid by municipal securities). The Manager will monitor the accuracy of
the pricing services. That monitoring may include comparing prices used for
portfolio valuation to actual sales prices of selected securities.
The closing prices in the London foreign exchange market on a
particular business day that are provided to the Manager by a bank, dealer or
pricing service that the Manager has determined to be reliable are used to value
foreign currency, including forward contracts, and to convert to U.S. dollars
securities that are denominated in foreign currency.
Puts, calls, and futures are valued at the last sale price on the
principal exchange on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the Board
of Trustees or by the Manager. If there were no sales that day, they
shall be valued at the last sale price on the preceding trading day if
it is within the spread of the closing "bid" and "asked" prices on the
principal exchange or on NASDAQ on the valuation date. If not, the
value shall be the closing bid price on the principal exchange or on
NASDAQ on the valuation date. If the put, call or future is not traded
on an exchange or on NASDAQ, it shall be valued by the mean between
"bid" and "asked" prices obtained by the Manager from two active
market makers. In certain cases that may be at the "bid" price if no
"asked" price is available.
When the Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and Liabilities
as an asset. An equivalent credit is included in the liability
section. The credit is adjusted ("marked-to-market") to reflect the
current market value of the option. In determining the Fund's gain on
investments, if a call or put written by the Fund is exercised, the
proceeds are increased by the premium received. If a call or put
written by the Fund expires, the Fund has a gain in the amount of the
premium. If the Fund enters into a closing purchase transaction, it
will have a gain or loss, depending on whether the premium received
was more or less than the cost of the closing transaction. If the Fund
exercises a put it holds, the amount the Fund receives on its sale of
the underlying investment is reduced by the amount of premium paid by
the Fund.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the Prospectus. The
information below provides additional information about the procedures and
conditions for redeeming shares.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of:
o Class A shares purchased subject to an initial sales charge or Class A
shares on which a contingent deferred sales charge was paid, or
o Class B shares that were subject to the Class B contingent deferred sales
charge when redeemed.
The reinvestment may be made without sales charge only in Class A
shares of the Fund or any of the other Oppenheimer funds into which shares of
the Fund are exchangeable as described in "How to Exchange Shares" below.
Reinvestment will be at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the Transfer
Agent for that privilege at the time of reinvestment. This privilege does not
apply to Class C shares. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Any capital gain that was realized when the shares were redeemed is
taxable, and reinvestment will not alter any capital gains tax payable on that
gain. If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption proceeds of
Fund shares on which a sales charge was paid are reinvested in shares of the
Fund or another of the Oppenheimer funds within 90 days of payment of the sales
charge, the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the loss or
increase the gain recognized from the redemption. However, in that case the
sales charge would be added to the basis of the shares acquired by the
reinvestment of the redemption proceeds.
Payments "In Kind". The Prospectus states that payment for shares tendered for
redemption is ordinarily made in cash. However, the Board of Trustees of the
Fund may determine that it would be detrimental to the best interests of the
remaining shareholders of the Fund to make payment of a redemption order wholly
or partly in cash. In that case, the Fund may pay the redemption proceeds in
whole or in part by a distribution "in kind" of liquid securities from the
portfolio of the Fund, in lieu of cash.
The Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act. Under that rule, the Fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net assets of the Fund during any
90-day period for any one shareholder. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage or other costs in selling the
securities for cash. The Fund will value securities used to pay redemptions in
kind using the same method the Fund uses to value its portfolio securities
described above under "Determination of Net Asset Values Per Share." That
valuation will be made as of the time the redemption price is determined.
Involuntary Redemptions. The Fund's Board of Trustees has the right to cause the
involuntary redemption of the shares held in any account if the aggregate net
asset value of those shares is less than $200 or such lesser amount as the Board
may fix. The Board will not cause the involuntary redemption of shares in an
account if the aggregate net asset value of such shares has fallen below the
stated minimum solely as a result of market fluctuations. If the Board exercises
this right, it may also fix the requirements for any notice to be given to the
shareholders in question (not less than 30 days). The Board may alternatively
set requirements for the shareholder to increase the investment, or set other
terms and conditions so that the shares would not be involuntarily redeemed.
Transfers of Shares. A transfer of shares to a different registration is not an
event that triggers the payment of sales charges. Therefore, shares are not
subject to the payment of a contingent deferred sales charge of any class at the
time of transfer to the name of another person or entity. It does not matter
whether the transfer occurs by absolute assignment, gift or bequest, as long as
it does not involve, directly or indirectly, a public sale of the shares. When
shares subject to a contingent deferred sales charge are transferred, the
transferred shares will remain subject to the contingent deferred sales charge.
It will be calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the transferring
shareholder.
If less than all shares held in an account are transferred, and some
but not all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities described in
the Prospectus under "How to Buy Shares" for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in determining the
order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans or
pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed
in "How To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must:
(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and (3) conform to the requirements of the plan and the Fund's other
redemption requirements.
Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Fund held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign the
request.
Distributions from pension and profit sharing plans are subject to
special requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed and submitted to the
Transfer Agent before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal Revenue Code
requires that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the Distributor, and the
Transfer Agent assume no responsibility to determine whether a distribution
satisfies the conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers on behalf of their customers. Shareholders should contact their
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
an order placed by the dealer or broker. However, if the Distributor receives a
repurchase order from a dealer or broker after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's net asset
value if the order was received by the dealer or broker from its customers prior
to the time the Exchange closes. Normally, the Exchange closes at 4:00 P.M., but
may do so earlier on some days. Additionally, the order must have been
transmitted to and received by the Distributor prior to its close of business
that day (normally 5:00 P.M.).
Ordinarily, for accounts redeemed by a broker-dealer under this
procedure, payment will be made within three business days after the shares have
been redeemed upon the Distributor's receipt of the required redemption
documents in proper form. The signature(s) of the registered owners on the
redemption documents must be guaranteed as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund
valued at $5,000 or more can authorize the Transfer Agent to redeem shares
(having a value of at least $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the shareholder for
receipt of the payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable to all
shareholders of record. Payments must also be sent to the address of record for
the account and the address must not have been changed within the prior 30 days.
Required minimum distributions from OppenheimerFunds-sponsored retirement plans
may not be arranged on this basis.
Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have Automatic
Withdrawal Plan payments transferred to the bank account designated on the
Account Application or by signature-guaranteed instructions sent to the Transfer
Agent. Shares are normally redeemed pursuant to an Automatic Withdrawal Plan
three business days before the payment transmittal date you select in the
Account Application. If a contingent deferred sales charge applies to the
redemption, the amount of the check or payment will be reduced accordingly.
The Fund cannot guarantee receipt of a payment on the date requested.
The Fund reserves the right to amend, suspend or discontinue offering these
plans at any time without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular additional Class A
share purchases while participating in an Automatic Withdrawal Plan. Class B and
Class C shareholders should not establish withdrawal plans, because of the
imposition of the contingent deferred sales charge on such withdrawals (except
where the contingent deferred sales charge is waived as described in Appendix B,
below).
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions that apply to such plans, as
stated below. These provisions may be amended from time to time by the Fund
and/or the Distributor. When adopted, any amendments will automatically apply to
existing Plans.
|X| Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent to exchange a pre-determined amount of shares of the Fund for shares (of
the same class) of other Oppenheimer funds automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is $25.
Instructions should be provided on the OppenheimerFunds Application or
signature-guaranteed instructions. Exchanges made under these plans are subject
to the restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional Information.
|X| Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales charge
will be redeemed first. Shares acquired with reinvested dividends and capital
gains distributions will be redeemed next, followed by shares acquired with a
sales charge, to the extent necessary to make withdrawal payments. Depending
upon the amount withdrawn, the investor's principal may be depleted. Payments
made under these plans should not be considered as a yield or income on your
investment.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan as agent for the shareholder(s) (the "Planholder") who executed the Plan
authorization and application submitted to the Transfer Agent. Neither the Fund
nor the Transfer Agent shall incur any liability to the Planholder for any
action taken or not taken by the Transfer Agent in good faith to administer the
Plan. Share certificates will not be issued for shares of the Fund purchased for
and held under the Plan, but the Transfer Agent will credit all such shares to
the account of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer Agent with
the Plan application so that the shares represented by the certificate may be
held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done at
net asset value without a sales charge. Dividends on shares held in the account
may be paid in cash or reinvested.
Shares will be redeemed to make withdrawal payments at the net asset
value per share determined on the redemption date. Checks or AccountLink
payments representing the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment, according to the choice specified in writing by the Planholder. Receipt
of payment on the date selected cannot be guaranteed.
The amount and the interval of disbursement payments and the address to
which checks are to be mailed or AccountLink payments are to be sent may be
changed at any time by the Planholder by writing to the Transfer Agent. The
Planholder should allow at least two weeks' time after mailing such notification
for the requested change to be put in effect. The Planholder may, at any time,
instruct the Transfer Agent by written notice to redeem all, or any part of, the
shares held under the Plan. That notice must be in proper form in accordance
with the requirements of the then-current Prospectus of the Fund. In that case,
the Transfer Agent will redeem the number of shares requested at the net asset
value per share in effect and will mail a check for the proceeds to the
Planholder.
The Planholder may terminate a Plan at any time by writing to the
Transfer Agent. The Fund may also give directions to the Transfer Agent to
terminate a Plan. The Transfer Agent will also terminate a Plan upon its receipt
of evidence satisfactory to it that the Planholder has died or is legally
incapacitated. Upon termination of a Plan by the Transfer Agent or the Fund,
shares that have not been redeemed will be held in uncertificated form in the
name of the Planholder. The account will continue as a dividend-reinvestment,
uncertificated account unless and until proper instructions are received from
the Planholder, his or her executor or guardian, or another authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated form.
Upon written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of Oppenheimer funds that have a single class without a
class designation are deemed "Class A" shares for this purpose. You
can obtain a current list showing which funds offer which classes by
calling the Distributor at 1.800.525.7048. o All of the Oppenheimer
funds currently offer Class A, B and C shares except Oppenheimer Money
Market Fund, Inc., Centennial Money Market Trust, Centennial Tax
Exempt Trust, Centennial Government Trust, Centennial New York Tax
Exempt Trust, Centennial California Tax Exempt Trust, and Centennial
America Fund, L.P., which only offer Class A shares.
o Oppenheimer Main Street California Municipal Fund currently
offers only Class A and Class B shares. o Class B and Class C shares
of Oppenheimer Cash Reserves are generally available only by exchange
from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds-sponsored 401 (k) plans.
o Only certain Oppenheimer Funds currently offer Class Y
shares. Class Y shares of Oppenheimer Real Asset Fund may not be
exchanged for shares of any other Fund.
o Class M Shares of Oppenheimer Convertible Securities Fund
may be exchanged only for Class A shares of other Oppenheimer
funds. They may not be acquired by exchange of shares of any
class of any other Oppenheimer funds except Class A shares of
Oppenheimer Money Market Fund or Oppenheimer Cash Reserves
acquired by exchange of Class M shares.
o Class A shares of Senior Floating Rate Fund are not
available by exchange of Class A shares of other Oppenheimer
funds. Class A shares of Senior Floating Rate Fund that are
exchanged for shares of the other Oppenheimer funds may not be
exchanged for Class A shares of Senior Floating Rate Fund.
o Class X shares of Limited Term New York Municipal Fund can
be exchanged only for Class B shares of other Oppenheimer funds
and no exchanges may be made to Class X shares.
o Shares of Oppenheimer Capital Preservation Fund may not be
exchanged for shares of Oppenheimer Money Market Fund, Inc.,
Oppenheimer Cash Reserves or Oppenheimer Limited-Term Government
Fund. Only participants in certain retirement plans may purchase
shares of Oppenheimer Capital Preservation Fund, and only those
participants may exchange shares of other Oppenheimer funds for
shares of Oppenheimer Capital Preservation Fund.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any money market fund offered by the Distributor. Shares of any
money market fund purchased without a sales charge may be exchanged for shares
of Oppenheimer funds offered with a sales charge upon payment of the sales
charge. They may also be used to purchase shares of Oppenheimer funds subject to
an early withdrawal charge or contingent deferred sales charge.
Shares of Oppenheimer Money Market Fund, Inc. purchased with the
redemption proceeds of shares of other mutual funds (other than funds managed by
the Manager or its subsidiaries) redeemed within the 30 days prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial sales charge or contingent deferred sales
charge. To qualify for that privilege, the investor or the investor's dealer
must notify the Distributor of eligibility for this privilege at the time the
shares of Oppenheimer Money Market Fund, Inc. are purchased. If requested, they
must supply proof of entitlement to this privilege.
Shares of the Fund acquired by reinvestment of dividends or
distributions from any of the other Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund may impose these changes at any time, it will provide
you with notice of those changes whenever it is required to do so by applicable
law. It may be required to provide 60 days notice prior to materially amending
or terminating the exchange privilege. That 60 day notice is not required in
extraordinary circumstances.
|X| How Exchanges Affect Contingent Deferred Sales Charges. No
contingent deferred sales charge is imposed on exchanges of shares of any class
purchased subject to a contingent deferred sales charge. However, when Class A
shares acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are redeemed
within 18 months of the end of the calendar month of the initial purchase of the
exchanged Class A shares, the Class A contingent deferred sales charge is
imposed on the redeemed shares. The Class B contingent deferred sales charge is
imposed on Class B shares acquired by exchange if they are redeemed within 6
years of the initial purchase of the exchanged Class B shares. The Class C
contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the imposition
of the Class B or the Class C contingent deferred sales charge will be followed
in determining the order in which the shares are exchanged. Before exchanging
shares, shareholders should take into account how the exchange may affect any
contingent deferred sales charge that might be imposed in the subsequent
redemption of remaining shares.
Shareholders owning shares of more than one class must specify which
class of shares they wish to exchange.
|X| Limits on Multiple Exchange Orders. The Fund reserves the right to
reject telephone or written exchange requests submitted in bulk by anyone on
behalf of more than one account. The Fund may accept requests for exchanges of
up to 50 accounts per day from representatives of authorized dealers that
qualify for this privilege.
|X| Telephone Exchange Requests. When exchanging shares by telephone, a
shareholder must have an existing account in the fund to which the exchange is
to be made. Otherwise, the investors must obtain a Prospectus of that fund
before the exchange request may be submitted. 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.
|X| Processing Exchange Requests. Shares to be exchanged are redeemed
on the regular business day the Transfer Agent receives an exchange request in
proper form (the "Redemption Date"). Normally, shares of the fund to be acquired
are purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The Fund
reserves the right, in its discretion, to refuse any exchange request that may
disadvantage it. For example, if the receipt of multiple exchange requests from
a dealer might require the disposition of portfolio securities at a time or at a
price that might be disadvantageous to the Fund, the Fund may refuse the
request. When you exchange some or all of your shares from one fund to another,
any special account feature such as an Asset Builder Plan or Automatic
Withdrawal Plan, will be switched to the new fund account unless you tell the
Transfer Agent not to do so. However, special redemption and exchange features
such as Automatic Exchange Plans and Automatic Withdrawal Plans cannot be
switched to an account in Oppenheimer Senior Floating Rate Fund.
In connection with any exchange request, the number of shares exchanged
may be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information, or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only the
shares available for exchange without restriction will be exchanged.
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks. A shareholder should assure that the
fund selected is appropriate for his or her investment and should be aware of
the tax consequences of an exchange. For federal income tax purposes, an
exchange transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above, discusses some
of the tax consequences of reinvestment of redemption proceeds in such cases.
The Fund, the Distributor, and the Transfer Agent are unable to provide
investment, tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. The Fund has no fixed dividend rate and there can
be no assurance as to the payment of any dividends or the realization of any
capital gains. The dividends and distributions paid by a class of shares will
vary from time to time depending on market conditions, the composition of the
Fund's portfolio, and expenses borne by the Fund or borne separately by a class.
Dividends are calculated in the same manner, at the same time, and on the same
day for each class of shares. However, dividends on Class B and Class C shares
are expected to be lower than dividends on Class A shares. That is because of
the effect of the asset-based sales charge on Class B and Class C shares. Those
dividends will also differ in amount as a consequence of any difference in the
net asset values of each class of shares.
Dividends, distributions and proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.
Reinvestment will be made as promptly as possible after the return of such
checks to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds. Unclaimed accounts may be subject to state escheatment
laws, and the Fund and the Transfer Agent will not be liable to shareholders or
their representatives for compliance with those laws in good faith.
Tax Status of the Fund's Dividends and Distributions. The federal tax treatment
of the Fund's dividends and capital gains distributions is briefly highlighted
in the Prospectus.
Special provisions of the Internal Revenue Code govern the eligibility
of the Fund's dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not eligible for the
deduction. The amount of dividends paid by the Fund that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that the
Fund derives from portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible for the
deduction on dividends paid on Fund shares held for 45 days or less. To the
extent the Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or dividends
from foreign corporations, those dividends will not qualify for the deduction.
Therefore, the Fund does not expect that a substantial portion of its dividends
will qualify for the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January 1
through December 31 of that year and 98% of its capital gains realized in the
period from November 1 of the prior year through October 31 of the current year.
If it does not, the Fund must pay an excise tax on the amounts not distributed.
It is presently anticipated that the Fund will meet those requirements. However,
the Board of Trustees and the Manager might determine in a particular year that
it would be in the best interests of shareholders for the Fund not to make such
distributions at the required levels and to pay the excise tax on the
undistributed amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized capital
gains to shareholders without having to pay tax on them. This avoids a double
tax on that income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund (unless the Fund's
shares are held in a retirement account or the shareholder is otherwise exempt
from tax). If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for federal income taxes on amounts
paid by it as dividends and distributions. The Fund qualified as a regulated
investment company in its last fiscal year. The Internal Revenue Code contains a
number of complex tests relating to qualification which the Fund might not meet
in any particular year. If it did not so qualify, the Fund would be treated for
tax purposes as an ordinary corporation and receive no tax deduction for
payments made to shareholders.
If prior distributions made by the Fund must be re-characterized as a
non-taxable return of capital at the end of the fiscal year as a result of the
effect of the Fund's investment policies, they will be identified as such in
notices sent to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed above. Reinvestment will be
made without sales charge at the net asset value per share in effect at the
close of business on the payable date of the dividend or distribution. To elect
this option, the shareholder must notify the Transfer Agent in writing and must
have an existing account in the fund selected for reinvestment. Otherwise the
shareholder first must obtain a prospectus for that fund and an application from
the Distributor to establish an account. Dividends and/or distributions from
shares of certain other Oppenheimer funds (other than Oppenheimer Cash Reserves)
may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Distributor. The Fund's shares are sold through dealers, brokers and other
financial institutions that have a sales agreement with OppenheimerFunds
Distributor, Inc., a subsidiary of the Manager that acts as the Fund's
Distributor. The Distributor also distributes shares of the other Oppenheimer
funds and is sub-distributor for funds managed by a subsidiary of the Manager.
The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a
division of the Manager. It is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for paying
dividends and distributions to shareholders. It also handles shareholder
servicing and administrative functions. It acts on an "at-cost" basis. It also
acts as shareholder servicing agent for the other Oppenheimer funds.
Shareholders should direct inquiries about their accounts to the Transfer Agent
at the address and toll-free numbers shown on the back cover.
The Custodian Bank. The Bank of New York is the custodian bank of the Fund's
assets. The custodian bank's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the delivery of such
securities to and from the Fund. It will be the practice of the Fund to deal
with the custodian bank in a manner uninfluenced by any banking relationship the
custodian bank may have with the Manager and its affiliates. The Fund's cash
balances with the custodian bank in excess of $100,000 are not protected by
federal deposit insurance. Those uninsured balances at times may be substantial.
Independent Auditors. KPMG LLP are the independent auditors of the Fund. They
audit the Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager and its
affiliates.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER DEVELOPING MARKETS FUND:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Developing Markets Fund as of
August 31, 1999, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the two-year period then ended and the period from November 18, 1996
(commencement of operations) to August 31, 1997. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1999, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Developing Markets Fund as of August 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the two-year period then ended and the period from November
18, 1996 (commencement of operations) to August 31, 1997, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
KPMG LLP
Denver, Colorado
September 22, 1999
<PAGE>
STATEMENT OF INVESTMENTS August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--98.6%
- -------------------------------------------------------------------------------
BASIC MATERIALS--0.7%
- --------------------------------------------------------------------------------
METALS--0.7%
Caemi Mineracao e Metalurgia SA, Preference 15,300,000 $ 485,600
- -------------------------------------------------------------------------------
CAPITAL GOODS--9.1%
- -------------------------------------------------------------------------------
AEROSPACE/DEFENSE--8.7%
Embraer--Empresa Brasileira de Aeronautica SA 2,059,500 5,732,883
- -------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.4%
MacMillian India MC(1) 21,500 247,319
- -------------------------------------------------------------------------------
COMMUNICATION SERVICES--5.8%
- -------------------------------------------------------------------------------
TELEPHONE UTILITIES--5.1%
Telecomunicacoes do Rio de Janeiro SA, Preference(1) 17,018,554 243,419
- -------------------------------------------------------------------------------
Telemar 146,000,000 1,289,116
- -------------------------------------------------------------------------------
Telesp Participacoes SA 25,950,000 276,789
- -------------------------------------------------------------------------------
Videsh Sanchar Nigam Ltd., GDR(2) 108,600 1,533,975
---------
3,343,299
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS-WIRELESS--0.7%
Tele Sudeste Celular Participacoes SA 18,200,000 46,306
- -------------------------------------------------------------------------------
Telesp Celular Participacoes SA 18,200,000 79,544
- -------------------------------------------------------------------------------
Telesp Celular SA, Cl. B, Preference 6,800,000 309,581
---------
435,431
- -------------------------------------------------------------------------------
CONSUMER CYCLICALS--19.9%
- -------------------------------------------------------------------------------
AUTOS & HOUSING--9.5%
Brazil Realty SA, GDR(3) 57,800 624,962
- -------------------------------------------------------------------------------
Corporacion GEO, SA de CV, Series B(1) 261,500 874,108
- -------------------------------------------------------------------------------
Courts (Singapore) Ltd. 3,405,000 2,062,085
- -------------------------------------------------------------------------------
Ellerine Holdings Ltd. 125,000 493,272
- -------------------------------------------------------------------------------
Grupo Accion SA de CV, Series B(1) 3,443,000 1,541,850
- -------------------------------------------------------------------------------
Solidere, GDR(1, 2) 81,500 682,562
---------
6,278,839
- -------------------------------------------------------------------------------
CONSUMER SERVICES--0.9%
Art Marketing Syndicate SA(1) 52,830 591,732
- -------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--0.9%
Danubius Hotel & Spa Rt.(1) 29,200 607,643
</TABLE>
14 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C>
MEDIA--8.6%
Hurriyet Gazetecilik ve Matbaacilik AS 53,300,000 $ 376,796
- --------------------------------------------------------------------------------
Lusomundo SGPS SA(1) 161,100 2,126,978
- --------------------------------------------------------------------------------
Naspers Ltd., N Shares 190,500 928,720
- --------------------------------------------------------------------------------
Primedia Ltd., N Shares 535,000 655,353
- --------------------------------------------------------------------------------
Singapore Press Holdings Ltd. 29,700 493,746
- --------------------------------------------------------------------------------
Times Publishing Ltd. 562,000 1,101,132
---------
5,682,725
- --------------------------------------------------------------------------------
CONSUMER STAPLES--20.8%
- --------------------------------------------------------------------------------
BEVERAGES--0.8%
Serm Suk Public Co. Ltd. 117,300 535,213
- --------------------------------------------------------------------------------
BROADCASTING--9.3%
Grupo Radio Centro SA de CV, Sponsored ADR 155,100 756,113
- --------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored GDR(1,2) 61,900 2,251,613
- --------------------------------------------------------------------------------
Teletypos SA 63,260 1,674,702
- --------------------------------------------------------------------------------
Television Broadcasts Ltd. 333,000 1,483,826
---------
6,166,254
- --------------------------------------------------------------------------------
FOOD--2.5%
Cresud SA 600,720 630,835
- --------------------------------------------------------------------------------
Parry's Confectionary Ltd.(1) 149,150 531,868
- --------------------------------------------------------------------------------
Rolimpex SA(1) 350,000 483,437
---------
1,646,140
- --------------------------------------------------------------------------------
FOOD & DRUG RETAILERS--5.0%
Dairy Farm International Holdings Ltd. 2,366,000 2,354,170
- --------------------------------------------------------------------------------
PT Hero Supermarket(1) 3,976,500 971,486
---------
3,325,656
- --------------------------------------------------------------------------------
HOUSEHOLD GOODS--2.1%
Grupo Casa Autrey SA de CV, Sponsored ADR(1) 263,000 887,625
- --------------------------------------------------------------------------------
Hindustan Lever Ltd. 56 3,433
- --------------------------------------------------------------------------------
Marico Industries Ltd. 41,900 516,687
---------
1,407,745
- --------------------------------------------------------------------------------
TOBACCO--1.1%
Eastern Tobacco Co.(1) 26,500 611,537
- --------------------------------------------------------------------------------
Kothari Products Ltd. 28,200 109,644
---------
721,181
15 OPPENHEIMER DEVELOPING MARKETS FUNDNOTES
<PAGE>
STATEMENT OF INVESTMENTS continued
- --------------------------------------------------------------------------------
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL--25.8%
- --------------------------------------------------------------------------------
BANKS--13.0%
Banco BHIF, Sponsored ADR 73,500 $1,139,250
- --------------------------------------------------------------------------------
Banco Pinto & Sotto Mayor SA 79,000 1,461,903
- --------------------------------------------------------------------------------
Commercial International Bank, Sponsored GDR 78,750 657,563
- --------------------------------------------------------------------------------
Espirito Santo Financial Group, ADR 117,950 1,872,456
- --------------------------------------------------------------------------------
Grupo Financiero Banorte SA de CV(1) 1,317,000 1,578,367
- --------------------------------------------------------------------------------
Grupo Financiero Inbursa, SA de CV(1) 509,770 1,521,907
- --------------------------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros SA, Sponsored GDR 23,000 402,500
---------
8,633,946
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--3.8%
Housing Development Finance Corp. Ltd. 50,000 297,243
- --------------------------------------------------------------------------------
ICICI Ltd. 6,200 11,475
- --------------------------------------------------------------------------------
ICICI Ltd., GDR(2) 238,125 2,232,422
---------
2,541,140
- --------------------------------------------------------------------------------
INSURANCE--9.0%
Adamjee Insurance Co. Ltd. 989,975 744,293
- --------------------------------------------------------------------------------
AXA China Regional Ltd. 1,695,000 1,189,677
- --------------------------------------------------------------------------------
Aksigorta AS 46,766,000 1,180,731
- --------------------------------------------------------------------------------
Fubon Insurance Co., GDR(1) 25,000 256,250
- --------------------------------------------------------------------------------
Liberty Life Assn. Africa Ltd. 50,144 587,859
- --------------------------------------------------------------------------------
Sanlam Ltd.(1) 500,000 596,037
- --------------------------------------------------------------------------------
Towarzystwo Ubezpieczen i Reasekuracji Warta SA 48,263 1,405,988
---------
5,960,835
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS--0.0%
Unit Trust of India-Masterplus 91(1) 10,100 5,658
- --------------------------------------------------------------------------------
HEALTHCARE--7.9%
- --------------------------------------------------------------------------------
HEALTHCARE/DRUGS--7.9%
Cheminor Drugs Ltd. 136,600 1,669,546
- --------------------------------------------------------------------------------
Dr. Reddy's Laboratories Ltd. 30,500 870,032
- --------------------------------------------------------------------------------
Pliva d.d., Sponsored GDR(2) 167,900 2,333,810
- --------------------------------------------------------------------------------
Sun Pharmaceutical Industries Ltd. 18,600 321,988
---------
5,195,376
16 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- --------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING--1.6%
- --------------------------------------------------------------------------------
CAPITAL GOODS--1.6%
Haci Omer Sabanci Holding AS, ADR(1) 197,800 $1,073,065
- --------------------------------------------------------------------------------
TRANSPORTATION--0.6%
- --------------------------------------------------------------------------------
RAILROADS & TRUCKERS--0.6%
Guangshen Railway Co. Ltd., Sponsored ADR 61,300 379,294
- --------------------------------------------------------------------------------
UTILITIES--6.4%
- --------------------------------------------------------------------------------
ELECTRIC UTILITIES--5.7%
Cia de Eletricidade do Estado da Bahia 22,360,000 692,223
- --------------------------------------------------------------------------------
Cia de Eletricidade do Estado da Bahia, Preference 25,150,000 775,979
- --------------------------------------------------------------------------------
Cia de Saneamento Basico do Estado de Sao Paulo 6,900,126 454,156
- --------------------------------------------------------------------------------
Cia Paranaense Energia, Sponsored ADR,
Preference B Shares 264,800 1,820,500
---------
3,742,858
- --------------------------------------------------------------------------------
GAS UTILITIES--0.7%
Aygaz AS 5,921,000 458,440
- --------------------------------------------------------------------------------
Total Common Stocks (Cost $67,008,718) 65,198,272
UNITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
PT Pan Indonesia Bank Wts., Exp. 6/00 (Cost $3,112) 404,558 23,721
FACE
AMOUNT(4)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS AND NOTES--1.2%
Grupo Financiero Banorte SA de CV, 24.90%
Nts., 12/5/02(3, 5) [MXP] (Cost $890,227) $7,730,000 811,842
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--0.5%
Repurchase agreement with First Chicago Capital Markets, 5.41%, dated 8/31/99,
to be repurchased at $300,045 on 9/1/99, collateralized by U.S. Treasury Nts.,
4%-6.375%, 11/30/99-2/28/03, with a value of $297,347, and U.S. Treasury Bills,
9/15/99, with a
value of $8,883 (Cost $300,000) 300,000 300,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $68,202,057) 100.3% 66,333,835
- --------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3) (195,726)
--------------------------
NET ASSETS 100.0% $66,138,109
--------------------------
--------------------------
</TABLE>
17 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
- --------------------------------------------------------------------------------
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Non-income-producing security.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities
have been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $9,034,382 or 13.66% of the Fund's net
assets as of August 31, 1999. 3. Identifies issues considered to be illiquid or
restricted-See Note 6 of Notes to Financial Statements. 4. Face amount is
reported in U.S. Dollars, except for those denoted in the following currency:
MXP Mexican Peso 5. Represents the current interest rate for a variable rate
security.
DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC DIVERSIFICATION, AS A
PERCENTAGE OF TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:
<TABLE>
<CAPTION>
GEOGRAPHIC DIVERSIFICATION MARKET VALUE PERCENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Brazil $13,233,560 20.0%
Mexico 10,223,424 15.4
India 8,351,289 12.6
Singapore 6,011,134 9.1
Portugal 5,461,337 8.2
South Africa 3,261,240 4.9
Turkey 3,089,032 4.7
Hong Kong 2,673,503 4.0
Poland 2,481,157 3.7
Croatia 2,333,810 3.5
Greece 1,674,702 2.5
Egypt 1,269,099 1.9
Chile 1,139,250 1.7
Indonesia 995,207 1.5
Pakistan 744,293 1.1
Lebanon 682,563 1.0
Argentina 630,835 1.0
Hungary 607,643 0.9
Thailand 535,213 0.8
China 379,294 0.6
United States 300,000 0.5
Taiwan 256,250 0.4
-------------------------
Total $66,333,835 100.0%
-------------------------
-------------------------
</TABLE>
See accompanying Notes to Financial Statements.
18 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES August 31, 1999
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at value (cost $68,202,057)--see accompanying statement $ 66,333,835
- ------------------------------------------------------------------------------------------------------------
Cash--foreign currencies (cost $351,896) 351,739
- ------------------------------------------------------------------------------------------------------------
Cash 36,089
- ------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold 143,250
Interest and dividends 64,594
Other 1,534
------------
Total assets 66,931,041
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed 422,148
Investments purchased 201,845
Transfer and shareholder servicing agent fees 49,809
Shareholder reports 48,202
Distribution and service plan fees 27,341
Trustees' compensation--Note 1 27,085
Other 16,502
-----------
Total liabilities 792,932
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $ 66,138,109
------------
------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $ 72,039,642
- ------------------------------------------------------------------------------------------------------------
Undistributed net investment income 272,716
- ------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and
foreign currency transactions (4,305,388)
- ------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and translation of
assets and liabilities denominated in foreign currencies (1,868,861)
------------
Net assets $ 66,138,109
------------
------------
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$40,046,310 and 3,512,609 shares of beneficial interest outstanding) $ 11.40
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price) $ 12.10
- ------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $21,027,728
and 1,860,439 shares of beneficial interest outstanding) $ 11.30
- ------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $5,064,071
and 447,940 shares of beneficial interest outstanding) $ 11.31
</TABLE>
See accompanying Notes to Financial Statements.
19 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Dividends (net of foreign withholding taxes of $104,476) $ 1,469,473
- ------------------------------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $10,555) 249,574
------------
Total income 1,719,047
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
EXPENSES
Management fees--Note 4 495,616
- ------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 298,897
- ------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 72,958
Class B 164,077
Class C 40,169
- ------------------------------------------------------------------------------------------------------------
Shareholder reports 95,299
- ------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 85,228
- ------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 21,835
- ------------------------------------------------------------------------------------------------------------
Deferred organization expenses 20,084
- ------------------------------------------------------------------------------------------------------------
Registration and filing fees 3,091
- ------------------------------------------------------------------------------------------------------------
Insurance expenses 2,259
- ------------------------------------------------------------------------------------------------------------
Trustees' compensation--Note 1 1,942
- ------------------------------------------------------------------------------------------------------------
Other 19,317
-------------
Total expenses 1,320,772
Less expenses paid indirectly--Note 1 (3,316)
-------------
Net expenses 1,317,456
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 401,591
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 223,603
Foreign currency transactions (2,183,419)
-------------
Net realized loss (1,959,816)
- ------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 21,871,765
Translation of assets and liabilities denominated in
foreign currencies (1,118,131)
---------------
Net change 20,753,634
---------------
Net realized and unrealized gain 18,793,818
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 19,195,409
--------------
--------------
</TABLE>
See accompanying Notes to Financial Statements.
20 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Year Ended August 31, 1999 1998
OPERATIONS
Net investment income $ 401,591 $ 325,991
- ----------------------------------------------------------------------------------------------
Net realized loss (1,959,816) (1,208,391)
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 20,753,634 (23,812,757)
----------------------------
Net increase (decrease) in net assets resulting from operations 19,195,409 (24,695,157)
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (299,233) (246,812)
Class B (57,849) (28,433)
Class C (9,462) (13,196)
- ----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (217,044) (1,271,220)
Class B (123,480) (679,498)
Class C (27,449) (163,333)
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from beneficial interest transactions--Note
2:
Class A 5,563,014 2,205,847
Class B 2,081,959 1,248,778
Class C 519,729 1,358,951
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) 26,625,594 (22,284,073)
- ----------------------------------------------------------------------------------------------
Beginning of period 39,512,515 61,796,588
----------------------------
End of period (including undistributed net investment
income of $272,716 and $160,789, respectively) $ 66,138,109 $ 39,512,515
----------------------------
----------------------------
</TABLE>
See accompanying Notes to Financial Statements.
21 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A YEAR ENDED AUGUST 31, 1999 1998 1997(1)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 7.76 $12.82 $ 10.00
- -----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .10 .11 .07
Net realized and unrealized gain (loss) 3.71 (4.62) 2.75
-------------------------------
Total income (loss) from investment
operations 3.81 (4.51) 2.82
- -----------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.10) (.09) --
Distributions from net realized gain (.07) (.46) --
-------------------------------
Total dividends and distributions
to shareholders (.17) (.55) --
- -----------------------------------------------------------------------------------------
Net asset value, end of period $11.40 $ 7.76 $12.82
-------------------------------
-------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 49.92% (36.33)% 28.20%
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $40,046 $23,663 $37,613
- -----------------------------------------------------------------------------------------
Average net assets (in thousands) $29,183 $35,864 $17,852
- -----------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 1.11% 0.87% 1.45%
Expenses 2.36% 2.18%(4) 1.94%(4)
- -----------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 78% 27%(1)
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 August 31, 1999, were $26,143,811 and $18,275,385, respectively.
22 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
<TABLE>
<CAPTION>
CLASS B YEAR ENDED AUGUST 31, 1999 1998 1997(1)
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 7.69 $12.73 $ 10.00
- --------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .01 .03
Net realized and unrealized gain (loss) 3.68 (4.57) 2.70
----------------------------
Total income (loss) from investment
operations 3.72 (4.56) 2.73
- --------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.04) (.02) --
Distributions from net realized gain (.07) (.46) --
----------------------------
Total dividends and distributions
to shareholders (.11) (.48) --
- --------------------------------------------------------------------------------------
Net asset value, end of period $11.30 $ 7.69 $12.73
----------------------------
----------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 48.81% (36.85)% 27.30%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $ 21,028 $12,788 $20,470
- --------------------------------------------------------------------------------------
Average net assets (in thousands) $ 16,430 $18,673 $7,802
- --------------------------------------------------------------------------------------
Ratios to average net assets(3)
Net investment income 0.37% 0.07% 0.87%
Expenses 3.10% 2.95%(4) 2.78%(4)
- --------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 78% 27%(1)
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 August 31, 1999, were $26,143,811 and $18,275,385, respectively.
23 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C Year Ended August 31, 1999 1998 1997(1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING DATA
Net asset value, beginning of period $ 7.68 $12.74 $ 10.00
- --------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 .02 .04
Net realized and unrealized gain (loss) 3.69 (4.58) 2.70
--------------------------
Total income (loss) from investment operations 3.73 (4.56) 2.74
- --------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.03) (.04) --
Distributions from net realized gain (.07) (.46) --
--------------------------
Total dividends and distributions to shareholders (.10) (.50) --
- --------------------------------------------------------------------------------------
Net asset value, end of period $11.31 $ 7.68 $12.74
--------------------------
--------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 48.98% (36.88)% 27.40%
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in thousands) $5,064 $3,061 $3,713
- --------------------------------------------------------------------------------------
Average net assets (in thousands) $4,022 $4,206 $1,560
- --------------------------------------------------------------------------------------
Ratios to average net assets:(3)
Net investment income 0.41% 0.24% 0.98%
Expenses 3.08% 2.95%(4) 2.77%(4)
- --------------------------------------------------------------------------------------
Portfolio turnover rate(5) 37% 78% 27%(1)
</TABLE>
1. For the period from November 18, 1996 (commencement of operations) to August
31, 1997.
2. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or commencement of operations), 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 for periods of less than one full year.
4. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
5. 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 August 31, 1999, were $26,143,811 and $18,275,385, respectively.
See accompanying Notes to Financial Statements.
24 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Developing Markets 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 on investments up to $1 million. Class B
and Class C shares may be subject to a contingent deferred sales charge (CDSC).
All classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distribution and/or service plans. 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.
- --------------------------------------------------------------------------------
SECURITIES 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
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 an
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. Foreign currency exchange contracts are valued based on the
closing prices of the foreign currency contract rates in the London foreign
exchange markets on a daily basis as provided by a reliable bank or dealer.
Options are valued based upon the last sale price on the principal exchange on
which the option is traded or, in the absence of any transactions that day, the
value is based upon the last sale price on the prior trading date if it is
within the spread between the closing bid and asked prices. If the last sale
price is outside the spread, the closing bid is used.
25 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued
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 foreign 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 the 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, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. As of August 31, 1999, the
Fund had available for federal tax purposes an unused capital loss carryover of
approximately $3,578,000, expiring in 2007.
- --------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. 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. During the year ended August
31, 1999, a credit of $5,699 was made for the Fund's projected benefit
obligations, resulting in an accumulated liability of $26,972 as of August 31,
1999.
26 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
The Board of Trustees has adopted a deferred compensation plan for independent
Trustees that enables Trustees to elect to defer receipt of all or a portion of
annual compensation they are entitled to receive from the Fund. Under the plan,
the compensation deferred is periodically adjusted as though an equivalent
amount had been invested for the Trustees in shares of one or more Oppenheimer
funds selected by the Trustee. The amount paid to the Trustee under the plan
will be determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not affect the net assets of the Fund, and
will not materially affect the Fund's assets, liabilities or net income per
share.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
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 paydown gains and losses and the recognition of certain
foreign currency gains (losses) as ordinary income (loss) for tax purposes. The
character of distributions made during the year from net investment income or
net realized gains may differ from its 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 fiscal year in which
the income or realized gain was recorded by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended August 31, 1999, amounts have been reclassified to reflect an
increase in undistributed net investment income of $76,880. Accumulated net
realized loss on investments was increased by the same amount.
- --------------------------------------------------------------------------------
EXPENSE OFFSET ARRANGEMENTS. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Foreign dividend income is often
recorded on the payable 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.
27 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STAEMENTS (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, 1999 YEAR ENDED AUGUST 31, 1998
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Sold 4,371,002 $ 42,720,089 3,153,898 $ 36,542,888
Dividends and/or distributions reinvested 59,038 498,873 137,965 1,466,572
Redeemed (3,967,426) (37,655,948) (3,175,275) (35,803,613)
----------------------------------------------------------
Net increase 462,614 $ 5,563,014 116,588 $ 2,205,847
----------------------------------------------------------
----------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
CLASS B
Sold 1,618,428 $ 16,240,189 1,231,248 $ 14,160,669
Dividends and/or distributions reinvested 20,507 172,670 64,707 685,899
Redeemed (1,441,572) (14,330,900) (1,240,445) (13,597,790)
----------------------------------------------------------
Net increase 197,363 $ 2,081,959 55,510 $ 1,248,778
----------------------------------------------------------
----------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
CLASS C
Sold 392,347 $ 3,833,222 419,799 $ 4,895,743
Dividends and/or distributions reinvested 4,083 34,424 15,549 164,660
Redeemed (346,893) (3,347,917) (328,388) (3,701,452)
----------------------------------------------------------
Net increase 49,537 $ 519,729 106,960 $ 1,358,951
----------------------------------------------------------
----------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND LOSSES ON SECURITIES
As of August 31, 1999, net unrealized depreciation on securities of $1,868,222
was composed of gross appreciation of $11,007,757, and gross depreciation of
$12,875,979.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
MANAGEMENT FEES. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund which provides for an annual
fee of 1.00% of the first $250 million of average annual net assets of the
Fund, 0.95% of the next $250 million, 0.90% of the next $500 million, and 0.85%
of average annual net assets in excess of $1 billion. The Fund's management fee
for the year ended August 31, 1999, was 1.00% of average net assets for each
class of shares.
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the
Manager, is the transfer and shareholder servicing agent for the Fund and for
other Oppenheimer funds. OFS's total costs of providing such services are
allocated ratably to these funds.
28 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FEES. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
<TABLE>
<CAPTION>
AGGREGATE CLASS A COMMISSIONS COMMISSIONS COMMISSIONS
FRONT-END FRONT-END ON CLASS A ON CLASS B ON CLASS C
SALES CHARGES SALES CHARGES SHARES SHARES SHARES
ON CLASS A RETAINED BY ADVANCED BY ADVANCED BY ADVANCED BY
YEAR ENDED SHARES DISTRIBUTOR DISTRIBUTOR(1) DISTRIBUTOR(1) DISTRIBUTOR(1)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
August 31, 1999 $129,143 $37,678 $13,821 $150,610 $13,447
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
CONTINGENT DEFERRED CONTINGENT DEFERRED CONTINGENT DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES
YEAR ENDED RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR RETAINED BY DISTRIBUTOR
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
August 31, 1999 $-- $56,988 $2,250
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution and
Service Plans for Class B and Class C shares under Rule 12b-1 of the Investment
Company Act. Under those plans the Fund pays the Distributor for all or a
portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
- --------------------------------------------------------------------------------
CLASS A SERVICE PLAN FEES. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements to
the Distributor at a rate of up to 0.25% of average annual net assets of Class A
shares. The Distributor makes payments to plan recipients quarterly at an annual
rate not to exceed 0.25% of the average annual net assets consisting of Class A
shares of the Fund. For the fiscal year ended August 31, 1999, payments under
the Class A Plan totaled $72,958, all of which was paid by the Distributor to
recipients. That included $6,851 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect to
Class A shares in any fiscal year cannot be recovered in subsequent years.
- --------------------------------------------------------------------------------
CLASS B AND CLASS C DISTRIBUTION AND SERVICE PLAN FEES. Under each plan, service
fees and distribution fees are computed on the average of the net asset value of
shares in the respective class, determined as of the close of each regular
business day during the period. The 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 under
the plan during the period for which the fee is paid.
29 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the
first year the shares are outstanding. The asset-based sales charges on Class B
and Class C shares allow investors to buy shares without a front-end sales
charge while allowing the Distributor to compensate dealers that sell those
shares.
The Distributor's actual expenses in selling Class B and Class C shares may
be more than the payments it receives from the contingent deferred sales charges
collected on redeemed shares and from the Fund under the plans. If either the
Class B or the Class C plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to the
Distributor for distributing shares before the plan was terminated. The plans
allow for the carry-forward of distribution expenses, to be recovered from
asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended August 31, 1999,
were as follows:
<TABLE>
<CAPTION>
DISTRIBUTOR'S DISTRIBUTOR'S
AGGREGATE UNREIMBURSED
UNREIMBURSED EXPENSES AS %
TOTAL PAYMENTS AMOUNT RETAINED EXPENSES OF NET ASSETS
UNDER PLAN BY DISTRIBUTOR UNDER PLAN OF CLASS
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $164,077 $134,322 $672,880 3.20%
Class C Plan 40,169 28,153 60,327 1.19
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS
A foreign currency exchange contract is a commitment to purchase or sell a
foreign currency at a future date, at a negotiated rate. The Fund may enter into
foreign currency exchange contracts for operational purposes and to seek to
protect against adverse exchange rate fluctuations. Risks to the Fund include
the potential inability of the counterparty to meet the terms of the contract.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates as provided by
a reliable bank, dealer or pricing service. Unrealized appreciation and
depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities.
The Fund may realize a gain or loss upon the closing or settlement of the
foreign currency transactions. Realized gains and losses are reported with all
other foreign currency gains and losses in the Statement of Operations.
Securities denominated in foreign currency to cover net exposure on outstanding
foreign currency contracts are noted in the Statement of Investments where
applicable.
30 OPPENHEIMER DEVELOPING MARKETS FUND
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES
As of August 31, 1999, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. The Fund intends to invest no more
than 15% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limitation. The aggregate value of illiquid or restricted
securities subject to this limitation as of August 31, 1999, was $1,436,804,
which represents 2.17% of the Fund's net assets.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended August 31,
1999.
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense Food and Drug Retailers
Air Transportation Gas Utilities
Asset-Backed Health Care/Drugs
Auto Parts and Equipment Health Care/Supplies & Services
Automotive Homebuilders/Real Estate
Bank Holding Companies Hotel/Gaming
Banks Industrial Services
Beverages Information Technology
Broadcasting Insurance
Broker-Dealers Leasing & Factoring
Building Materials Leisure
Cable Television Manufacturing
Chemicals Metals/Mining
Commercial Finance Nondurable Household Goods
Communication Equipment Office Equipment
Computer Hardware Oil - Domestic
Computer Software Oil - International
Conglomerates Paper
Consumer Finance Photography
Consumer Services Publishing
Containers Railroads & Truckers
Convenience Stores Restaurants
Department Stores Savings & Loans
Diversified Financial Shipping
Diversified Media Special Purpose Financial
Drug Wholesalers Specialty Printing
Durable Household Goods Specialty Retailing
Education Steel
Electric Utilities Telecommunications - Long Distance
Electrical Equipment Telephone - Utility
Electronics Textile, Apparel & Home Furnishings
Energy Services Tobacco
Entertainment/Film Trucks and Parts
Environmental Wireless Services
Food
Appendix B
OppenheimerFunds Special Sales Charge Arrangements and Waivers
In certain cases, the initial sales charge that applies to purchases of Class A
shares1 of the Oppenheimer funds or the contingent deferred sales charge that
may apply to Class A, Class B or Class C shares may be waived.2 That is because
of the economies of sales efforts realized by OppenheimerFunds Distributor,
Inc., (referred to in this document as the "Distributor"), or by dealers or
other financial institutions that offer those shares to certain classes of
investors.
Not all waivers apply to all funds. For example, waivers relating to Retirement
Plans do not apply to Oppenheimer municipal funds, because shares of those funds
are not available for purchase by or on behalf of retirement plans. Other
waivers apply only to shareholders of certain funds.
For the purposes of some of the waivers described below and
in the Prospectus and Statement of Additional Information of the
applicable Oppenheimer funds, the term "Retirement Plan" refers
to the following types of plans:
(1) plans qualified under Sections 401(a) or 401(k) of the Internal Revenue
Code,
(2) non-qualified deferred compensation plans,
(3) employee benefit plans3
(4) Group Retirement Plans4
(5) 403(b)(7) custodial plan accounts (6) Individual Retirement Accounts
("IRAs"), including traditional IRAs, Roth IRAs, SEP-IRAs, SARSEPs or
SIMPLE plans
The interpretation of these provisions as to the
applicability of a special arrangement or waiver in a particular
case is in the sole discretion of the Distributor or the transfer
agent (referred to in this document as the "Transfer Agent") of
the particular Oppenheimer fund. These waivers and special
arrangements may be amended or terminated at any time by a
particular fund, the Distributor, and/or OppenheimerFunds, Inc.
(referred to in this document as the "Manager"). Waivers that
apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.
--------------
1. Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
2. In the case of Oppenheimer Senior Floating Rate Fund, a
continuously-offered closed-end fund, references to contingent deferred
sales charges mean the Fund's Early Withdrawal Charges and references to
"redemptions" mean "repurchases" of shares.
3. An "employee benefit plan" means any plan or arrangement, whether or not
it is "qualified" under the Internal Revenue Code, under which Class A
shares of an Oppenheimer fund or funds are purchased by a fiduciary or
other administrator for the account of participants who are employees of a
single employer or of affiliated employers. These may include, for example,
medical savings accounts, payroll deduction plans or similar plans. The
fund accounts must be registered in the name of the fiduciary or
administrator purchasing the shares for the benefit of participants in the
plan.
4. The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship,
members and employees of a partnership or association or other organized
group of persons (the members of which may include other groups), if the
group has made special arrangements with the Distributor and all members of
the group participating in (or who are eligible to participate in) the plan
purchase Class A shares of an Oppenheimer fund or funds through a single
investment dealer, broker or other financial institution designated by the
group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and
403(b) plans other than plans for public school employees. The term "Group
Retirement Plan" also includes qualified retirement plans and non-qualified
deferred compensation plans and IRAs that purchase Class A shares of an
Oppenheimer fund or funds through a single investment dealer, broker or
other financial institution that has made special arrangements with the
Distributor enabling those plans to purchase Class A shares at net asset
value but subject to the Class A contingent deferred sales charge. I.
Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial
Sales Charge but May Be Subject to the Class A Contingent Deferred Sales Charge
(unless a waiver applies).
There is no initial sales charge on purchases of Class A shares of any
of the Oppenheimer funds in the cases listed below. However, these purchases may
be subject to the Class A contingent deferred sales charge if redeemed within 18
months of the end of the calendar month of their purchase, as described in the
Prospectus (unless a waiver described elsewhere in this Appendix applies to the
redemption). Additionally, on shares purchased under these waivers that are
subject to the Class A contingent deferred sales charge, the Distributor will
pay the applicable commission described in the Prospectus under "Class A
Contingent Deferred Sales Charge."1 This waiver provision applies to:
o Purchases of Class A shares aggregating $1 million or
more.
o Purchases by a Retirement Plan (other than an IRA or
403(b)(7) custodial plan) that:
(1) buys shares costing $500,000 or more, or
(2) has, at the time of purchase, 100 or more eligible
employees or total plan assets of $500,000 or more, or
(3) certifies to the Distributor that it projects to have
annual plan purchases of $200,000 or more. o Purchases by an
OppenheimerFunds-sponsored Rollover IRA, if the purchases are
made:
(1) through a broker, dealer, bank or registered investment
advisor that has made special arrangements with the Distributor
for those purchases, or
(2) by a direct rollover of a distribution from a qualified
Retirement Plan if the administrator of that Plan has made
special arrangements with the Distributor for those purchases. o
Purchases of Class A shares by Retirement Plans that have any of
the following record-keeping arrangements:
(1) The record keeping is performed by Merrill Lynch Pierce
Fenner & Smith, Inc. ("Merrill Lynch") on a daily valuation basis
for the Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets invested in (a) mutual
funds, other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM"), that are made available under a
Service Agreement between Merrill Lynch and the mutual fund's
principal underwriter or distributor, and (b) funds advised or
managed by MLAM (the funds described in (a) and (b) are referred
to as "Applicable Investments").
(2) The record keeping for the Retirement Plan is performed
on a daily valuation basis by a record keeper whose services are
provided under a contract or arrangement between the Retirement
Plan and Merrill Lynch. On the date the plan sponsor signs the
record keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets (excluding assets
invested in money market funds) invested in Applicable
Investments.
(3) The record keeping for a Retirement Plan is handled
under a service agreement with Merrill Lynch and on the date the
plan sponsor signs that agreement, the Plan has 500 or more
eligible employees (as determined by the Merrill Lynch plan
conversion manager). o Purchases by a Retirement Plan whose
record keeper had a cost-allocation agreement with the Transfer
Agent on or before May 1, 1999.
<PAGE>
II. Waivers of Class A Sales Charges of Oppenheimer Funds
A. Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers.
Class A shares purchased by the following investors are not
subject to any Class A sales charges (and no commissions are paid
by the Distributor on such purchases):
o The Manager or its affiliates.
o Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's
spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents,
etc.) are included.
o Registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose.
o 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.
o Employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that
have entered into sales arrangements with such dealers or brokers
(and which are identified as such to the Distributor) or with the
Distributor. The purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children).
o Dealers, brokers, banks or registered investment advisors that
have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients. Those clients
may be charged a transaction fee by their dealer, broker, bank or
advisor for the purchase or sale of Fund shares.
o Investment advisors and financial planners who have entered into
an agreement for this purpose with the Distributor and who charge
an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients.
o "Rabbi trusts" that buy shares for their own accounts, if the
purchases are made through a broker or agent or other financial
intermediary that has made special arrangements with the
Distributor for those purchases.
o Clients of investment advisors or financial planners (that have
entered into an agreement for this purpose with the Distributor)
who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a
master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special
arrangements . Each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares.
o 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.
o Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this
arrangement) and persons who are directors or trustees of the
company or trust which is the beneficial owner of such accounts.
o A unit investment trust that has entered into an appropriate agreement with
the Distributor. o Dealers, brokers, banks, or registered investment advisors
that have entered into an agreement with the
Distributor to sell shares to defined contribution employee
retirement plans for which the dealer, broker or investment
advisor provides administration services.
o Retirement Plans and deferred compensation plans and trusts used
to fund those plans (including, for example, plans qualified or
created under sections 401(a), 401(k), 403(b) or 457 of the
Internal Revenue Code), in each case if those purchases are made
through a broker, agent or other financial intermediary that has
made special arrangements with the Distributor for those
purchases.
o A TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for
Value Fund were exchanged for Class A shares of that Fund due to
the termination of the Class B and Class C TRAC-2000 program on
November 24, 1995.
o A qualified Retirement Plan that had agreed with the former Quest
for Value Advisors to purchase shares of any of the Former Quest
for Value Funds at net asset value, with such shares to be held
through DCXchange, a sub-transfer agency mutual fund
clearinghouse, if that arrangement was consummated and share
purchases commenced by December 31, 1996.
B. Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions.
Class A shares issued or purchased in the following transactions are not subject
to sales charges (and no commissions are paid by the Distributor on such
purchases): o Shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to
which the Fund is a party.
o 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.
o Shares purchased through a broker-dealer that has entered into a special
agreement with the Distributor to allow the broker's customers to purchase
and pay for shares of Oppenheimer funds using the proceeds of shares
redeemed in the prior 30 days from a mutual fund (other than a fund managed
by the Manager or any of its subsidiaries) on which an initial sales charge
or contingent deferred sales charge was paid. This waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner. This waiver must be
requested when the purchase order is placed for shares of the Fund, and the
Distributor may require evidence of qualification for this waiver.
o Shares purchased with the proceeds of maturing principal units of
any Qualified Unit Investment Liquid Trust Series.
o Shares purchased by the reinvestment of loan repayments by a
participant in a Retirement Plan for which the Manager or an
affiliate acts as sponsor.
C. 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: o To make Automatic Withdrawal Plan
payments that are limited annually to no more than 12% of the account value
measured at the time the Plan is established, adjusted annually.
o Involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (please refer to
"Shareholder Account Rules and Policies," in the applicable fund
Prospectus).
o For distributions from Retirement Plans, deferred compensation
plans or other employee benefit plans for any of the following
purposes:
(1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established.
(2) To return excess contributions.
(3) To return contributions made due to a mistake of fact.
(4) Hardship withdrawals, as defined in the plan.2
(5) Under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code, or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the
Internal Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue Code.
(7) To make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.
(9) Separation from service.3
(10)Participant-directed redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or a
subsidiary of the Manager) if the plan has made special
arrangements with the Distributor. (11) Plan termination or
"in-service distributions," if the redemption proceeds are rolled
over directly to an OppenheimerFunds-sponsored IRA.
o For distributions from Retirement Plans having 500 or more
eligible employees, except distributions due to termination of all
of the Oppenheimer funds as an investment option under the Plan.
o For distributions from 401(k) plans sponsored by broker-dealers
that have entered into a special agreement with the Distributor
allowing this waiver.
III. Waivers of Class B and Class C Sales Charges of Oppenheimer Funds
The Class B and Class C contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions or redeemed in certain
circumstances described below.
A. 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:
o Shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," in the applicable Prospectus. o Redemptions from
accounts other than Retirement Plans following the death or disability
of the last surviving shareholder, including a trustee of a grantor
trust or revocable living trust for which the trustee is also the sole
beneficiary. The death or disability must have occurred after the
account was established, and for disability you must provide evidence
of a determination of disability by the Social Security Administration.
o Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this
waiver. o Redemptions of Class B shares held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or
an independent record keeper under a contract with Merrill Lynch. o
Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into a
special arrangement with the Distributor for this purpose. o
Redemptions requested in writing by a Retirement Plan sponsor of Class
C shares of an Oppenheimer fund in amounts of $1 million or more held
by the Retirement Plan for more than one year, if the redemption
proceeds are invested in Class A shares of one or more Oppenheimer
funds. o Distributions from Retirement Plans or other employee benefit
plans for any of the following purposes:
(1) Following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary.
The death or disability must occur after the
participant's account was established in an Oppenheimer
fund.
(2) To return excess contributions made to a participant's account. (3) To
return contributions made due to a mistake of fact. (4) To make hardship
withdrawals, as defined in the plan.4
(5) To make distributions required under a Qualified Domestic
Relations Order or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the
Internal Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue Code.
(7) To make "substantially equal periodic payments" as
described in Section 72(t) of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.5
(9) On account of the participant's separation from service.6
(10) Participant-directed redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or
a subsidiary of the Manager) offered as an investment
option in a Retirement Plan if the plan has made special
arrangements with the Distributor.
(11) Distributions made on account of a plan termination or
"in-service" distributions," if the redemption proceeds
are rolled over directly to an OppenheimerFunds-sponsored
IRA.
(12) Distributions from Retirement Plans having 500 or more
eligible employees, but excluding distributions made
because of the Plan's elimination as investment options
under the Plan of all of the Oppenheimer funds that had
been offered.
(13) For distributions from a participant's account under an
Automatic Withdrawal Plan after the participant reaches
age 59 1/2, as long as the aggregate value of the
distributions does not exceed 10% of the account's value
annually (measured from the establishment of the
Automatic Withdrawal Plan).
o Redemptions of Class B shares or Class C shares under an Automatic
Withdrawal Plan from an account other than a Retirement Plan if
the aggregate value of the redeemed shares does not exceed 10% of
the account's value annually.
B. 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:
o Shares sold to the Manager or its affiliates.
o 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.
o Shares issued in plans of reorganization to which the Fund is a party.
o Shares sold to present or former officers, directors, trustees or
employees (and their "immediate families" as defined above in
Section I.A.) of the Fund, the Manager and its affiliates and
retirement plans established by them for their employees.
IV. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers for Class A,
Class B and Class C shares described in the Prospectus or Statement of
Additional Information of the Oppenheimer funds are modified as described below
for certain persons who were shareholders of the former Quest for Value Funds.
To be eligible, those persons must have been shareholders on November 24, 1995,
when OppenheimerFunds, Inc. became the investment advisor to those former Quest
for Value Funds. Those funds include:
<PAGE>
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Global Value Fund
Oppenheimer Quest Opportunity Value Fund
These arrangements also apply to shareholders of the following funds
when they merged (were reorganized) into various Oppenheimer funds on November
24, 1995:
Quest for Value U.S. Government Income Fund
Quest for Value New York Tax-Exempt Fund
Quest for Value Investment Quality Income Fund
Quest for Value National Tax-Exempt Fund
Quest for Value Global Income Fund
Quest for Value California Tax-Exempt Fund
All of the funds listed above are referred to in this Appendix as the
"Former Quest for Value Funds." The waivers of initial and contingent deferred
sales charges described in this Appendix apply to shares of an Oppenheimer fund
that are either:
o acquired by such shareholder pursuant to an exchange of shares of an
Oppenheimer fund that was one of the Former Quest for Value Funds or o
purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any of
the Former Quest for Value Funds into that other Oppenheimer fund on
November 24, 1995.
A. Reductions or Waivers of Class A Sales Charges.
|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest for
Value Funds Shareholders.
Purchases by Groups and Associations. The following table sets forth the initial
sales charge rates for Class A shares purchased by members of "Associations"
formed for any purpose other than the purchase of securities. The rates in the
table apply if that Association purchased shares of any of the Former Quest for
Value Funds or received a proposal to purchase such shares from OCC Distributors
prior to November 24, 1995.
<TABLE>
<CAPTION>
Number of Eligible Initial Sales Charge as a Initial Sales Charge as a Commission as % of
Employees of Members % of Offering Price % of Net Amount Invested Offering Price
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
9 or Fewer 2.50% 2.56% 2.00%
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
At least 10 but not more 2.00% 2.04% 1.60%
than 49
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
</TABLE>
For purchases by Associations having 50 or more eligible employees or
members, there is no initial sales charge on purchases of Class A shares, but
those shares are subject to the Class A contingent deferred sales charge
described in the applicable fund's Prospectus.
Purchases made under this arrangement qualify for the lower of either
the sales charge rate in the table based on the number of members of an
Association, or the sales charge rate that applies under the Right of
Accumulation described in the applicable fund's Prospectus and Statement of
Additional Information. Individuals who qualify under this arrangement for
reduced sales charge rates as members of Associations also may purchase shares
for their individual or custodial accounts at these reduced sales charge rates,
upon request to the Distributor.
|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders 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. o
Shareholders who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.
|X| Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares 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.
B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers.
|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for Value Fund
into the fund or by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such fund merged. Those shares must have been
purchased prior to March 6, 1995 in connection with:
o 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 o liquidation of a
shareholder's account if the aggregate net asset value of shares held
in the account is less than the required minimum value of such
accounts.
|X| Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995. In the following cases, the contingent
deferred sales charge will be waived for redemptions of Class A, Class B or
Class C shares of an Oppenheimer fund. The shares must have been acquired by the
merger of a Former Quest for Value Fund into the fund or by exchange from an
Oppenheimer fund that was a Former Quest For Value Fund or into which such
Former Quest for Value Fund merged. Those shares must have been purchased on or
after March 6, 1995, but prior to November 24, 1995:
o redemptions following the death or disability of the shareholder(s)
(as evidenced by a determination of total disability by the U.S. Social
Security Administration); o withdrawals under an automatic withdrawal
plan (but only for Class B or Class C shares) where the annual
withdrawals do not exceed 10% of the initial value of the account; and
o 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 Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Connecticut Mutual Investment
Accounts, Inc.
The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the respective Prospectus (or this Appendix) of
the following Oppenheimer funds (each is referred to as a "Fund" in this
section): o Oppenheimer U. S. Government Trust, o Oppenheimer Bond Fund, o
Oppenheimer Disciplined Value Fund and o Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment advisor to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account
Connecticut Mutual Total Return Account
Connecticut Mutual Government Securities Account
CMIA LifeSpan Capital Appreciation Account
Connecticut Mutual Income Account
CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account
CMIA Diversified Income Account
A. Prior Class A CDSC and Class A Sales Charge Waivers.
|X| Class A Contingent Deferred Sales Charge. Certain shareholders of a
Fund and the other Former Connecticut Mutual Funds are entitled to continue to
make additional purchases of Class A shares at net asset value without a Class A
initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one
year of purchase, they will be assessed a 1% contingent deferred sales charge on
an amount equal to the current market value or the original purchase price of
the shares sold, whichever is smaller (in such redemptions, any shares not
subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are:
(1) persons whose purchases of Class A shares of a Fund and other
Former Connecticut Mutual Funds were $500,000 prior to March 18,
1996, as a result of direct purchases or purchases pursuant to the
Fund's policies on Combined Purchases or Rights of Accumulation,
who still hold those shares in that Fund or other Former
Connecticut Mutual Funds, and
(2) persons whose intended purchases under a Statement of Intention
entered into prior to March 18, 1996, with the former general
distributor of the Former Connecticut Mutual Funds to purchase
shares valued at $500,000 or more over a 13-month period entitled
those persons to purchase shares at net asset value without being
subject to the Class A initial sales charge.
Any of the Class A shares of a Fund and the other Former Connecticut Mutual
Funds that were purchased at net asset value prior to March 18, 1996, remain
subject to the prior Class A CDSC, or if any additional shares are purchased by
those shareholders at net asset value pursuant to this arrangement they will be
subject to the prior Class A CDSC.
|X| Class A Sales Charge Waivers. Additional Class A shares
of a Fund may be purchased without a sales charge, by a person
who was in one (or more) of the categories below and acquired
Class A shares prior to March 18, 1996, and still holds Class A
shares: (1)
<PAGE>
any purchaser, provided the total initial amount invested in the Fund
or any one or more of the Former Connecticut Mutual Funds totaled
$500,000 or more, including investments made pursuant to the
Combined Purchases, Statement of Intention and Rights of
Accumulation features available at the time of the initial
purchase and such investment is still held in one or more of the
Former Connecticut Mutual Funds or a Fund into which such Fund
merged;
(2) any participant in a qualified plan, provided that the total
initial amount invested by the plan in the Fund or any one or more
of the Former Connecticut Mutual Funds totaled $500,000 or more;
(3) Directors of the Fund or any one or more of the Former Connecticut
Mutual Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual Financial
Services, L.L.C. ("CMFS"), the prior distributor of the Former
Connecticut Mutual Funds, and its affiliated companies;
(5) one or more members of a group of at least 1,000 persons (and
persons who are retirees from such group) engaged in a common
business, profession, civic or charitable endeavor or other
activity, and the spouses and minor dependent children of such
persons, pursuant to a marketing program between CMFS and such
group; and
(6) an institution acting as a fiduciary on behalf of an individual or
individuals, if such institution was directly compensated by the
individual(s) for recommending the purchase of the shares of the
Fund or any one or more of the Former Connecticut Mutual Funds,
provided the institution had an agreement with CMFS.
Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of the Fund.
B. Class A and Class B Contingent Deferred Sales Charge Waivers.
In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B shares
of a Fund into Class A or Class B shares of a Former Connecticut Mutual Fund
provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by
exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund.
Additionally, the shares of such Former Connecticut Mutual Fund must have been
purchased prior to March 18, 1996:
(1) by the estate of a deceased shareholder;
(2) upon the disability of a shareholder, as defined in Section 72(m)(7) of the
Internal Revenue Code;
(3) for retirement distributions (or loans) to participants or
beneficiaries from retirement plans qualified under Sections 401(a) or
403(b)(7)of the Code, or from IRAs, deferred compensation plans created
under Section 457 of the Code, or other employee benefit plans;
(4) as tax-free returns of excess contributions to such retirement or
employee benefit plans;
(5) in whole or in part, in connection with shares sold to any state,
county, or city, or any instrumentality, department, authority, or agency
thereof, that is prohibited by applicable investment laws from paying a
sales charge or commission in connection with the purchase of shares of any
registered investment management company;
(6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger,
acquisition or similar reorganization transaction;
(7) in connection with the Fund's right to involuntarily redeem or
liquidate the Fund;
(8) in connection with automatic redemptions of Class A shares and Class B
shares in certain retirement plan accounts pursuant to an Automatic
Withdrawal Plan but limited to no more than 12% of the original value
annually; or
(9) as involuntary redemptions of shares by operation of law, or under
procedures set forth in the Fund's Articles of Incorporation, or as adopted
by the Board of Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of
Advance America Funds, Inc.
Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Equity Income Fund who
acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those Oppenheimer
funds on October 18, 1991, and who held shares of Advance America Funds, Inc. on
March 30, 1990, may purchase Class A shares of those four Oppenheimer funds at a
maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of
Oppenheimer Convertible Securities Fund
Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to purchase
those shares at net asset value without sales charge:
o the Manager and its affiliates,
o present or former officers, directors, trustees and employees (and
their "immediate families" as defined in the Fund's Statement of
Additional Information) of the Fund, the Manager and its affiliates,
and retirement plans established by them or the prior investment
advisor of the Fund for their employees, o registered management
investment companies or separate accounts of insurance companies that
had an agreement with the Fund's prior investment advisor or
distributor for that purpose, o 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, o employees and
registered representatives (and their spouses) of dealers or brokers
described in the preceding section or financial institutions that have
entered into sales arrangements with those dealers or brokers (and
whose identity is made known to the Distributor) or with the
Distributor, but only if the purchaser certifies to the Distributor at
the time of purchase that the purchaser meets these qualifications, o
dealers, brokers, or registered investment advisors that had entered
into an agreement with the Distributor or the prior distributor of the
Fund specifically providing for the use of Class M shares of the Fund
in specific investment products made available to their clients, and o
dealers, brokers or registered investment advisors that had entered
into an agreement with the Distributor or prior distributor of the
Fund's shares to sell shares to defined contribution employee
retirement plans for which the dealer, broker, or investment advisor
provides administrative services.
<PAGE>
Oppenheimer Developing Markets Fund
Internet Web Site:
www.oppenheimerfunds.com
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1.800.525.7048
Custodian Bank
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019-5820
67890
PX785.1299
OPPENHEIMER DEVELOPING MARKETS FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) Declaration of Trust dated 5/7/96: Previously filed with Registrant's
initial registration statement, 6/10/96, and incorporated herein by reference.
(b) Amended and Restated By-Laws dated June 4, 1998: Previously filed with
Registrant's Post-Effective Amendment No. 4, 12/21/98, and incorporated herein
by reference.
(c) (i) Specimen Class A Share Certificate: Filed herewith. (ii) Specimen
Class B Share Certificate: Filed herewith. (iii) Specimen Class C Share
Certificate: Filed herewith.
(d) Form of Investment Advisory Agreement: Previously filed with Registrant's
initial registration statement, 6/10/96, and incorporated herein by reference.
(e) (i) Form of General Distributor's Agreement: Previously filed with
Registrant's initial registration statement, 6/10/96, and incorporated
herein by reference.
(ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Pre-Effective Amendment No. 2 to the Registration
Statement of Oppenheimer Trinity Value Fund (Reg. No. 333-79707), 8/25/99,
and incorporated herein by reference.
(iii) Form of Agency Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Pre-Effective Amendment No. 2 to the Registration
Statement of Oppenheimer Trinity Value Fund (Reg. No. 333-79707), 8/25/99,
and incorporated herein by reference.
(iv) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Pre-Effective Amendment No. 2 to the Registration
Statement of Oppenheimer Trinity Value Fund (Reg. No. 333-79707), 8/25/99,
and incorporated herein by reference.
(f) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors:
(i) Retirement Plan for Non-Interested Trustees or Directors dated June 7,
1990: Previously filed with Post-Effective Amendment No. 97 to the
Registration Statement of Oppenheimer Fund (File No. 2-14586), 8/30/90,
refiled with Post-Effective Amendment No. 45 of Oppenheimer Growth Fund
(Reg. No. 2-45272), 8/22/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(ii) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Filed with Post-Effective Amendment No. 26 to the
Registration Statement of Oppenheimer Gold & Special Minerals Fund (Reg.
No. 2-82590), 10/28/98, and incorporated by reference.
(g) (i) Form of Custody Agreement between Registrant and The Bank of New
York: Previously filed with Registrant's initial registration statement,
6/10/96, and incorporated herein by reference.
(ii) Foreign Custody Manager Agreement between Registrant and The Bank of
New York: Previously filed with Pre-Effective Amendment No.2 to the
Registration Statement of Oppenheimer World Bond Fund (Reg. 333-48973),
4/23/98, and incorporated herein by reference.
(h) Not applicable.
(i) Opinion and Consent of Counsel: Previously filed with Registrant's
Pre-Effective Amendment No. 1, 11/8/96, and incorporated herein by reference.
(j) Independent Auditors' Consent: Filed herewith.
(k) Not applicable.
(l) Investment Letter from OppenheimerFunds, Inc. to Registrant dated 10/18/96:
Previously filed with Registrant's Pre-Effective Amendment No. 1, 11/8/96, and
incorporated herein by reference.
(m) (i) Service Plan and Agreement for Class A Shares pursuant to Rule
12b-1: Previously filed with Registrant's Initial Registration
Statement, 6/10/96, and incorporated herein by reference.
(ii) Amended and Restated Distribution and Service Plan and Agreement
for Class B Shares dated 2/12/98 pursuant to Rule 12b-1: Previously
filed with Registrant's Post-Effective Amendment No 4, 12/21/98, and
incorporated herein by reference.
(iii) Amended and Restated Distribution and Service Plan and Agreement
for Class C Shares dated 2/12/98 pursuant to Rule 12b-1: Previously
filed with Registrant's Post-Effective Amendment No. 4, 12/21/98, and
incorporated herein by reference.
(n) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated through
8/24/99: Previously filed with Pre-Effective Amendment No. 1 to the Registration
Statement of Oppenheimer Senior Floating Rate Fund (Reg. No.
333-82579), 8/27/99, and incorporated herein by reference.
-- Powers of Attorney for all Trustees/Directors: Previously filed with
Pre-Effective Amendment No. 1 to the Registration Statement of Oppenheimer
Trinity Value Fund (Reg. No. 333-79707), 8/4/99, and incorporated herein by
reference.
Item 24. Persons Controlled by or Under Common Control with the Fund
None.
Item 25. Indemnification
Reference is made to the provisions of Article Seven of Registrant's
Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this
Registration Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a trustee, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person, Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
Item 26. Business and Other Connections of the Investment Adviser
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it and
certain subsidiaries and affiliates act in the same capacity to other investment
companies, including without limitation those described in Parts A and B hereof
and listed in Item 26(b) below.
(b) There is set forth below information as to any other business, profession,
vocation or employment of a substantial nature in which each officer and
director of OppenheimerFunds, Inc. is, or at any time during the past two fiscal
years has been, engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name and Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
<S> <C>
Charles E. Albers,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds
(since April 1998); a
Chartered Financial
Analyst; formerly, a Vice
President and portfolio
manager for Guardian
Investor Services, the
investment management
subsidiary of The Guardian
Life Insurance Company
(since
1972).
Edward Amberger,
Assistant Vice President Formerly
Assistant Vice President,
Securities Analyst for
Morgan Stanley Dean Witter
(May 1997 - April 1998);
and Research Analyst (July
1996 - May 1997), Portfolio
Manager (February 1992 -
July 1996) and Department
Manager (June 1988 to
February 1992) for The Bank
of New York.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager of certain Oppenheimer
funds; a Chartered Financial Analyst; Senior Vice President
of HarbourView Asset Management Corporation; prior to March
1996 he was the senior equity portfolio manager for the
Panorama Series Fund, Inc. (the "Company") and other mutual
funds and pension funds managed by G.R. Phelps & Co. Inc.
("G.R. Phelps"), the Company's former investment adviser,
which was a subsidiary of Connecticut Mutual Life Insurance
Company; he was also responsible for managing the common
stock department and common stock investments of Connecticut
Mutual Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds.
Formerly, a Vice President
and Senior Portfolio
Manager at First of America
Investment Corp.
George Batejan,
Executive Vice President,
Chief Information Officer Formerly Senior Vice President, Group Executive, and Senior
Systems Officer for American International Group (October
1994 - May 1998).
Richard Bayha,
Senior Vice President None.
John R. Blomfield,
Vice President Formerly Senior
Product Manager (November
1995 - August 1997) of
International Home Foods
and American Home Products
(March 1994 - October
1996).
Connie Bechtolt,
Assistant Vice President None.
Kathleen Beichert,
Vice President None.
Rajeev Bhaman,
Vice President Formerly, Vice
President (January 1992 -
February, 1996) of Asian
Equities for Barclays de
Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Vice President of
Mutual Fund Accounting
(since May 1996); an
officer of other
Oppenheimer funds;
formerly, an Assistant Vice
President of
OppenheimerFunds,
Inc./Mutual Fund Accounting
(April 1994 - May 1996),
and a Fund Controller for
OppenheimerFunds, Inc.
Chad Boll,
Assistant Vice President None
Scott Brooks,
Vice President None.
Kevin Brosmith,
Vice President None.
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly, Assistant Vice President of Rochester Fund
Services, Inc.
Christopher Capot,
Assistant Vice President Assistant
Vice President of Public
Relations at Webster
Financial Corporation
(December 1995 - December
1998).
Michael Carbuto,
Vice President An officer and/or portfolio manager of certain Oppenheimer
funds; Vice President of Centennial Asset Management
Corporation.
John Cardillo,
Assistant Vice President None.
Mark Curry,
Assistant Vice President None.
H.C. Digby Clements,
Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President
and Chief Investment
Officer Chief Investment Officer
(since 6/99); Chief
Executive Officer and
Senior Manager of
HarbourView Asset
Management Corporation;
Trustee (1993 - present) of
Awhtolia College - Greece;
formerly Chief Executive
Officer (1993-June 1999).
William DeJianne, None.
Assistant Vice President
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Vice President None.
Craig P. Dinsell
Executive Vice President Formerly,
Senior Vice President of
Human Resources for
Fidelity Investments-Retail
Division (January 1995 -
January 1996), Fidelity
Investments FMR Co.
(January 1996 - June 1997)
and Fidelity Investments
FTPG (June 1997 - January
1998).
John Doney,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Executive Vice President (since September 1993), and a
director (since January 1992) of the Distributor; Executive
Vice President, General Counsel and a director of
HarbourView Asset Management Corporation Shareholder
Services, Inc., Shareholder Financial Services, Inc. and
Oppenheimer Partnership Holdings, Inc. since (September
1995); President and a director of Centennial Asset
Management Corporation (since September 1995); President and
a director of Oppenheimer Real Asset Management, Inc (since
July 1996); General Counsel (since May 1996) and Secretary
(since April 1997) of Oppenheimer Acquisition Corp.; Vice
President and Director of OppenheimerFunds International,
Ltd. and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
Bruce Dunbar, None.
Vice President
Daniel Engstrom,
Assistant Vice President None.
George Evans,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
George Fahey,
Vice President None.
Scott Farrar,
Vice President Assistant
Treasurer of Oppenheimer
Millennium Funds plc (since
October 1997); an officer
of other Oppenheimer funds;
formerly an Assistant Vice
President of
OppenheimerFunds,
Inc./Mutual Fund Accounting
(April 1994 - May 1996),
and a Fund Controller for
OppenheimerFunds, Inc.
Leslie A. Falconio,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds
(since 6/99).
Katherine P. Feld,
Vice President and Secretary
Vice President and
Secretary of the
Distributor; Secretary of
HarbourView Asset
Management Corporation, and
Centennial Asset Management
Corporation; Secretary,
Vice President and Director
of Centennial Capital
Corporation; Vice President
and Secretary of
Oppenheimer Real Asset
Management, Inc.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio manager of certain
Oppenheimer funds; Presently he holds the following other
positions: Director (since 1995) of ICI Mutual Insurance
Company; Governor (since 1994) of St. John's College;
Director (since 1994 - present) of International Museum of
Photography at George Eastman House. Formerly, he held the
following positions: formerly, Chairman of the Board and
Director of Rochester Fund Distributors, Inc. ("RFD");
President and Director of Fielding Management Company, Inc.
("FMC"); President and Director of Rochester Capital
Advisors, Inc. ("RCAI"); Managing Partner of Rochester
Capital Advisors, L.P., President and Director of Rochester
Fund Services, Inc. ("RFS"); President and Director of
Rochester Tax Managed Fund, Inc.; Director (1993 - 1997) of
VehiCare Corp.; Director (1993 - 1996) of VoiceMode.
David Foxhoven,
Assistant Vice President Formerly Manager, Banking Operations Department (July 1996 -
November 1998).
Jennifer Foxson,
Vice President None.
Dan Gangemi,
Vice President None.
Erin Gardiner,
Assistant Vice President None.
Daniel Garrity,
Vice President None.
Charles Gilbert,
Assistant Vice President None.
Alan Gilston,
Vice President Formerly, Vice President (1987 - 1997) for Schroder Capital
Management International.
Jill Glazerman,
Vice President None.
Robyn Goldstein-Liebler
Assistant Vice President None.
Mikhail Goldverg
Assistant Vice President None.
Jeremy Griffiths,
Executive Vice President,
Chief Financial Officer and Chief Financial Officer and Treasurer (since March
Director 1998) of Oppenheimer Acquisition Corp.; a Member and Fellow
of the Institute of Chartered Accountants; formerly, an
accountant for Arthur Young (London, U.K.).
Robert Grill,
Senior Vice President Formerly,
Marketing Vice President
for Bankers Trust Company
(1993 - 1996); Steering
Committee Member,
Subcommittee Chairman for
American Savings Education
Council (1995 - 1996).
Robert Haley
Assistant Vice President Formerly,
Vice President of
Information Services for
Bankers Trust Company
(January 1991 - November
1997).
Thomas B. Hayes,
Vice President None.
Barbara Hennigar,
Chairman of OppenheimerFunds Executive Vice President and
Services, a Division of OFI Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager
.
Dorothy Hirshman, None.
Assistant Vice President
Merryl Hoffman,
Vice President and None.
Senior Counsel
Merrell Hora,
Assistant Vice President Research Fellow for the University of Minnesota
(July 1997- July 1998).
Scott T. Huebl,
Vice President None.
James Hyland,
Assistant Vice President Formerly
Manager of Customer
Research for Prudential
Investments (February 1998
- July 1999).
Kathleen T. Ives,
Vice President None.
William Jaume,
Vice President None.
Frank Jennings,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds.
Andrew Jordan,
Assistant Vice President None.
Deborah Kaback
Vice President Senior Vice President and Deputy General Counsel of
Oppenheimer Capital (April 1989-November 1999).
Lewis Kamman
Vice President
Senior Consultant for Bell Atlantic Network Integration,
Inc. (June 1997-December 1998) and
Vice President for JP Morgan, Inc. (August 1994-June 1997).
Thomas W. Keffer,
Senior Vice President None.
Erica Klein,
Assistant Vice President None.
Walter Konops,
Assistant Vice President None.
Avram Kornberg,
Vice President None.
Jimmy Kourkoulakos,
Assistant Vice President. None.
John Kowalik,
Senior Vice President An officer
and/or portfolio manager
for certain
OppenheimerFunds; formerly,
Managing Director and
Senior Portfolio Manager at
Prudential Global Advisors
(1989 -
1998).
Joseph Krist,
Assistant Vice President None.
Michael Levine,
Vice President None.
Shanquan Li,
Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio manager for certain Oppenheimer
funds; a Chartered Financial Analyst; a Vice President of
HarbourView Asset Management Corporation; prior to March
1996, the senior bond portfolio manager for Panorama Series
Fund Inc., other mutual funds and pension accounts managed
by G.R. Phelps; also responsible for managing the public
fixed-income securities department at Connecticut Mutual
Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Vice President None.
Steve Macchia,
Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director Chief Executive Officer (since September 1995); President
and director (since June 1991) of HarbourView Asset
Management Corporation; and a director of Shareholder
Services, Inc. (since August 1994), and Shareholder
Financial Services, Inc. (September 1995); President (since
September 1995) and a director (since October 1990) of
Oppenheimer Acquisition Corp.; President (since September
1995) and a director (since November 1989) of Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of
OppenheimerFunds, Inc.; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director
(since October 1997) of OppenheimerFunds International Ltd.,
an offshore fund manager subsidiary of OppenheimerFunds,
Inc. and Oppenheimer Millennium Funds plc (since October
1997); President and a director of other Oppenheimer funds;
a director of Hillsdown Holdings plc (a U.K. food company);
formerly, an Executive Vice President of OFI.
Philip T. Masterson,
Vice President Formerly an
Associate at Davis, Graham,
& Stubbs (January 1998 -
July 1998); Associate;
Myer, Swanson, Adams &
Wolf, P.C. (May 1996 - June
1998).
Loretta McCarthy,
Executive Vice President None.
Beth Michnowski,
Assistant Vice President Formerly Senior Marketing Manager (May 1996 - June 1997) and
Director of Product Marketing (August 1992 - May 1996) with
Fidelity Investments.
Lisa Migan,
Assistant Vice President None.
Andrew J. Mika
Senior Vice President Formerly a
Second Vice President for
Guardian Investments (June
1990 - October 1999).
Denis R. Molleur,
Vice President and
Senior Counsel None.
Nikolaos Monoyios,
Vice President A Vice President
and/or portfolio manager of
certain Oppenheimer funds
(since April 1998); a
Certified Financial
Analyst; formerly, a Vice
President and portfolio
manager for Guardian
Investor Services, the
management subsidiary of
The Guardian Life Insurance
Company (since 1979).
Linda Moore,
Vice President Formerly, Marketing Manager (July 1995 -November 1996) for
Chase Investment Services Corp.
Kenneth Nadler,
Vice President None.
David Negri,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Ray Olson,
Assistant Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds
(since 6/99).
Robert E. Patterson,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds.
Frank Pavlak,
Vice President Branch Chief of Investment Company Examinations at U.S.
Securities and Exchange Commission (January 1981 - December
1998).
James Phillips
Assistant Vice President None.
David Pellegrino Vice President.
Stephen Puckett,
Vice President None.
Jane Putnam,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds.
Michael Quinn,
Assistant Vice President Formerly, Assistant Vice President (April 1995 - January
1998) of Van Kampen American Capital.
Julie Radtke,
Vice President Formerly Assistant Vice President and Business Analyst for
Pershing, Jersey City (August 1997 -November 1997); Senior
Business Consultant, American International Group (January
1996 - July 1997).
Russell Read,
Senior Vice President Vice President of Oppenheimer Real Asset Management, Inc.
(since March 1995).
Thomas Reedy,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds;
formerly, a Securities
Analyst for the Manager.
John Reinhardt,
Vice President: Rochester Division None
Jeffrey Rosen,
Vice President None.
Michael S. Rosen,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds.
Marci Rossell,
Vice President and
Corporate Economist Economist with Federal Reserve
Bank of Dallas (April 1996 - March 1999).
Richard H. Rubinstein,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President & Director None.
Andrew Ruotolo
Executive Vice President Formerly Chief Operations Officer for American
International Group (1997-August 1999).
Rohit Sah,
Assistant Vice President None.
Valerie Sanders,
Vice President None.
Jeff Schneider,
Vice President Director, Personal Decisions International.
Ellen Schoenfeld,
Assistant Vice President None.
David Schultz,
Senior Vice President
and Chief Executive Officer
Senior Managing Director,
President (since April
1999) and Chief Executive
Officer of HarbourView
Asset Management
Corporation (since June
1999).
Stephanie Seminara,
Vice President None.
Martha Shapiro,
Assistant Vice President None.
Christian D. Smith
Senior Vice President Formerly
Co-head of the Municipal
Portfolio Management Team,
Portfolio Manager for
Prudential Global Asset
Management (January 1990 -
September 1999).
Connie Song,
Assistant Vice President None.
Richard Soper,
Vice President None.
Keith Spencer Equity trader.
Vice President
Cathleen Stahl,
Vice President Assistant Vice President & Manager of Women & Investing
Program
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995) of Rochester Capitol
Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds.
Jayne Stevlingson,
Vice President None.
Marlo Stil,
Vice President Investment Specialist and Career Agent/Registered
Representative for MML Investor services, Inc.
John Stoma,
Senior Vice President None.
Michael C. Strathearn,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds;
a Chartered Financial
Analyst; a Vice President
of HarbourView Asset
Management Corporation.
Kevin Surrett,
Assistant Vice President Assistant Vice President of Product Development
At Evergreen Investor Services, Inc. (June 1995 -
May 1999).
Wayne Strauss,
Assistant Vice President: Rochester
Division Formerly Senior Editor, West Publishing Company (January
1997 - March 1997).
James C. Swain,
Vice Chairman of the Board
Chairman, CEO and Trustee,
Director or Managing
Partner of the Denver-based
Oppenheimer Funds;
formerly, President and
Director of Centennial
Asset Management
Corporation and Chairman of
the Board of Shareholder
Services, Inc.
Susan Switzer,
Assistant Vice President None.
Anthony A. Tanner,
Vice President: Rochester Division None.
Jay Tracey,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds.
James Turner,
Assistant Vice President None.
Angela Uttaro,
Assistant Vice President None.
Mark Vandehey,
Vice President None.
Maureen VanNorstrand,
Assistant Vice President None.
Annette Von Brandis,
Assistant Vice President None.
Phillip Vottiero,
Vice President Chief Financial officer for the Sovlink Group
(April 1996 - June 1999).
Teresa Ward,
Vice President None.
Jerry Webman,
Senior Vice President Director of New York-based tax-exempt fixed income
Oppenheimer funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B. White,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds;
a Chartered Financial
Analyst; Vice President of
HarbourView Asset
Management Corporation.
William L. Wilby,
Senior Vice President An officer
and/or portfolio manager of
certain Oppenheimer funds;
Vice President of
HarbourView Asset
Management Corporation.
Donna Winn, Senior Vice President/Distribution Marketing.
Senior Vice President
Brian W. Wixted, Formerly Principal and Chief Operating Officer,
Senior Vice President and Bankers Trust Company - Mutual Fund Services
Treasurer Division (March 1995 - March 1999); Vice President and
Chief Financial Officer of CS First Boston Investment
Management Corp. (September 1991 - March 1995); and Vice
President and Accounting Manager, Merrill Lynch Asset
Management (November 1987 - September 1991).
Carol Wolf,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds;
Vice President of
Centennial Asset Management
Corporation; Vice
President, Finance and
Accounting; Point of
Contact: Finance Supporters
of Children; Member of the
Oncology Advisory Board of
the Childrens Hospital.
Caleb Wong,
Vice President An officer and/or
portfolio manager of
certain Oppenheimer funds
(since 6/99) .
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of Shareholder Services, Inc. (since May
1985), Shareholder Financial Services, Inc. (since November
1989), OppenheimerFunds International Ltd. (since 1998),
Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Mark Zavanelli,
Assistant Vice President None.
Arthur J. Zimmer,
Senior Vice President An officer and/or portfolio manager of certain Oppenheimer
funds; Vice President of Centennial Asset Management
Corporation.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds and the Oppenheimer Quest /Rochester Funds, as
set forth below:
New York-based Oppenheimer Funds
Oppenheimer California Municipal Fund Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Preservation Fund Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund Oppenheimer Enterprise Fund Oppenheimer Europe Fund
Oppenheimer Global Fund Oppenheimer Global Growth & Income Fund Oppenheimer Gold
& Special Minerals Fund Oppenheimer Growth Fund Oppenheimer International Growth
Fund Oppenheimer International Small Company Fund Oppenheimer Large Cap Growth
Fund Oppenheimer Money Market Fund, Inc. Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust Oppenheimer Multiple Strategies Fund
Oppenheimer Municipal Bond Fund Oppenheimer New York Municipal Fund Oppenheimer
Series Fund, Inc. Oppenheimer Trinity Core Fund Oppenheimer Trinity Growth Fund
Oppenheimer Trinity Value Fund Oppenheimer U.S. Government Trust Oppenheimer
World Bond Fund
Quest/Rochester Funds
Limited Term New York Municipal Fund
Oppenheimer Convertible Securities Fund
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Denver-based Oppenheimer Funds
Centennial America Fund, L.P. Centennial California Tax Exempt Trust Centennial
Government Trust Centennial Money Market Trust Centennial New York Tax Exempt
Trust Centennial Tax Exempt Trust Oppenheimer Cash Reserves Oppenheimer Champion
Income Fund Oppenheimer Capital Income Fund Oppenheimer High Yield Fund
Oppenheimer Integrity Funds Oppenheimer International Bond Fund Oppenheimer
Limited-Term Government Fund Oppenheimer Main Street Small Cap Fund Oppenheimer
Main Street Funds, Inc. Oppenheimer Municipal Fund Oppenheimer Real Asset Fund
Oppenheimer Senior Floating Rate Fund Oppenheimer Strategic Income Fund
Oppenheimer Total Return Fund, Inc. Oppenheimer Variable Account Funds Panorama
Series Fund, Inc.
The address of OppenheimerFunds, Inc., the New York-based Oppenheimer Funds, the
Quest Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset Management
Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer Acquisition Corp.
is Two World Trade Center, New York, New York 10048-0203.
The address of the Denver-based Oppenheimer Funds, Shareholder Financial
Services, Inc., Shareholder Services, Inc., OppenheimerFunds Services,
Centennial Asset Management Corporation, Centennial Capital Corp., and
Oppenheimer Real Asset Management, Inc. is 6803 South Tucson Way, Englewood,
Colorado 80112.
The address of the Rochester-based funds is 350 Linden Oaks, Rochester, New York
14625-2807.
Item 27. Principal Underwriter
(a) OppenheimerFunds Distributor, Inc. is the Distributor of the Registrant's
shares. It is also the Distributor of each of the other registered open-end
investment companies for which OppenheimerFunds, Inc. is the investment adviser,
as described in Part A and B of this Registration Statement and listed in Item
26(b) above (except Oppenheimer Multi-Sector Income Trust and Panorama Series
Fund, Inc.) and for MassMutual Institutional Funds.
(b) The directors and officers of the Registrant's principal underwriter are:
<TABLE>
<CAPTION>
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
<S> <C> <C>
Jason Bach Vice President None
31 Racquel Drive
Marietta, GA 30064
Peter Beebe Vice President None
876 Foxdale Avenue
Winnetka, IL 60093
Douglas S. Blankenship Vice President None
17011 Woodbank
Spring, TX 77379
Peter W. Brennan Vice President None
8826 Amberton Lane
Charlotte, NC 28226
Susan Burton(2) Vice President None
Erin Cawley(2) Assistant Vice President None
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
William Coughlin Vice President None
1730 N. Clark Street
#3203
Chicago, IL 60614
Mary Crooks(1)
Daniel Deckman Vice President None
12252 Rockledge Circle
Boca Raton, FL 33428
Christopher DeSimone Vice President None
5105 Aldrich Avenue South
Minneapolis, MN 55419
Joseph DiMauro Vice President None
244 McKinley Avenue
Grosse Pointe Farms, MI 48236
Rhonda Dixon-Gunner(1) Assistant Vice President None
Andrew John Donohue(2) Executive Vice Secretary of the
President, Director Oppenheimer funds.
and General Counsel
John Donovan Vice President None
868 Washington Road
Woodbury, CT 06798
Kenneth Dorris Vice President None
4104 Harlanwood Drive
Fort Worth, TX 76109
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
35 Crown Terrace
Yardley, PA 19067
George Fahey Vice President None
141 Breon Lane
Elkton, MD 21921
Eric Fallon Vice President None
10 Worth Circle
Newton, MA 02158
Katherine P. Feld(2) Vice President None
& Secretary & Senior Counsel
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
John ("J") Fortuna(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki-Wells Vice President None
4734 Highland Place Center
Lakeland, FL 33813
Luiggino Galleto Vice President None
10302 Reisling Court
Charlotte, NC 28277
Michelle Gans Vice President None
8327 Kimball Drive
Eden Prairie, MN 55347
L. Daniel Garrity Vice President None
27 Covington Road
Avondale, GA 30002
Lucio Giliberti Vice President None
78 Metro Vista Drive
Hawthorne, NJ 07506
Ralph Grant(2) Vice President/National None
Sales Manager
Michael Guman Vice President None
3913 Pleasent Avenue
Allentown, PA 18103
Linda Harding Vice President/FID None
6229 Love Drive
#413
Irving, TX 75039
Webb Heidinger Vice President None
138 Gates Street
Portsmouth, NH 03801
Phillip Hemery Vice President None
184 Park Avenue
Rochester, NY 14607
Tammy Hospodar Vice President None
30864 Paloma Court
Westlake Village, CA 91362
Edward Hrybenko (2) Vice President None
Richard L. Hymes (2) Vice President None
Byron Ingram(1) Assistant Vice President None
Kathleen T. Ives(1) Vice President None
Lynn Jensen Vice President None
5120 Patterson Street
Long Beach, CA 90815
Eric K. Johnson Vice President None
3665 Clay Street
San Francisco, CA 94118
Mark D. Johnson Vice President None
409 Sundowner Ridge Court
Wildwood, MO 63011
Elyse Jurman Vice President None
1194 Hillsboro Mile, #51
Hillsboro Beach, FL 33062
Michael Keogh(2) Vice President None
Brian Kelly Vice President None
60 Larkspur Road
Fairfield, CT 06430
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Brent Krantz Vice President None
2609 SW 149th Place
Seattle, WA 98166
Oren Lane Vice President None
5286 Timber Bend Drive
Brighton, MI 48116
Todd Lawson Vice President None
10687 East Ida Avenue
Englewood, CO 80111
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 Wesley Hill Lane
Warwick, NY 10990
Steve Manns Vice President None
1941 W. Wolfram Street
Chicago, IL 60657
Todd Marion Vice President None
3 St. Marks Place
Cold Spring Harbor, NY 11724
LuAnn Mascia(2) Assistant Vice President None
Marie Masters Vice President None
8384 Glen Eagle Drive
Manlius, NY 13104
Theresa-Marie Maynier Vice President None
2421 Charlotte Drive
Charlotte, NC 28203
Anthony Mazzariello Vice President None
704 Beaver Road
Leetsdale, PA 15056
John McDonough Vice President None
3812 Leland Street
Chevy Chase, MD 20815
Kent McGowan Vice President None
18424 12th Avenue West
Lynnwood, WA 98037
Tanya Mrva(2) Assistant Vice President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Denise-Marie Nakamura Vice President None
4111 Colony Plaza
Newport, CA 92660
John Nesnay Vice President None
3410 East County Line
#17
Highlands Ranch, CO 80126
Chad V. Noel Vice President None
2408 Eagleridge Drive
Henderson, NV 89014
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Kevin Parchinski Vice President None
8409 West 116th Terrace
Overland Park, KS 66210
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Drive
Pittsford, NY 14534
Bill Presutti Vice President None
130 E. 63rd Street, #10E
New York, NY 10021
Steve Puckett Vice President None
5297 Soledad Mountain Road
San Diego, CA 92109
Elaine Puleo(2) Senior Vice President None
Christopher L. Quinson (2) Vice President/ None
Variable Annuities
Minnie Ra Vice President None
100 Delores Street, #203
Carmel, CA 93923
Dustin Raring Vice President None
378 Elm Street
Denver, CO 80220
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
Douglas Rentschler Vice President None
677 Middlesex Road
Grosse Pointe Park, MI 48230
Ruxandra Risko(2) Vice President None
Michael S. Rosen(2) Vice President None
Kenneth Rosenson Vice President None
3505 Malibu Country Drive
Malibu, CA 90265
James Ruff(2) President & Director None
Alfredo Scalzo Vice President None
19401 Via Del Mar, #303
Tampa, FL 33647
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Eric Sharp Vice President None
862 McNeill Circle
Woodland, CA 95695
Michelle Simone(2) Assistant Vice President None
Stuart Speckman(2) Vice President None
Timothy J. Stegner Vice President None
794 Jackson Street
Denver, CO 80206
Marlo Stil Vice President None
8579 Prestwick Drive
La Jolla, CA 92037
Peter Sullivan Vice President None
21445 S. E 35th Street
Issaquah, WA 98029
David Sturgis Vice President None
81 Surrey Lane
Boxford, MA 01921
Scott Such(1) Senior Vice President None
Brian Summe Vice President None
239 N. Colony Drive
Edgewood, KY 41017
George Sweeney Vice President None
5 Smokehouse Lane
Hummelstown, PA 17036
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
704 Inwood
Southlake, TX 76092
David G. Thomas Vice President None
2200 North Wilson Blvd.
Suite 102-176
Arlington, VA 22201
Sarah Turpin Vice President None
3517 Milton Avenue
Dallas, TX 75205
Mark Vandehey(1) Vice President None
Brian Villec (2) Vice President None
Andrea Walsh(1) Vice President None
Suzanne Walters(1) Assistant Vice President None
James Wiaduck Vice President None
935 Wood Run Court
South Lyon, MI 48178
Michael Weigner Vice President None
5722 Harborside Drive
Tampa, FL 33615
Donn Weise Vice President None
3249 Earlmar Drive
Los Angeles, CA 90064
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
Brian W. Wixted (1) Vice President Vice President and
and Treasurer Treasurer of the Oppenheimer
funds.
</TABLE>
(1) 6803 South Tucson Way, Englewood, CO 80112
(2) Two World Trade Center, New York, NY 10048
(3) 350 Linden Oaks, Rochester, NY 14623
(c) Not applicable.
Item 28. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Registrant
pursuant to Section 31(a) of the Investment Company Act of 1940 and rules
promulgated thereunder are in the possession of OppenheimerFunds, Inc.
at its offices at 6803 South Tucson Way, Englewood, Colorado 80112.
Item 29. Management Services
Not applicable
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the Investment
Company Act of 1940, the Registrant certifies that it meets all the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York and State of New York on the 9th day of December, 1999.
OPPENHEIMER DEVELOPING MARKETS FUND
By: /s/ Bridget A. Macaskill*
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ Leon Levy* Chairman of the December 9, 1999
- ------------------------------------- Board of Trustees
Leon Levy
/s/ Donald W. Spiro* Vice Chairman and December 9, 1999
- ------------------------------------- Trustee
Donald W. Spiro
/s/ Robert G. Galli* Trustee December 9, 1999
- -------------------------------------
Robert G. Galli
/s/ Phillip A. Griffiths* Trustee December 9, 1999
- ------------------------------------
Phillip A. Griffiths
/s/ Benjamin Lipstein* Trustee December 9, 1999
- -------------------------------------
Benjamin Lipstein
/s/ Bridget A. Macaskill* President, December 9, 1999
- ------------------------------------- Principal Executive
Bridget A. Macaskill Officer, Trustee
/s/ Elizabeth B. Moynihan* Trustee December 9, 1999
- -------------------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee December 9, 1999
- -------------------------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee December 9, 1999
- -------------------------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee December 9, 1999
- -------------------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee December 9, 1999
- -------------------------------------
Pauline Trigere
/s/ Brian W. Wixted* Treasurer and December 9, 1999
- ------------------------------------- Principal Financial
Brian W. Wixted Officer
/s/ Clayton K. Yeutter* Trustee December 9, 1999
- -------------------------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- ---------------------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
OPPENHEIMER DEVELOPING MARKETS FUND
EXHIBIT INDEX
Exhibit No. Description
(c)(i) Specimen Class A Share Certificate
(c)(ii) Specimen Class B Share Certificate
(c)(iii) Specimen Class C Share Certificate
(j) Independent Auditors' Consent
Exhibit 23 (c)(i)
OPPENHEIMER DEVELOPING MARKETS FUND
Class A Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within
decorative border)
(upper left) box with heading: (upper right) box with heading:
NUMBER (OF SHARES) CLASS A SHARES
(certificate number above)
(centered below boxes)
Oppenheimer Developing Markets Fund
A MASSACHUSETTS BUSINESS TRUST
(at left) (at right)
THIS IS TO CERTIFY THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 683974109
(at left)
is the owner of
(centered)
FULLY PAID CLASS A SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER DEVELOPING MARKETS FUND
(hereinafter called the "Fund"), transferable
only on the books of the Fund by the holder
hereof in person or by duly authorized
attorney, upon surrender of this certificate
properly endorsed. This certificate and the
shares represented hereby are issued and shall
be held subject to all of the provisions of the
Declaration of Trust of the Fund to all of
which the holder by acceptance hereof assents.
This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures of its
duly authorized officers.
(at left of seal) (at right of seal)
(signature) Dated:
/s/ Brian W. Wixted /s/ Bridget A. Macaskill
TREASURER PRESIDENT
<PAGE>
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER DEVELOPING MARKETS FUND
SEAL
<PAGE>
1996
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (Colo) Transfer Agent
By:
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with rights of survivorship and not as tenants
in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ________________
(State)
Additional abbreviations may also be used though not in
the above list.
For Value Received __________________ hereby sell(s), and transfer(s) unto
(at right) PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE (box below)
(Please print or type name and address of assignee)
Class A Shares of beneficial interest represented by the
within Certificate, and do hereby irrevocably constitute and appoint.
Attorney to transfer the said shares on the books of the
within named Fund with full power of substitution in the premises.
Dated:
Signed:
<PAGE>
(Both must sign if joint owners)
Signature(s)
guaranteed Name of Guarantor
by:
Signature of Officer/Title
(text printed vertically to right of above paragraph)
NOTICE: The signature(s) to this assignment must correspond with the name(s) as
written upon the face of the certificate in every particular without alteration
or enlargement or any change whatever.
(text printed in box to left of signature guarantee)
Signatures must be guaranteed by a financial institution of the type described
in the current prospectus of the Fund.
(at left) (at right)
PLEASE NOTE: This document contains OppenheimerFunds
a watermark when viewed at an angle. logotype
It is invalid without this watermark.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
Exhibit 23(c)(ii)
OPPENHEIMER DEVELOPING MARKETS FUND
Class B Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within decorative
border)
--------------------
(upper left) box with heading: (upper right) box with heading:
NUMBER (OF SHARES) CLASS B SHARES
(certificate number above)
(centered below boxes)
Oppenheimer Developing Markets Fund
A MASSACHUSETTS BUSINESS TRUST
(at left) (at right)
THIS IS TO CERTIFY THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 683974208
(at left)
is the owner of
(centered)
FULLY PAID CLASS B SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER DEVLOPING MARKETS FUND
(hereinafter
called the "Fund"), transferable only on the books of
the Fund by the holder hereof in person or by duly
authorized attorney, upon surrender of this certificate
properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of
the Fund to all of which the holder by acceptance hereof
assents. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures of its
duly authorized officers.
(at left of seal) (at right of seal)
(signature) Dated:
/s/ Brian W. Wixted /s/ Bridget A. Macaskill
TREASURER PRESIDENT
(centered at bottom)
<PAGE>
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER DEVELOPING MARKETS FUND
SEAL
1996
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (Colo) Transfer Agent
By:
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with rights of survivorship and not as
tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ________________
(State)
Additional abbreviations may also be used though not in
the above list.
For Value Received __________________ hereby sell(s), and transfer(s) unto
(at right) PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE (box below)
(Please print or type name and address of assignee)
<PAGE>
Class B Shares of beneficial interest represented by the
within Certificate, and do hereby irrevocably constitute and
appoint.
Attorney to transfer the said shares on the books of the
within named Fund with full power of substitution in the
premises.
Dated:
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s)
guaranteed Name of Guarantor
by
Signature of Officer/Title
(text printed vertically to right of above paragraph)
NOTICE: The signature(s) to this assignment must correspond with the name(s) as
written upon the face of the certificate in every particular without alteration
or enlargement or any change whatever.
(text printed in box to left of signature guarantee)
Signatures must be guaranteed by a financial institution of the type described
in the current prospectus of the Fund.
(at left) (at right)
PLEASE NOTE: This document contains OppenheimerFunds
a watermark when viewed at an angle. logotype
It is invalid without this watermark.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
Exhibit 23(c)(iii)
OPPENHEIMER DEVELOPING MARKETS FUND
Class C Share Certificate (8-1/2" x 11")
FRONT OF CERTIFICATE (All text and other matter lies within decorative
border)
--------------------
(upper left) box with heading: (upper right) box with heading:
NUMBER (OF SHARES) CLASS C SHARES
(certificate number above)
(centered below boxes)
Oppenheimer Developing Markets Fund
A MASSACHUSETTS BUSINESS TRUST
(at left) (at right)
THIS IS TO CERTIFY THAT SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 683974307
(at left)
is the owner of
(centered)
FULLY PAID CLASS C SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER DEVELOPING MARKETS FUND
(hereinafter called the
"Fund"), transferable only on the books of the Fund by the
holder hereof in person or by duly authorized attorney, upon
surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the
Declaration of Trust of the Fund to all of which the holder by
acceptance hereof assents. This certificate is not valid until
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.
(at left of seal) (at right of seal)
(signature) Dated:
/s/ Brian W. Wixted /s/ Bridget A. Macaskill
TREASURER PRESIDENT
<PAGE>
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
OPPENHEIMER DEVELOPING MARKETS FUND
SEAL
1996
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMER SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (Colo) Transfer Agent
By:
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11" dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as tenants with rights of survivorship and not as
tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ________________
(State)
Additional abbreviations may also be used though not in
the above list.
For Value Received __________________ hereby sell(s), and transfer(s) unto
(at right) PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE (box below)
(Please print or type name and address of assignee)
<PAGE>
Class C Shares of beneficial interest represented by the
within Certificate, and do hereby irrevocably constitute and
appoint.
Attorney to transfer the said shares on the books of the
within named Fund with full power of substitution in the
premises.
Dated:
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
Signature(s)
guaranteed Name of Guarantor
by
Signature of Officer/Title
(text printed vertically to right of above paragraph)
NOTICE: The signature(s) to this assignment must correspond with the name(s) as
written upon the face of the certificate in every particular without alteration
or enlargement or any change whatever.
(text printed in box to left of signature guarantee)
Signatures must be guaranteed by a financial institution of the type described
in the current prospectus of the Fund.
(at left) (at right)
PLEASE NOTE: This document contains OppenheimerFunds
a watermark when viewed at an angle. logotype
It is invalid without this watermark.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer Developing Markets Fund:
We consent to the use of our report dated September 22, 1999, included in the
Registration Statement of Form N-1A of Oppenheimer Developing Markets Fund and
to the references to our firm under the headings "Financial Highlights"
appearing in the Prospectus which is also a part of such Registration Statement,
and "Independent Auditors" appearing in the Statement of Additional Information.
/s/ KPMG LLP
- -------------------------
KPMG LLP
Denver, Colorado
December 16, 1999
