OPPENHEIMER GLOBAL FUND
Supplement dated January 7, 1997 to the
Prospectus dated January 7, 1997
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1) sales
of Class A shares stated in the sales charge table in "Buying Class A
Shares" on page 29, (2) sales of Class B shares described in the fifth
paragraph in "Distribution and Service Plans for Class B and Class C
Shares" on page 36, and (3) sales of Class C shares described in the sixth
paragraph in "Distribution and Service Plans for Class B and Class C
Shares" on page 36, the Distributor will pay additional commission to each
broker, dealer and financial institution that has a sales agreement with
the Distributor and agrees to accept that additional commission (these are
referred to as "participating firms") for Class A, Class B and Class C
shares of the Fund sold in "qualifying transactions" (the "promotion").
The additional commission will be 1.00% of the offering price of shares
of the Fund sold by a registered representative or sales representative
of a participating firm during the promotion. If the additional
commission is paid on the sale of Class A shares of $500,000 or more or
the sale of Class A shares to a SEP IRA with 100 or more eligible
participants and those shares are redeemed within 13 months from the end
of the month in which they were purchased, the participating firm will be
required to return the additional commission.
"Qualifying transactions" are aggregate sales of $150,000 or more
of Class A, Class B and/or Class C shares of any one or more of the
Oppenheimer funds (except money market funds and municipal bond funds)
for rollovers or trustee-to-trustee transfers from another retirement plan
trustee, of IRA assets or other employee benefit plan assets from an
account or investment other than an account or investment in the
Oppenheimer funds to (1) IRAs, rollover IRAs, SEP IRAs and SAR-SEP IRAs,
using the OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997 through
April 15, 1997 (the "promotion period"), or the acceptance of a direct
rollover or trustee-to-trustee transfer is acknowledged by the trustee of
the OppenheimerFunds prototype IRA during the promotion period, and (2)
IRAs, rollover IRAs, SEP IRAs and SAR-SEP IRAs using the A.G. Edwards &
Sons, Inc. prototype IRA agreement, if the rollover contribution or
trustee-to-trustee payment is received during the promotion period.
"Qualifying transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2) purchases of
Class A, Class B and/or Class C shares with the redemption proceeds from
an existing Oppenheimer funds account.
January 7, 1997 PS0330.017
<PAGE>
OPPENHEIMER GLOBAL FUND
Prospectus dated January 7, 1997
Oppenheimer Global Fund is a mutual fund with the investment objective of
capital appreciation. Current income is not an objective. The Fund
invests primarily in common stocks of U.S. and foreign companies and
normally invests a substantial portion of its assets in foreign stocks.
The Fund emphasizes investments in "growth-type" companies, in industry
sectors that the portfolio manager believes have appreciation
possibilities. The Fund also uses "hedging" instruments to try to reduce
the risks of market and currency fluctuations that affect the value of the
securities the Fund holds.
Some of the Fund's investment techniques may be considered
speculative. Foreign investing involves special risks. These techniques
may increase the risks of investing in the Fund and the Fund's operating
costs. You should carefully review the risks associated with an
investment in the Fund. Please refer to "Investment Policies and
Strategies" for more information about the types of securities the Fund
invests in and the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the January 7, 1997 Statement of Additional Information. For a
free copy, call OppenheimerFunds Services, the Fund's Transfer Agent, at
1-800-525-7048, or write to the Transfer Agent at the address on the back
cover. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(logo) OppenheimerFunds
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
3 Expenses
5 A Brief Overview of the Fund
7 Financial Highlights
10 Investment Objective and Policies
17 How the Fund is Managed
19 Performance of the Fund
ABOUT YOUR ACCOUNT
23 How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
35 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
37 How to Sell Shares
By Mail
By Telephone
39 How to Exchange Shares
40 Shareholder Account Rules and Policies
42 Dividends, Capital Gains and Taxes
45 Appendix A: Special Sales Charge Arrangement for Certain Persons
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services, and those
expenses are subtracted from the Fund's assets to calculate the Fund's net
asset value per share. All shareholders therefore pay those expenses
indirectly. Shareholders pay other expenses directly, such as sales
charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
will bear indirectly. The numbers below are based on the Fund's expenses
during its fiscal year ended September 30, 1996.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages ____ through ____, for an explanation of how and when these charges
apply.
<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None
Maximum Deferred Sales Charge
(as a % of the lower of the original
offering price or redemption proceeds None(1) 5% in the 1st 1% if redeemed
year, declining within 12
to 1% in the 6th months of
year and eliminated purchase(2)
thereafter(2)
Sales Charge on Reinvested Dividends None None None
Exchange Fee None None None
Redemption Fee None(3) None(3) None(3)
</TABLE>
___________________________
(1) If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales
Charge" on page ___) in Class A shares, you may have to pay a sales charge
of up to 1% if you sell your shares within 18 calendar months from the end
of the calendar month during which you purchased those shares. See "How
to Buy Shares - Buying Class A Shares," below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares
- - Buying Class C Shares" below.
(3) There is a $10 transaction fee for redemptions paid by Federal Funds
wire, but not for redemptions paid by ACH transfer through AccountLink.
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, OppenheimerFunds,
Inc. (which is referred to in this Prospectus as the "Manager"). The
rates of the Manager's fees are set forth in "How the Fund is Managed,"
below. The Fund has other regular expenses for services, such as transfer
agent fees, custodial fees paid to the bank that holds its portfolio
securities, audit fees and legal expenses. Those expenses are detailed
in the Fund's Financial Statements in the Statement of Additional
Information.
Annual Fund Operating Expenses
(as a Percentage of Average Net Assets)
Class A Class B Class C
-------- ------- -------
Management Fees .71% .71% .71%
12b-1 Distribution Plan Fees .18% 1.00% 1.00%
Other Expenses .28% .29% .28%
Total Fund Operating Expenses 1.17% 2.00% 1.99%
The numbers for Class A, Class B and Class C shares in the table
above are based upon the Fund's business expenses in its fiscal year ended
September 30, 1996. These amounts are shown as a percentage of the
average net assets of each class of the Fund's shares for that year. The
12b-1 Distribution Plan Fees for Class A shares are service fees (the
maximum fee is 0.25% of average net assets of that class). For Class B
and Class C shares, the 12b-1 Distribution Plan Fees are service fees (the
maximum fee is 0.25% of average net assets of that class) and the asset-
based sales charge of 0.75%. These plans are described in greater detail
in "How to Buy Shares."
The actual expenses for each class of shares in future years may be
more or less than the numbers in the table, depending on a number of
factors, including changes in the actual value of the Fund's assets
represented by each class of shares.
- Examples - To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, that the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses table above. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
------ ------- ------- --------
Class A Shares $69 $93 $118 $191
Class B Shares $70 $93 $128 $192
Class C Shares $30 $62 $107 $232
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
------ ------- ------- --------
Class A Shares $69 $93 $118 $191
Class B Shares $20 $63 $108 $192
Class C Shares $20 $62 $107 $232
* In the first example, expenses include the Class A initial sales charge
and the applicable Class B or Class C contingent deferred sales charge.
In the second example, Class A expenses include the initial sales charge,
but Class B and Class C expenses do not include contingent deferred sales
charges. The Class B expenses in years 7 through 10 are based on the
Class A expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the effect
of the asset-based sales charge and contingent deferred sales charge
imposed on Class B and Class C shares, long-term holders of Class B and
Class C shares could pay the economic equivalent of more than the maximum
front-end sales charge allowed under applicable regulations. For Class
B shareholders, the automatic conversion of Class B shares to Class A
shares is designed to minimize the likelihood that this will occur.
Please refer to "How to Buy Shares - Buying Class B Shares" for more
information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which may be more or less than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek capital appreciation. Current income is not an
objective.
- What Does the Fund Invest In? The Fund primarily invests in
foreign and domestic common or convertible stocks of "growth type"
companies considered to have appreciation possibilities. Investments in
debt securities may be made in uncertain market conditions. The Fund may
also use hedging instruments and some derivative investments to try to
manage investment risks. These investments are more fully explained in
"Investment Objective and Policies," starting on page 10.
- - Who Manages the Fund? The Fund's investment adviser (the Manager)
is OppenheimerFunds, Inc. Prior to January 5, 1996, the Manager was known
as Oppenheimer Management Corporation. The Manager (including a
subsidiary) manages investment company portfolios having over $55 billion
in assets as of September 30, 1996. The Manager is paid an advisory fee
by the Fund, based on its net assets. The Fund has a portfolio manager,
William Wilby, who is employed by the Manager. He is primarily
responsible for the selection of the Fund's securities. The Fund's Board
of Trustees, elected by shareholders, oversees the investment adviser and
the portfolio manager. Please refer to "How the Fund is Managed,"
starting on page ___ for more information about the Manager and its fees.
- How Risky is the Fund? All investments carry risks to some
degree. It is important to remember that the Fund is designed for long-
term investors. The Fund's investments in stocks and bonds are subject
to changes in their value from a number of factors such as changes in
general bond and stock market movements or the change in value of
particular stocks because of an event affecting the issuer. The Fund's
investments in foreign securities are subject to additional risks
associated with investing abroad, such as the effect of currency rate
changes on stock values. These changes affect the value of the Fund's
investments and its price per share. In the Oppenheimer funds spectrum,
the Fund is generally more volatile than the other stock funds, the income
and growth funds, and the more conservative income funds. While the
Manager tries to reduce risks by diversifying investments, by carefully
researching securities before they are purchased for the portfolio, and
in some cases by using hedging techniques, there is no guarantee of
success in achieving the Fund's objective, and your shares may be worth
more or less than their original cost when you redeem them. Please refer
to "Investment Objective and Policies" starting on page ___ for a more
complete discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page ___ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund offers the
individual investor three classes of shares. Each class has the same
investment portfolio but different expenses. Class A shares are offered
with a front-end sales charge, starting at 5.75%, and reduced for larger
purchases. Class B and Class C shares are offered without a front-end
sales charge, but may be subject to a contingent deferred sales charge if
redeemed within 6 years or 12 months, respectively, of purchase. There
is also an annual asset-based sales charge on Class B and Class C shares.
Please review "How To Buy Shares" starting on page ___ for more details,
including a discussion about which class may be appropriate for you.
-- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How to Sell Shares" on page ___. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How
To Exchange Shares" on page __.
-- How Has the Fund Performed? The Fund measures its performance by
quoting its average annual total returns and cumulative total returns,
which measure historical performance. Those returns can be compared to
the returns (over similar periods) of other funds. Of course, other funds
may have different objectives, investments, and levels of risk. The
Fund's performance can also be compared to a broad stock market index,
which we have done on page ___. Please remember that past performance
does not guarantee future results.
<PAGE>
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense ratios and
other data based on the Fund's average net assets. This information has
been audited by KPMG Peat Marwick LLP, the Fund's independent auditors,
whose report on the Fund's financial statements for the fiscal year ended
September 30, 1996, is included in the Statement of Additional
Information.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 36.84 $ 37.69 $ 35.04 $ 30.03 $ 32.05 $ 27.63 $ 30.43
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .23 .31 .17 .26 .17 .05 .02
Net realized and unrealized gain (loss) 4.22 2.59 6.10 4.99 (1.50) 6.14 .29
- --------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 4.45 2.90 6.27 5.25 (1.33) 6.19 .31
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.24) -- (.25) (.12) (.11) (.08) (.11)
Distributions from net realized gain (2.05) (3.75) (3.37) (.12) (.58) (1.69) (3.00)
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (2.29) (3.75) (3.62) (.24) (.69) (1.77) (3.11)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.00 $ 36.84 $ 37.69 $ 35.04 $ 30.03 $ 32.05 $ 27.63
==========================================================
========================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 12.98% 9.26% 19.19% 17.67% (4.23)% 23.71%
0.79%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $ 2,499 $ 2,186 $ 1,921 $ 1,389 $ 1,215 $ 1,076 $ 720
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $ 2,309 $ 1,979 $ 1,711 $ 1,213 $ 1,194 $ 899 $ 672
- --------------------------------------------------------------------------------------------------------------------------------
Amount of debt outstanding at end of
period (in thousands) N/A N/A N/A N/A $ 60,000 $ 60,000 $ 60,000
- --------------------------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding
throughout each period (in thousands) N/A N/A N/A $ 18,247 $ 60,000 $ 60,000 $ 42,877
- --------------------------------------------------------------------------------------------------------------------------------
Average number of shares outstanding
throughout each period (in thousands) N/A N/A N/A 39,853 37,435 30,607 21,982
- --------------------------------------------------------------------------------------------------------------------------------
Average amount of debt per share
outstanding throughout each period N/A N/A N/A $ 0.46 $ 1.60 $ 1.96 $ 1.95
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.62% 0.90% 0.38% 0.84% 0.55% 0.22% 0.16%
Expenses 1.17% 1.20% 1.15% 1.18% 1.36% 1.65% 1.68%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 102.9% 84.4% 78.3% 86.9% 18.0% 19.9% 27.2%
Average brokerage commission rate(3) $ 0.0071 -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------- ------------------------------------------
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30,
1989 1988 1987 1996 1995 1994 1993(5)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 22.94 $ 38.29 $ 28.88 $ 36.16 $ 37.36 $ 34.99 $ 33.33
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .20 .04 .05 (.05) .06 .08 .03
Net realized and unrealized gain (loss) 9.11 (9.70) 13.28 4.13 2.49 5.83 1.63
- --------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 9.31 (9.66) 13.33 4.08 2.55 5.91 1.66
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.09) (.07) (.11) -- -- (.18) --
Distributions from net realized gain (1.73) (5.62) (3.81) (2.05) (3.75) (3.36) --
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (1.82) (5.69) (3.92) (2.05) (3.75) (3.54) --
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 30.43 $ 22.94 $ 38.29 $ 38.19 $ 36.16 $ 37.36 $ 34.99
==========================================================
=============================
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 42.87% (25.17)% 52.65% 12.07% 8.34%
18.10% 3.64%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $ 523 $ 371 $ 601 $ 541 $ 340 $ 187 $ 6
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $ 446 $ 398 $ 473 $ 438 $ 258 $ 88 $ 3
- --------------------------------------------------------------------------------------------------------------------------------
Amount of debt outstanding at end of
period (in thousands) $ 30,000 $ 30,000 $ 35,000 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding
throughout each period (in thousands) $ 30,000 $ 31,052 $ 26,290 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
Average number of shares outstanding
throughout each period (in thousands) 16,968 17,173 15,099 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
Average amount of debt per share
outstanding throughout each period $ 1.77 $ 1.81 $ 1.74 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.73% 0.15% 0.16% (0.17)% 0.09% (0.30)%
1.52%(6)
Expenses 1.90% 1.89% 1.49% 2.00% 2.03% 2.08% 2.40%(6)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 62.6% 25.2% 37.0% 102.9% 84.4% 78.3% 86.9%
Average brokerage commission rate(3) -- -- -- $ 0.0071 -- -- --
</TABLE>
<TABLE>
<CAPTION>
CLASS C
----------------
PERIOD ENDED
SEPTEMBER 30,
1996(4)
- --------------------------------------------------------
<S> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 36.67
- --------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) .09
Net realized and unrealized gain (loss) 4.13
- --------------------------------------------------------
Total income (loss) from investment
operations 4.22
- --------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.11)
Distributions from net realized gain (2.05)
- --------------------------------------------------------
Total dividends and distributions
to shareholders (2.16)
- --------------------------------------------------------
Net asset value, end of period $ 38.73
=============
- --------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(1) 12.34%
- --------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions) $ 18
- --------------------------------------------------------
Average net assets (in millions) $ 8
- --------------------------------------------------------
Amount of debt outstanding at end of
period (in thousands) N/A
- --------------------------------------------------------
Average amount of debt outstanding
throughout each period (in thousands) N/A
- --------------------------------------------------------
Average number of shares outstanding
throughout each period (in thousands) N/A
- --------------------------------------------------------
Average amount of debt per share
outstanding throughout each period N/A
- --------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.04%(6)
Expenses 1.99%(6)
- --------------------------------------------------------
Portfolio turnover rate(2) 102.9%
Average brokerage commission rate(3) $ 0.0071
</TABLE>
1. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
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.
2. 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 September 30, 1996 were
$2,961,733,794 and $2,678,446,475, respectively.
3. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
4. For the period from October 2, 1995 (inception of offering) to
September 30, 1996.
5. For the period from August 17, 1993 (inception of offering) to
September 30, 1993.
6. Annualized.
<PAGE>
Investment Objective and Policies
Objective. The Fund invests its assets with the objective of capital
appreciation.
Investment Policies and Strategies. The Fund seeks capital appreciation
by emphasizing investments in common stocks or convertible securities of
"growth-type" companies. These may include securities of U.S. companies
or foreign companies, as discussed below. The Fund may invest in
securities of smaller, less well-known companies as well as those of
large, well-known companies (not generally included in the definition of
"growth-type" companies). The Fund may hold warrants and rights. Current
income is not a consideration in the selection of portfolio securities.
A portion of the Fund's assets may be invested in securities for liquidity
purposes.
As a matter of fundamental policy, under normal market conditions
(when the Manager believes that the securities markets are not in a
volatile or unstable period), the Fund invests in securities of issuers
traded in markets in at least three different countries (which may include
the United States). The Manager expects that the Fund will normally
invest a substantial portion of its assets in foreign securities
(discussed in "Foreign Securities," below).
The Fund's portfolio manager currently employs an investment strategy
in selecting foreign and domestic securities that considers the effects
of worldwide trends on the growth of various business sectors. These
trends or "global themes" currently include telecommunications expansion,
emerging consumer markets, infrastructure development, natural resource
use and development, corporate restructuring, capital market development
in foreign countries, health care expansion, and global integration.
These trends, which may affect the growth of companies having businesses
in these sectors or that are affected by their development, may suggest
opportunities for investing the Fund's assets. The Manager does not
invest a fixed or specific amount of the Fund's assets in any one sector,
and these themes or this approach may change over time.
The Fund may also seek to take advantage of changes in the business
cycle by investing in companies that are sensitive to those changes as
well as in "special situations" the Manager believes present opportunities
for capital growth. For example, when a country's economy is expanding,
companies in the financial services and consumer products industries may
be in a position to benefit from changes in the business cycle and may
present long-term growth opportunities.
When investing the Fund's assets, the Manager considers many factors,
including the global themes discussed above, general economic conditions
abroad relative to the U.S. and the trends in foreign and domestic stock
markets. The Fund may try to hedge against losses in the value of its
portfolio of securities by using hedging strategies and derivative
investments described below.
When market conditions are unstable, the Fund may invest in debt
securities, such as rated or unrated bonds and debentures, cash
equivalents and preferred stocks. It is expected that short-term debt
securities (which are securities maturing in one year or less from date
of purchase) will be emphasized for defensive or liquidity purposes, since
those securities usually may be disposed of quickly and their prices tend
not to be as volatile as the prices of longer term debt securities. When
circumstances warrant, securities may be sold without regard to the length
of time held, although short-term trading may increase brokerage costs
borne by the Fund.
- What are "Growth-Type" Companies? These tend to be newer
companies that may be developing new products or services, or expanding
into new markets for their products. While they may have what the Manager
believes to be favorable prospects for the long-term, growth-type
companies normally retain a large part of their earnings for research,
development and investment in capital assets. Therefore, they tend not
to emphasize the payment of dividends.
- Can the Fund's Investment Objective and Policies Change? The Fund
has an investment objective, which is described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and strategies
in carrying out those investment policies. The Fund's investment policies
and techniques are not "fundamental" unless this Prospectus or the
Statement of Additional Information says that a particular policy is
"fundamental." The Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's Board
of Trustees may change non-fundamental policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus.
- Stock Investment Risks. Because the Fund normally invests most,
or a substantial portion, of its assets in stocks, the value of the Fund's
portfolio will be affected by changes in the stock markets. At times, the
stock markets can be volatile, and stock prices can change substantially.
This market risk will affect the Fund's net asset values per share, which
will fluctuate as the values of the Fund's portfolio securities change.
Not all stock prices change uniformly or at the same time, not all stock
markets move in the same direction at the same time, and other factors can
affect a particular stock's prices (for example, poor earnings reports by
an issuer, loss of major customers, major litigation against an issuer,
or changes in government regulations affecting an industry). Not all of
these factors can be predicted.
As discussed below, the Fund attempts to limit market risks by
diversifying its investments, that is, by not holding a substantial amount
of stock of any one company and by not investing too great a percentage
of the Fund's assets in any one company.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, some of which may be speculative, the
Fund is designed for investors who are investing for the long-term and who
are willing to accept greater risks of loss of their investment in the
hope of achieving capital appreciation. It is not intended for investors
seeking assured income and preservation of capital. Investing for capital
appreciation entails the risk of loss of all or part of your investment.
Because changes in securities market prices can occur at any time, there
is no assurance that the Fund will achieve its investment objective, and
when you redeem your shares, they may be worth more or less than what you
paid for them.
- Foreign Securities. The Fund will normally invest a substantial
amount of its assets in foreign securities. Foreign securities are those
that are traded primarily on a foreign securities exchange or in the
foreign over-the-counter markets. The Fund can invest up to 100% of its
assets in foreign securities. The Fund may purchase equity (and debt)
securities issued or guaranteed by foreign companies or foreign
governments or their agencies. The Fund may buy securities of companies
or governments in any country, developed or underdeveloped.
The Fund does not limit its investments in bonds and debentures to
issues having specified credit ratings. The Fund may invest in debt
securities rated below "investment grade" (investment grade securities are
generally those in the four highest rating categories of Moody's Investors
Service, Inc. or Standard & Poor's Corporation). Debt securities are
subject to changes in value due to changes in prevailing interest rates.
The values of outstanding debt securities rise when prevailing interest
rates decline, and decline when prevailing interest rates rise. The
Manager does not currently intend to invest more than 5% of the Fund's
assets in debt securities.
The Fund will hold foreign currency only in connection with the
purchase or sale of foreign securities. If the Fund's securities are held
abroad, the countries in which they are held and the sub-custodians
holding them must be approved by the Fund's Board of Trustees.
- - Foreign securities have special risks. There are special risks in
investing in foreign securities. Because the Fund may purchase securities
denominated in foreign currencies or traded primarily in foreign markets,
a change in the value of a foreign currency against the U.S. dollar will
result in a change in the U.S. dollar value of those foreign securities.
Foreign issuers are not required to use generally-accepted accounting
principals that apply to U.S. issuers. If foreign securities are not
registered for sale in the U.S. under U.S. securities laws, the issuer
does not have to comply with disclosure requirements that U.S. companies
are subject to. The value of foreign investments may be affected by other
factors, including exchange control regulations, expropriation or
nationalization of a company's assets, foreign taxes, delays in settlement
of transactions, changes in governmental, economic or monetary policy in
the U.S. or abroad, or other political and economic factors.
In addition, it is generally more difficult to obtain court judgments
outside the U.S. if the Fund were to sue a foreign issuer or broker.
Additional costs may be incurred because foreign brokerage commissions are
generally higher than U.S. rates, and there are additional custodial costs
associated with holding securities abroad. More information about the
risks and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." The Fund ordinarily does not engage in
short-term trading to try to achieve its objective. As a result, the
Fund's portfolio turnover is not expected to be more than 100% each year.
The "Financial Highlights," above, show the Fund's portfolio turnover rate
during past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and other
transaction costs, and results in the Fund's realization of capital gains
or losses for tax purposes. It may also affect the Fund's ability to
qualify as a "regulated investment company" under the Internal Revenue
Code for tax deductions for dividends and capital gains distributions the
Fund pays to shareholders. The Fund qualified in its last fiscal year and
intends to do so in the coming year, although it reserves the right not
to qualify.
- Derivative Investments. In general, a "derivative investment" is
a specially designed investment. Its performance is linked to the
performance of another investment or security, such as an option, future,
index, currency or commodity. The Fund can invest in a number of
different kinds of "derivative investments." They are used in some cases
for hedging purposes and in other cases to enhance total return. In the
broadest sense, exchange-traded options and futures contracts (discussed
in "Hedging," below) may be considered "derivative investments."
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the
maturity of the instrument. Also, the underlying investment or security
on which the derivative is based might not perform the way the Manager
expected it to perform. The performance of derivative investments may
also be influenced by interest rate and stock market changes in the U.S.
and abroad. All of this can mean that the Fund may realize less principal
or income from the investment than expected. Certain derivative
investments held by the Fund may trade in the over-the-counter market and
may be illiquid. Please refer to "Illiquid and Restricted Securities" for
an explanation.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. In a repurchase transaction, the Fund buys a security and
simultaneously sells it to the vendor for delivery at a future date. They
are used primarily for cash liquidity purposes.
Repurchase agreements must be fully collateralized. However, if the
vendor fails to pay the resale price on the delivery date, the Fund may
incur costs in disposing of the collateral and may experience losses if
there is any delay in its ability to do so. The Fund will not enter into
a repurchase agreement that causes more than 10% of its net assets to be
subject to repurchase agreements having a maturity beyond seven days.
There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less.
Other Investment Techniques and Strategies
The Fund may also use the investment techniques and strategies
described below. These techniques involve certain risks. The Statement
of Additional Information contains more information about these practices,
including limitations on their use that may help to reduce some of the
risks.
- Loans of Portfolio Securities. The Fund has entered into a
Securities Lending Agreement and Guaranty with The Bank of New York.
Under that agreement portfolio securities of the Fund may be loaned to
brokers, dealers and other financial institutions. The Securities Lending
Agreement provides that loans must be adequately collateralized and may
be made only in conformity with the Fund's Securities Lending Guidelines,
adopted by the Fund's Board of Trustees. The value of the securities
loaned may not exceed 25% of the value of the Fund's total assets. The
Fund presently does not intend that the value of the securities loaned in
the current fiscal year will exceed 5% of the value of the Fund's total
assets.
In lending its securities, the Fund has certain risks, such as a
delay in receiving additional collateral, a delay in the return of the
loaned securities or loss of rights in the collateral if the borrower
fails financially. To try to reduce some of those risks, the Fund is the
beneficiary of a guaranty provided by The Bank of New York. See "Loans
of Portfolio Securities" in the Statement of Additional Information for
further information.
- Borrowing for Leverage. The Fund may borrow up to 10% of the
value of its net assets from banks on an unsecured basis to buy
securities. That percentage limit is a fundamental policy. This is a
speculative investment method known as "leverage." This investing
technique may subject the Fund to greater risks and costs than funds that
do not borrow. These risks may include the possibility that the Fund's
net asset value per share will fluctuate more than funds that don't
borrow. Borrowing for leverage is subject to limits under the Investment
Company Act, described in more detail in "Borrowing for Leverage" in the
Statement of Additional Information.
- Warrants and Rights. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time. Rights
are similar to warrants but normally have a short duration and are
distributed directly by the issuer to its shareholders. The Fund may
invest up to 5% of its total assets in warrants or rights. That 5%
limitation does not apply to warrants the Fund has acquired as part of
units with other securities or that are attached to other securities. No
more than 2% of the Fund's total assets may be invested in warrants that
are not listed on either the New York Stock Exchange or the American Stock
Exchange. These percentage limitations are fundamental policies. For
further details, see "Warrants and Rights" in the Statement of Additional
Information.
- Special Situations. The Fund may invest in securities of
companies that are in "special situations" that the Manager believes may
present opportunities for capital growth. A "special situation" may be
an event such as a proposed merger, reorganization, or other unusual
development that is expected to occur and which may result in an increase
in the value of a company's securities, regardless of general business
conditions or the movement of prices in the securities market as a whole.
There is a risk that the price of the security may decline if the
anticipated development fails to occur.
- Investing In Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have
been in operation less than three years, including the operations of any
predecessors. Securities of these companies may have limited liquidity
(which means that the Fund may have difficulty selling them at an
acceptable price when it wants to) and the price of these securities may
be volatile. See "Investing in Small, Unseasoned Companies" in the
Statement of Additional Information for a further discussion of the risks
involved in such investments.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments. Investments
may be illiquid because of the absence of an active trading market, making
it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction on
its resale or which cannot be sold publicly until it is registered under
the Securities Act of 1933. The Fund will not invest more than 10% of its
net assets in illiquid or restricted securities (the Board may increase
that limit to 15%). The Fund's percentage limitation on these investments
does not apply to certain restricted securities that are eligible for
resale to qualified institutional purchasers. The Manager monitors
holdings of illiquid securities on an ongoing basis and at times the Fund
may be required to sell some holdings to maintain adequate liquidity. See
"Restricted and Illiquid Securities" in the Statement of Additional
Information for further details.
- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, forward
contracts, and options on futures and broadly-based stock indices. These
are all referred to as "hedging instruments." The Fund does not use
hedging instruments for speculative purposes, and has limits on the use
of them, described below. The hedging instruments the Fund may use are
described below and in greater detail in "Other Investment Techniques and
Strategies" in the Statement of Additional Information.
The Fund may buy and sell options, futures and forward contracts for
a number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options,
tend to increase the Fund's exposure to the securities market. Forward
contracts are used to try to manage foreign currency risks on the Fund's
foreign investments. Foreign currency options are used to try to protect
against declines in the dollar value of foreign securities the Fund owns,
or to protect against an increase in the dollar cost of buying foreign
securities. Writing covered call options may also provide income to the
Fund for liquidity purposes.
- Futures. The Fund may buy and sell futures contracts that relate
to (1) broadly-based stock indices (these are referred to as Stock Index
Futures) or (2) foreign currencies (these are called Forward Contracts and
are discussed below).
- Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls). A call or put option may
not be purchased if the value of all of the Fund's put and call options
would exceed 5% of the Fund's total assets. Calls the Fund buys or sells
must be listed on a domestic securities or commodities exchange, or quoted
on the Automated Quotation System ("NASDAQ") of The Nasdaq Stock Market,
Inc. In the case of puts and calls on foreign currency, they must be
traded on a securities or commodities exchange, or be quoted by recognized
dealers in those options.
The Fund may buy calls only on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures, or to terminate its
obligation on a call the Fund previously wrote.
The Fund may write (that is, sell) call options. Each call the Fund
writes must be "covered" while it is outstanding. That means the Fund
owns the investment on which the call was written or the Fund owns and
segregates liquid assets to satisfy its obligation if the call is
exercised. The Fund may write calls on futures contracts it owns, but
these calls must be covered by securities or any other liquid assets,
including equity and debt securities of any grade, the Fund owns. When
the Fund writes a call, it receives cash (called a premium). The call
gives the buyer the ability to buy the investment on which the call was
written from the Fund at the call price during the period in which the
call may be exercised. If the value of the investment does not rise above
the call price, it is likely that the call will lapse without being
exercised, while the Fund keeps the cash premium (and the investment).
After the Fund writes a call, not more than 25% of the Fund's total assets
may be subject to calls.
The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a seller
of a put on that investment. The Fund can buy only those puts that relate
to securities that the Fund owns, broadly-based stock indices, foreign
currencies or Stock Index Futures. The Fund can buy a put on a Stock
Index Future whether or not the Fund owns the particular Stock Index
Future in its portfolio.
The Fund may write puts on securities, broadly-based stock indices,
foreign currencies or Stock Index Futures in an amount up to 50% of its
total assets but only if those puts are covered by segregated liquid
assets. In writing puts, there is a risk that the Fund may be required
to buy the underlying security at a disadvantageous price.
- Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Fund uses them to try to "lock in"
the U.S. dollar price of a security denominated in a foreign currency that
the Fund has bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and foreign currency.
The Fund limits its net exposure under forward contracts in a particular
foreign currency to the amount of its assets denominated in that currency
or denominated in a closely-correlated currency.
- Hedging Instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different from what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If a covered call written by the Fund is exercised on a
security that has increased in value, the Fund will be required to sell
the security at the call price and will not be able to realize any profit
if the security has increased in value above the call price. The use of
forward contracts may reduce the gain that would otherwise result from a
change in the relationship between the U.S. dollar and a foreign currency.
These risks and the hedging strategies the Fund may use are described in
greater detail in the Statement of Additional Information.
- Short Sales Against-the-Box. In a short sale, the seller does not
own the security that is sold, but normally borrows the security to
fulfill its delivery obligation. The seller later buys the security to
repay the loan, in the expectation that the price of the security will be
lower when the purchase is made, resulting in a gain. The Fund may not
sell securities short except in collateralized transactions referred to
as "short sales against-the-box," where the Fund owns an equivalent amount
of the securities sold short. This technique is primarily used for tax
purposes. As a fundamental policy, no more than 15% of the Fund's net
assets will be held as collateral for such short sales at any one time.
Other Investment Restrictions
The Fund has certain investment restrictions that are fundamental
policies. Under these restrictions, the Fund cannot do any of the
following:
- Buy securities issued or guaranteed by any one issuer (except the
U.S. Government or any of its agencies or instrumentalities) if, with
respect to 75% of its total assets, more than 5% of the Fund's total
assets would be invested in securities of that issuer, or the Fund would
then own more than 10% of that issuer's voting securities.
- Concentrate investments in any particular industry. Therefore the
Fund will not purchase the securities of companies in any one industry if,
thereafter, more than 25% of the value of the Fund's assets would consist
of securities of companies in that industry.
Unless the Prospectus states that a percentage restriction applies
on an ongoing basis, it applies only at the time the Fund makes an
investment, and the Fund need not sell securities to meet the percentage
limits if the value of the investment increases in proportion to the size
of the Fund. Other investment restrictions are listed in "Investment
Restrictions" in the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was originally incorporated in
Maryland in 1969 and was reorganized in 1986 as a Massachusetts business
trust. The Fund is an open-end, diversified management investment company,
with an unlimited number of authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The
Trustees periodically meet throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager.
"Trustees and Officers of the Fund" in the Statement of Additional
Information names the Trustees and officers of the Fund and provides more
information about them. Although the Fund will not normally hold annual
meetings of its shareholders, it may hold shareholder meetings from time
to time on important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class
A, Class B and Class C. All classes invest in the same investment
portfolio. Each class has its own dividends and distributions and pays
certain expenses, which may be different for the different classes. Each
class may have a different net asset value. Each share has one vote at
shareholder meetings, with fractional shares voting proportionally. Only
shares of a particular class vote as a class on matters that affect that
class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc. which is responsible for selecting the Fund's
investments and handles its day-to-day business. The Manager carries out
its duties, subject to the policies established by the Board of Trustees,
under an Investment Advisory Agreement which states the Manager's
responsibilities. The Investment Advisory Agreement sets forth the fees
paid by the Fund to the Manager and describes the expenses that the Fund
is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $55 billion
as of September 30, 1996, and with more than 3 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a
holding company that is owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company.
- Portfolio Manager. The Portfolio Manager of the Fund is William
L. Wilby. He is a Senior Vice President of the Manager. He has been the
person principally responsible for the day-to-day management of the Fund's
portfolio since December, 1992. During the past five years, Mr. Wilby has
also served as an officer and portfolio manager for other Oppenheimer
funds, prior to which he was an international investment strategist at
Brown Brothers, Harriman & Co. and a Managing Director and Portfolio
Manager at AIG Global Investors.
- Fees and Expenses. Under the Investment Advisory Agreement the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.80% of the first $250 million of
average annual net assets, 0.77% of the next $250 million, 0.75% of the
next $500 million, 0.69% of the next $1 billion, and 0.67% of average
annual net assets in excess of $2 billion. The Manager has voluntarily
agreed to reduce the management fee to which it is entitled under the
Agreement to 0.65% on assets in excess of $3.5 billion. The Fund's
management fee for its last fiscal year ended September 30, 1996, was .71%
of average annual net assets for both its Class A and Class B shares. The
Fund's shareholders have been asked to approve a proposed investment
advisory agreement that would include the Manager's undertaking as part
of its management fee rate. This Prospectus will not be supplemented if
the proposed agreement is approved, because the fee paid by the Fund would
not change.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal fees and
auditing costs. Those expenses are paid out of the Fund's assets and are
not paid directly by shareholders. However, those expenses reduce the net
asset value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the Investment Advisory
Agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers are
selected for the Fund's portfolio transactions. When deciding which
brokers to use, the Manager is permitted by the Investment Advisory
Agreement to consider whether brokers have sold shares of the Fund or any
other funds for which the Manager serves as investment adviser.
- The Distributor. The Fund's shares are sold through dealers,
brokers and other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts
as the Fund's Distributor. The Distributor also distributes shares of the
other Oppenheimer funds and is sub-distributor for funds managed by a
subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder
servicing agent for the Fund on an "at-cost" basis. It also acts as the
shareholder servicing agent for the other Oppenheimer funds. Shareholders
should direct inquiries about their accounts to the Transfer Agent at the
address and toll-free number shown below in this Prospectus and on the
back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return" and "average annual total return" to illustrate its performance.
The performance of each class of shares is shown separately, because the
performance of each class will usually be different as a result of the
different kinds of expenses each class bears. These returns measure the
performance of a hypothetical account in the Fund over various periods,
and do not show the performance of each shareholder's account (which will
vary if dividends are received in cash, or shares are sold or purchased).
The Fund's performance information may help you see how well your Fund has
done over time and to compare it to other funds or market indices.
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. More detailed information about how total returns
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary over
time, depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally they
include the payment of the current maximum initial sales charge. When
total returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for which
total return is shown has been deducted. However, total returns may also
be quoted "at net asset value," without considering the effect of the
sales charge, and those returns would be less if sales charges were
deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended September 30, 1996,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's fiscal
year ended September 30, 1996, the U.S. stock market outperformed the
major foreign stock markets. The Manager utilized the following global
theme areas in selecting stocks for the Fund's portfolio:
telecommunications, emerging consumer markets, infrastructure, capital
market development, healthcare, natural resources, corporate restructuring
and efficiency enhancement. The Fund's performance benefited from
appreciation of oil services companies, selected within the natural
resources theme, as oil prices moved higher in 1996. In healthcare, the
Manager used a sharp decline in the biotechnology sector to add to the
Fund's biotechnology holdings, and also established holdings of several
European banks.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in Class A,
Class B and Class C shares of the Fund held until September 30, 1996. In
the case of Class A shares, performance is measured over a ten-year
period. In the case of Class B shares, performance is measured over a
one-year period, and since inception of the Class on August 17, 1993. In
the case of Class C shares performance is measured from the inception of
the Class on October 2, 1995.
The Fund's performance is compared to the performance of the Morgan
Stanley Capital International World Index, an unmanaged index of issuers
listed on the stock exchanges of 20 foreign countries and the United
States. It is widely recognized as a measure of global stock market
performance. Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs, and
none of the data below shows the effect of taxes. Also, the Fund's
performance reflects the deduction of the current maximum sales charge of
5.75% for Class A shares, the applicable contingent deferred sales charge
on Class B shares, and reinvestment of all dividends and capital gains
distributions, and the effect of Fund business and operating expenses.
While index comparisons may be useful to provide a benchmark for the
Fund's performance, it must be noted that the Fund's investments are not
limited to the securities in the Morgan Stanley Capital International
World Index. Moreover, the index performance data does not reflect any
assessment of the risk of the investments included in the index.
Comparison of Change in Value
of $10,000 Hypothetical Investments in: Class A and Class B Shares of
Oppenheimer Global Fund And
Morgan Stanley Capital International World Index
(Graphs)
Oppenheimer Global Fund
Avg. Annual Total Returns Avg. Annual Total Returns
of Class A Shares of of Class B Shares
the Fund at of the Fund
9/30/96(1) at 9/30/96(2)
A Shares 1 Year 5 Year 10 Year B Shares 1 Year Life of
Class:
6.49% 9.33% 12.26% 7.07% 13.05%
Cumulative Total Return
of Class C Shares of the
Fund at 9/30/96 (3)
- ------------------------------
C Shares Life of Class:
- --------- -------
11.34%
_____________________
Total returns and the ending account value in the graph show change in
share value and include reinvestment of all dividends and capital gains
distributions.
(1) Class A returns are shown net of the applicable 5.75% maximum initial
sales charge. The inception date of the Fund (Class A shares) was
12/22/69.
(2) Class B shares of the Fund were first publicly offered on 8/17/93.
Returns are shown net of the applicable 5% and 3% contingent deferred
sales charges, respectively, for the 1-year period and the Life-of-Class.
The ending account value in the graph is net of the applicable 3%
contingent deferred sales charge.
(3) Class C shares of the Fund were first publicly offered on 10/2/95.
The Life-of-Class return is shown net of the applicable 1% contingent
deferred sales charge.
Past performance is not predictive of future performance.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by "Retirement Plans," as defined in "Class A Contingent Deferred Sales
Charge" on page ____). If you purchase Class A shares as part of an
investment of at least $1 million ($500,000 for Retirement Plans) in
shares of one or more Oppenheimer funds, you will not pay an initial sales
charge, but if you sell any of those shares within 18 months of buying
them, you may pay a contingent deferred sales charge. The amount of that
sales charge will vary depending on the amount you invested. Sales charge
rates are described in "Buying Class A Shares" below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years of buying them, you will normally pay a contingent deferred sales
charge. That sales charge varies depending on how long you own your
shares, as described in "Buying Class B Shares" below.
- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred sales
charge of 1%, as described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors 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.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, considering the effect of the
annual asset-based sales charge on Class B and Class C expenses (which,
like all expenses, will affect your investment return). For the sake of
comparison, we have assumed that there is a 10% rate of appreciation in
the investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class of
shares, and which class of shares you invest in. The factors discussed
below are not intended to be investment advice or recommendations, because
each investor's financial considerations are different. The discussion
below of the factors to consider in purchasing a particular class of
shares assumes that you will purchase only one class of shares and not a
combination of shares of different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of
Class A shares may, over time, offset the effect of paying an initial
sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on Class B or Class C
shares for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and
the contingent deferred sales charge does not apply to amounts you sell
after holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge on
Class C shares will have a greater impact on your account over the longer
term than the reduced front-end sales charge available for larger
purchases of Class A shares. For example, Class A might be more
advantageous than Class C (as well as Class B) for investments of more
than $100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or more),
Class A shares may become more advantageous than Class C (and B). If
investing $500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you
intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B shares or
$1 million or more of Class C shares from a single investor.
- Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need access
to your money for seven years or more, Class B shares may be an
appropriate consideration, if you plan to invest less than $100,000. If
you plan to invest more than $100,000 over the long term, Class A shares
will likely be more advantageous than Class B shares or C shares, as
discussed above, because of the effect of the expected lower expenses for
Class A shares and the reduced initial sales charges available for larger
investments in Class A shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumed annual performance return stated above, and
therefore you should analyze your options carefully.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available to Class B or Class C
shareholders, or other features (such as Automatic Withdrawal Plans) might
not be advisable (because of the effect of the contingent deferred sales
charge) in non-retirement accounts for Class B or Class C shareholders,
you should carefully review how you plan to use your investment account
before deciding which class of shares to buy. Share certificates are not
available for Class B or Class C shares, and if you are considering using
your shares as collateral for a loan, that may be a factor to consider.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class of shares than for selling another class. It is important that
investors understand that the purpose of the Class B and Class C
contingent deferred sales charges and asset-based sales charges is the
same as the purpose of the front-end sales charge on sales of Class A
shares: that is, to compensate the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans.
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25. Subsequent purchases of at
least $25 can be made by telephone through AccountLink.
Under pension, profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as
little as $250 (if your IRA is established under an Asset Builder Plan,
the $25 minimum applies), and subsequent investments may be as little as
$25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other Oppenheimer funds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. The Distributor may appoint
certain servicing agents as the Distributor's agent to accept purchase
(and redemption) orders. When you buy shares, be sure to specify Class
A, Class B, or Class C shares. If you do not choose, your investment will
be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares. However, it
is recommended that you discuss your investment first with a financial
advisor, to be sure that it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to have the Transfer Agent send redemption proceeds, or to transmit
dividends and distributions to your bank account.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the Statement
of Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to
receive that day's offering price, the Distributor, or its designated
agent, must receive your order by the time of day the New York Stock
Exchange closes, which is normally 4:00 P.M., New York time, but may be
earlier on some days (all references to time in this Prospectus mean "New
York time"). The net asset value of each class of shares is determined
as of that time on each day the New York Stock Exchange is open (which is
a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of the New York Stock Exchange, on a regular business
day and transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its
sole discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix A to this
Prospectus sets forth conditions for the waiver of, or exemption from,
sales charges or the special sales charge rates that apply to purchases
of shares of the Fund (including purchases by exchange) by a person who
was a shareholder of one of the Former Quest for Value Funds (as defined
in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, purchases are not subject to an initial
sales charge, and the offering price will be the net asset value. In some
cases, reduced sales charges may be available, as described below. Out
of the amount you invest, the Fund receives the net asset value to invest
for your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers
are as follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission
as Percentage as Percentage as Percentage
Amount of of Offering of Amount of Offering
Purchase Price Invested Price
- --------- ------------- ------------- -------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
- ---------------------
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
- Purchases aggregating $1 million or more;
- Purchases by a retirement plan qualified under section 401(a) if
the retirement plan has total plan assets of $500,000 or more;
- Purchases by an a retirement plan qualified under section 401(a)
or 401(k) of the Internal Revenue Code, by a non-qualified deferred
compensation plan (not including Section 457 plans), employee benefit
plan, group retirement plan (see "How to Buy Shares - Retirement Plans"
in the Statement of Additional Information for further details), an
employee's 403(b)(7) custodial plan account, SEP IRA, SARSEP, or SIMPLE
plan (all of these plans are collectively referred to as "Retirement
Plans"); that: (1) buys shares costing $500,000 or more, or (2) has, at
the time of purchase, 100 or more eligible participants, or (3) certifies
that it projects to have annual plan purchases of $200,000 or more;
- Purchases by an OppenheimerFunds Rollover IRA if the purchases are
made (1) through a broker, dealer, bank or registered investment adviser
that has made special arrangements with the Distributor for these
purchases, or (2) by a direct rollover of a distribution from a qualified
retirement plan if the administrator of that plan has made special
arrangements with the Distributor for those purchases.
The Distributor pays dealers of record commissions on those purchases
in an amount equal to (i) 1.0% for non-Retirement Plan accounts, and (ii)
for Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50%
of the next $2.5 million, plus 0.25% of purchases over $5 million. That
commission will be paid only on those purchases that were not previously
subject to a front-end sales charge and dealer commission. No sales
commission will be paid to the dealer, broker or financial institution on
sales of Class A shares purchased with the redemption proceeds of shares
of a mutual fund offered as an investment option under a special
arrangement with the Distributor if the purchase occurs more than 30 days
after the addition of the Oppenheimer funds as an investment option to the
Retirement Plan.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") may be deducted
from the redemption proceeds. That sales charge may be equal to 1.0% of
either (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original offering price (which is the original
net asset value) of the redeemed shares. However, the Class A contingent
deferred sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A shares of
all Oppenheimer funds you purchased subject to the Class A contingent
deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's exchange privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A and Class B shares you purchase for your
individual accounts, or jointly, or for trust or custodial accounts on
behalf of your children who are minors. A fiduciary can count all shares
purchased for a trust, estate or other fiduciary account (including one
or more employee benefit plans of the same employer) that has multiple
accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also include Class A and Class B shares of Oppenheimer funds you
previously purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of Class A
shares, provided that you still hold your investment in one of the
Oppenheimer funds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The Oppenheimer funds are listed in "Reduced Sales Charges" in
the Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, if you purchase Class
A shares or Class A and Class B shares of the Fund and other Oppenheimer
funds during a 13-month period, you can reduce the sales charge rate that
applies to your purchases of Class A shares. The total amount of your
intended purchases of both Class A and Class B shares will determine the
reduced sales charge rate for the Class A shares purchased during that
period. This can include purchases made up to 90 days before the date of
the Letter. More information is contained in the Application and in
"Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are
not imposed in the circumstances described below. There is an explanation
of this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing specifically for
the use of shares of the Fund in particular investment products made
available to their clients (those clients may be charged a transaction fee
by their dealer, broker, bank or adviser for the purchase or sale of Fund
shares);
- (1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares for
their own account or the account of their clients, (2) Retirement Plans
and deferred compensation plans and trusts used to fund those Plans
(including, for example, plans qualified or created under sections 401(a),
403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy
shares for their own accounts, in each case if those purchases are made
through a broker or agent or other financial intermediary that has made
special arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy shares
for their own accounts may also purchase shares without sales charge but
only if their accounts are linked to a master account of their investment
advisor or financial planner on the books and records of the broker, agent
or financial intermediary with which the Distributor has made such special
arrangements (each of these investors may be charged a fee by the broker,
agent or financial intermediary for purchasing shares).
- directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
- accounts for which Oppenheimer Capital is the investment adviser
(the Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial
owner of such accounts;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of
the Class B and C TRAC-2000 program on November 24, 1995; or
- qualified retirement plans that had agreed with the former Quest
for Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through DCXchange,
a sub-transfer agency mutual fund clearinghouse, provided that such
arrangements are consummated and share purchases commence by December 31,
1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor;
- shares purchased and paid for with the proceeds of shares redeemed
in the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver; or
- purchased with the proceeds of maturing principal of units of any
Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions . The Class A contingent deferred sales charge is also waived
if shares that would otherwise be subject to the contingent deferred sales
charge are redeemed in the following cases:
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules
and Policies," below);
- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees in writing to accept the dealer's portion of the
commission payable on the sale in installments of 1/18th of the commission
per month (and no further commission will be payable if the shares are
redeemed within 18 months of purchase); or
- for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program.
- for distributions from Retirement Plans, deferred compensation
plans or other employee benefit plans for any of the following purposes:
(1) following the death or disability (as defined in the Internal Revenue
Code) of the participant or beneficiary (the death or disability must
occur after the participant's account was established); (2) to return
excess contributions; (3) to return contributions made due to a mistake
of fact; (4) hardship withdrawals, as defined in the plan; (5) under a
Qualified Domestic Relations Order, as defined in the Internal Revenue
Code; (6) to meet the minimum distribution requirements of the Internal
Revenue Code; (7) to establish "substantially equal periodic payments" as
described in Section 72(t) of the Internal Revenue Code; (8) for
retirement distributions or loans to participants or beneficiaries; (9)
separation from service; (10) participant-directed redemptions to purchase
shares of a mutual fund (other than a fund managed by the Manager or its
subsidiary) offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a special
arrangement with the Distributor, or (11) plan termination or "in-service
distributions", if the redemption proceeds are rolled over directly to an
OppenheimerFunds IRA.
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
shareholder accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. The Distributor uses all
of those fees to compensate dealers, brokers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares and to reimburse
itself (if the Fund's Board of Trustees authorizes such reimbursements,
which it has not yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the service providers or their customers. The payments under
the Plan increase the annual expenses of Class A shares. For more details,
please refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The contingent deferred sales charge will be
based on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the original
net asset value). The contingent deferred sales charge is not imposed on
the amount of your account value represented by an increase in net asset
value over the initial purchase price. The Class B contingent deferred
sales charge is paid to the Distributor to reimburse its expenses of
providing distribution-related services to the Fund in connection with the
sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges,"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which 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. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution and Service Plan, described below. The conversion is based
on the relative net asset value of the two classes, and no sales load or
other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and
Class C Shares" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of dividends
or capital gains distributions. The contingent deferred sales charge will
be based on the lesser of the net asset value of the redeemed shares at
the time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price. The Class C
contingent deferred sales charge is paid to the Distributor to reimburse
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
- Distribution and Service Plans for Class B and Class C Shares.
The Fund has adopted Distribution and Service Plans for Class B and Class
C shares to compensate the Distributor for its services and costs in
distributing Class B and C shares and servicing accounts. Under the Plans,
the Fund pays the Distributor an annual "asset-based sales charge" of
0.75% per year on Class B shares that are outstanding for 6 years or less
and on Class C shares. The Distributor also receives a service fee of
0.25% per year under each Plan.
Under each Plan, both fees are computed on the average of the net
asset value of shares in the respective class, determined as of the close
of each regular business day during the period. The asset-based sales
charge and service fees increase Class B and Class C expenses by up to
1.00% of the net assets per year of the respective class.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or C shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The Distributor pays the 0.25% service fees to
dealers in advance for the first year after Class B or Class C shares have
been sold by the dealer and retains the service fee paid by the Fund in
that year. After the shares have been held for a year, the Distributor
pays the service fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B or Class
C shares without a front-end sales charge while allowing the Distributor
to compensate dealers that sell those shares. The Fund pays the asset-
based sales charges to the Distributor for its services rendered in
distributing Class B and Class C shares. The services rendered by the
Distributor include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B and Class
C shares.
The Distributor currently pays sales commissions of 3.75% of the
purchase price of Class B shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total amount
paid by the Distributor to the dealer at the time of sale of Class B
shares is therefore 4.00% of the purchase price. The Distributor retains
the Class B asset-based sales charge.
The Distributor currently pays sales commissions of 0.75% of the
purchase price of Class C shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total amount
paid by the Distributor to the dealer at the time of sale of Class C
shares is therefore 1.00% of the purchase price. Those payments retained
by the Distributor during the first year Class C shares are outstanding.
The Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.
The Distributor's actual expenses in selling Class B and Class C
shares may be more than the payments it receives from contingent deferred
sales charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class B and Class C shares. If either
Plan is terminated by the Fund, the Board of Directors may allow the Fund
to continue payments of the asset-based sales charge to the Distributor
for distributing shares before the Plan was terminated. At September 30,
1996, the end of the Class B Plan year, the Distributor had incurred
unreimbursed expenses under the Plan of $16,226,094 (equal to 3.00% of the
Fund's net assets represented by Class B shares on that date), which have
been carried over into the present Plan year. At September 30, 1996, the
end of the Class C Plan year, the Distributor had incurred unreimbursed
expenses under the Plan of $200,447 (equal to 1.15% of the Fund's net
assets represented by Class C shares on that date), which have been
carried over into the present Plan year.
Payments under the Class C Plan are at a fixed rate that is not
related to the Distributor's expenses. The Fund's Board of Trustees have
proposed a new Class B Plan having the same fees as the current plan,
under which payments would also be at a fixed rate that is not related to
the Distributor's expenses. This Prospectus will not be supplemented if
Class B shareholders approve the new Class B Plan.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to Class B
and Class C shares redeemed in certain circumstances as described below.
The reasons for this policy are in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares
in the following cases, if the Transfer Agent is notified that these
conditions apply to the redemption:
- distributions to participants or beneficiaries from Retirement
Plans, if the distributions are made (a) under an Automatic Withdrawal
Plan after the participant reaches age 59-1/2, as long as the payments are
no more than 10% of the account value annually (measured from the date the
Transfer Agent receives the request), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder including a trustee
of a "grantor" trust or revocable living trust for which the trustee is
also the sole beneficiary (the death or disability must have occurred
after the account was established, and for disability you must provide
evidence of a determination of disability by the Social Security
Administration);
- returns of excess contributions to Retirement Plans;
- distributions from retirement plans to make "substantially equal
periodic payments" as permitted in Section 72(t) of the Internal Revenue
Code that do not exceed 10% of the account value annually, measured from
the date the transfer agent receives the request;
- shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; and
- shares issued in plans of reorganization to which the Fund is
a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions. These include purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges should be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply to
each shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank
account information must be made by signature-guaranteed instructions to
the Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of withdrawals
of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange automatically an amount you establish in advance for shares of
up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each Oppenheimer funds account is $25. These exchanges are subject
to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or
Class B shares of the Fund, you have up to 6 months to reinvest all or
part of the redemption proceeds in Class A shares of the Fund or other
Oppenheimer funds without paying a sales charge. This privilege applies
to Class A shares that you purchased subject to an initial sales charge
and to Class A or Class B shares on which you paid a contingent deferred
sales charge when you redeemed them. This privilege does not apply to
Class C shares. You must be sure to ask the Distributor for this privilege
when you send your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP-IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other employers
- 401(k) Prototype Retirement Plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations (there
may be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive
a check
- The redemption check is not payable to all shareholders listed
on the account statement
- The redemption check is not sent to the address of record on
your account statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as
an Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing on behalf of a corporation, partnership or other business, or
as a fiduciary, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of the New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. You may not redeem
shares held in an OppenheimerFunds retirement plan or under a share
certificate by telephone.
- To redeem shares through a service representative, call 1-800-852-
8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds sent to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone, once 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 or By Wire. 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.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account. The bank must be a member of the Federal Reserve
wire system. There is a $10 fee for each Federal Funds wire. To place
a wire redemption request, call the Transfer Agent at 1-800-852-8457. The
wire will normally be transmitted on the next bank business day after the
shares are redeemed. There is a possibility that the wire may be delayed
up to seven days to enable the Fund to sell securities to pay the
redemption proceeds. No dividends are accrued or paid on the proceeds of
shares that have been redeemed and are awaiting transmittal by wire. To
establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please call
your dealer for more information about this procedure. Please refer to
"Special Arrangements for Repurchase of Shares from Dealers and Brokers"
in the Statement of Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for
sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of
another fund. At present, Oppenheimer Money Market Fund, Inc. offers only
one class of shares which are considered "Class A" shares for this
purpose. In some cases, sales charges may be imposed on exchange
transactions. Please refer to "How to Exchange Shares" in the Statement
of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by
calling a service representative at 1-800-525-7048. That list can change
from time to time.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of the New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into up
to seven days if it determines it would be disadvantaged by a same-day
transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy
might require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- For tax purposes, exchanges of shares involve a redemption of the
shares of the fund you own and a purchase of shares of the other fund,
which may result in a capital gain or loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a
result, those exchanges may be subject to notice requirements, delays and
other limitations that do not apply to shareholders who exchange their
shares directly by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of the New York Stock Exchange on each day the Exchange
is open by dividing the value of the Fund's net assets attributable to a
class by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities and obligations for which market values
cannot be readily obtained. These procedures are described more
completely in the Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Trustees at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will
be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may not be
able to complete a telephone transaction and should consider placing your
order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
- The redemption price for shares will vary from day to day because
the values of the securities in the Fund's portfolio fluctuate, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. For accounts registered
in the name of a broker/dealer, payment will be forwarded within 3
business days. The Transfer Agent may delay forwarding a check or
processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from taxable dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or Employer Identification Number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charge when redeeming certain Class
A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income, if any, on an annual basis
and normally pays those dividends to shareholders in December, but the
Board of Trustees can change that date. The Board may also cause the Fund
to declare dividends after the close of the Fund's fiscal year (which ends
September 30th). Because the Fund does not have an objective of seeking
current income, the amounts of dividends it pays, if any, will likely be
small. Dividends paid on Class A shares will generally be higher than for
Class B or Class C shares because expenses allocable to Class B and Class
C shares will generally be higher than for Class A shares. There is no
fixed dividend rate and there can be no assurance that the Fund will pay
any dividends.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of capital gains following the end of its
fiscal year. Long-term capital gains will be separately identified in the
tax information the Fund sends you after the end of the year. Short-term
capital gains are treated as dividends for tax purposes. There can be no
assurance that the Fund will pay any capital gains distributions in a
particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or have
them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another Oppenheimer funds Account.
You can reinvest all distributions in another Oppenheimer funds account
you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year the Fund will send you
and the IRS a statement showing the amount of all taxable distributions
you received in the previous year.
When more than 50% of its assets are invested in foreign securities
at the end of any fiscal year, the Fund may elect that Section 853 of the
Internal Revenue Code will apply to it to permit shareholders to take a
credit (or a deduction) on their own federal income tax returns for
foreign taxes paid by the Fund. "Dividends, Capital Gains and Taxes" in
the Statement of Additional Information contains further information about
this tax provision.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares on
or just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. Generally speaking, a
capital gain or loss is the difference between the price you paid for the
shares and the price you received when you sold them.
- Returns of Capital: In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain Federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in the Fund on your particular
tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers
for Class A, Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those shareholders
of (i) Quest for Value Fund, Inc., Quest for Value Growth and Income Fund,
Quest for Value Opportunity Fund, Quest for Value Small Capitalization
Fund and Quest for Value Global Equity Fund, Inc. on November 24, 1995,
when OppenheimerFunds, Inc. became the investment adviser to those funds,
and (ii) Quest for Value U.S. Government Income Fund, Quest for Value
Investment Quality Income Fund, Quest for Value Global Income Fund, Quest
for Value New York Tax-Exempt Fund, Quest for Value National Tax-Exempt
Fund and Quest for Value California Tax-Exempt Fund when those funds
merged into various Oppenheimer funds on November 24, 1995. The funds
listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the Fund (i)
acquired by such shareholder pursuant to an exchange of shares of one of
the Oppenheimer funds that was one of the Former Quest for Value Funds or
(ii) received by such shareholder pursuant to the merger of any of the
Former Quest for Value Funds into an Oppenheimer fund on November 24,
1995.
Class A Sales Charges
- - Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
- - Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for
Class A shares purchased by a "Qualified Retirement Plan" through a single
broker, dealer or financial institution, or by members of "Associations"
formed for any purpose other than the purchase of securities if that
Qualified Retirement Plan or that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this purpose
only, a "Qualified Retirement Plan" includes any 401(k) plan, 403(b) plan,
and SEP/IRA or IRA plan for employees of a single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage Percentage of
Number of Percentage of Amount Offering
Eligible Employees of Offering Invested Price
or Members Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having
50 or more eligible employees or members, there is no initial sales charge
on purchases of Class A shares, but those shares are subject to the Class
A contingent deferred sales charge described on pages 27 and 28 of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees
in a Qualified Retirement Plan or members of an Association or the sales
charge rate that applies under the Rights of Accumulation described above
in the Prospectus. In addition, purchases by 401(k) plans that are
Qualified Retirement Plans qualify for the waiver of the Class A initial
sales charge if they qualified to purchase shares of any of the Former
Quest For Value Funds by virtue of projected contributions or investments
of $1 million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of Associations, or
as eligible employees in Qualified Retirement Plans also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Fund's Distributor.
- - Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund issued in the reorganization on November 24,
1995 for shares of Quest For Value Global Income Fund that were subject
to a contingent deferred sales charge, will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed within
18 months of the end of the calendar month in which they were purchased,
at a rate equal to 1.0% if the redemption occurs within 12 months of their
initial purchase and at a rate of 0.50 of 1.0% if the redemption occurs
in the subsequent six months. This contingent deferred sales charge rate
also applies to shares of the Fund purchased by exchange of shares of
other Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and which
shares were subject to a Class A contingent deferred sales charge prior
to November 24, 1995. Class A shares of any of the Former Quest for Value
Funds purchased without an initial sales charge on or before November 22,
1995 will continue to be subject to the applicable contingent deferred
sales charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- - Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
- Shareholders of the Fund who were shareholders of the AMA Family
of Funds on February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former Quest
for Value Fund by merger of any of the portfolios of the Unified Funds.
- - Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to redemptions
of Class A shares of the Fund purchased by the following investors who
were shareholders of any Former Quest for Value Fund:
- Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted
under that law.
- Participants in Qualified Retirement Plans that purchased shares
of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
- - Waivers for Redemptions of Shares Purchased Prior to March 6, 1995
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by exchange from
an Oppenheimer fund that was a Former Quest for Value Fund or into which
such fund merged, if those shares were purchased prior to March 6, 1995:
in connection with (i) distributions to participants or beneficiaries of
plans qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457 of the
Code, and other employee benefit plans, and returns of excess
contributions made to each type of plan, (ii) withdrawals under an
automatic withdrawal plan holding only either Class B or C shares if the
annual withdrawal does not exceed 10% of the initial value of the account,
and (iii) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required
minimum value of such accounts.
- - Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund acquired by
merger of a Former Quest for Value Fund into the Fund or by exchange from
an Oppenheimer fund that was a Former Quest For Value Fund or into which
such fund merged, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) distributions to participants
or beneficiaries from Individual Retirement Accounts under Section 408(a)
of the Internal Revenue Code or retirement plans under Section 401(a),
401(k), 403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from service
or (b) following the death or disability (as defined in the Code) of the
participant or beneficiary; (2) returns of excess contributions to such
retirement plans; (3) redemptions other than from retirement plans
following the death or disability of the shareholder(s) (as evidenced by
a determination of total disability by the U.S. Social Security
Administration); (4) withdrawals under an automatic withdrawal plan (but
only for Class B or C shares) where the annual withdrawals do not exceed
10% of the initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in
the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, B or C shares
of the Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares in this
Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and that were transferred to an OppenheimerFunds
prototype 401(k) plan shall be eligible for an additional one-time payment
by the Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and (i) the shares held by those plans were exchanged
for Class A shares, or (ii) the plan assets were transferred to an
OppenheimerFunds prototype 401(k) plan, shall be eligible for an
additional one-time payment by the Distributor of 1% of the value of the
plan assets transferred, but that payment may not exceed $5,000.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER GLOBAL FUND
Graphic material included in Prospectus of Oppenheimer Global Fund:
"Comparison of Change in Value of $10,000 Hypothetical Investments in
Class A, Class B and Class C shares of Oppenheimer Global Fund and the
Morgan Stanley Capital International World Index."
Linear graphs will be included in the Prospectus of Oppenheimer
Global Fund (the "Fund") depicting the initial subsequent account values
of hypothetical $10,000 investments in (i) Class A shares of the Fund
during the past 10 fiscal years, (ii) Class B shares of the Fund during
the period August 17, 1993 (first public offering of Class B shares) to
September 30, 1996, and (iii) Class C shares of the Fund during the period
October 2, 1995 (inception of the class); in each case comparing such
values with the same investment over the same time periods in the Morgan
Stanley Capital International World Index. Set forth below are the
relevant data points that will appear on the linear graph. Additional
information with respect to the foregoing, including a description of the
Morgan Stanley Capital International World Index, is set forth in the
Prospectus under "Performance of the Fund - Management's Discussion of
Performance."
Fiscal Year Oppenheimer Morgan Stanley Capital
Ended Global Fund International World Index
- ----------- ----------- -------------------------
Class A
-------
09/30/86 9,425 10,000
09/30/87 14,388 14,438
09/30/88 10,766 13,581
09/30/89 15,382 17,084
09/30/90 15,503 13,478
09/30/91 19,179 16,884
09/30/92 18,358 16,812
09/30/93 21,602 20,324
09/30/94 25,749 21,964
09/30/95 28,135 25,252
09/30/96 31,788 28,838
Class B
-------
08/17/93 10,000 10,000
09/30/93 10,364 9,817
09/30/94 12,240 10,609
09/30/95 13,261 12,198
09/30/96 14,661 13,929
Class C
-------
10/02/95 10,000 10,000
09/30/96 11,134 11,420
Oppenheimer Global Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized to
give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information,
and if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, OppenheimerFunds, Inc.,
OppenheimerFunds Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
PR0330.001.0197 *Printed on recycled paper
<PAGE>
Oppenheimer Global Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated January 7, 1997
<R?
This Statement of Additional Information of Oppenheimer Global Fund
is not a Prospectus. This document contains additional information about
the Fund and supplements information in the Prospectus dated January 7,
1997. It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, OppenheimerFunds
Services at P.O. Box 5270, Denver, Colorado 80217 or by calling the
Transfer Agent at the toll-free number shown above.
Table of Contents
Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 6
Other Investment Restrictions 15
How the Fund is Managed 16
Organization and History 16
Trustees and Officers of the Fund 17
The Manager and Its Affiliates 21
Brokerage Policies of the Fund 22
Performance of the Fund 24
Distribution and Service Plans 27
About Your Account
How to Buy Shares 29
How to Sell Shares 36
How to Exchange Shares 39
Dividends, Capital Gains and Taxes 41
Additional Information About the Fund 42
Financial Information About the Fund
Independent Auditors' Report 42
Financial Statements 43
Appendix: Corporate Industry Classifications A-1
<PAGE>
About the Fund
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund may invest, as well as the strategies the Fund may use
to try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meanings as those terms have in
the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment adviser, OppenheimerFunds, Inc. (the "Manager"), evaluates the
merits of securities primarily through the exercise of its own investment
analysis. This may include, among other things, evaluation of the history
of the issuer's operations, prospects for the industry of which the issuer
is part, the issuer's financial condition, the issuer's pending product
developments and developments by competitors, the effect of general market
and economic conditions on the issuer's business, and legislative
proposals or new laws that might affect the issuer. Current income is not
a consideration in the selection of portfolio securities for the Fund,
whether for appreciation, defensive or liquidity purposes. The fact that
a security has a low yield or does not pay current income will not be an
adverse factor in selecting securities to try to achieve the Fund's
investment objective of capital appreciation unless the Manager believes
that the lack of yield might adversely affect appreciation possibilities.
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.
- Investing in Securities of Growth-Type Companies. The Fund may
emphasize securities of "growth-type" companies. Such issuers typically
are those the goods or services of which have relatively favorable long-
term prospects for increasing demand, or ones which develop new products,
services or markets and normally retain a relatively large part of their
earnings for research, development and investment in capital assets. They
may include companies in the natural resources fields or those developing
industrial applications for new scientific knowledge having potential for
technological innovation, such as nuclear energy, oceanography, business
services and new customer products.
- Investing in Small, Unseasoned Companies. The securities of
small, unseasoned companies may have a limited trading market, which may
adversely affect the Fund's ability to sell them and can reduce the price
the Fund might be able to obtain for them. If other investors holding the
same securities as the Fund sell them when the Fund attempts to dispose
of its holdings, the Fund may receive lower prices than might otherwise
be obtained, because of the thinner market for such securities.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments, that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offers the Fund potential benefits not
available from investing solely in securities of domestic issuers, such
as the opportunity to invest in foreign issuers that appear to offer
growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., 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. If the
Fund's portfolio securities are held abroad, the countries in which such
securities may be held and the sub-custodians holding them must be
approved by the Fund's Board of Trustees under applicable rules of the
Securities and Exchange Commission. In buying foreign securities, the
Fund may convert U.S. dollars into foreign currency, but only to effect
securities transactions on foreign securities exchanges and not to hold
such currency as an investment.
- Risks of Foreign Investing. Investing in foreign securities
involves special additional risks and considerations not typically
associated with investing in securities of issuers traded in the U.S.
These include: reduction of income by foreign taxes; fluctuation in value
of foreign portfolio investments due to changes in currency rates and
control regulations (e.g., currency blockage); transaction charges for
currency exchange; lack of public information about foreign issuers; lack
of uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic issuers; less volume on foreign
exchanges than on U.S. exchanges; greater volatility and less liquidity
in foreign markets than in the U.S.; less regulation of foreign issuers,
stock exchanges and brokers than in the U.S.; greater difficulties in
commencing lawsuits against foreign issuers; higher brokerage commission
rates than in the U.S.; increased risks of delays in settlement of
portfolio transactions or loss of certificates for portfolio securities;
possibilities in some countries of expropriation or nationalization of
assets, confiscatory taxation, political, financial or social instability
or adverse diplomatic developments; and 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.
A number of current significant political demographic and economic
developments may affect investments in foreign securities and in
securities of companies with operations overseas. Such developments
include dramatic political changes in government and economic policies in
several Eastern European countries, Germany and the republics comprising
the former Soviet Union, as well as unification of the European Economic
Community. The course of any of one or more of these events and the
effect on trade barriers, competition and markets for consumer goods and
services is uncertain. With roughly two-thirds of all outstanding equity
securities now traded outside of the United States the Fund's global scope
enables it to attempt to take advantage of other world markets and
companies and seek to protect itself against declines in any single
economy.
- Convertible Securities. While convertible securities are a form
of debt security in many cases, their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as
"equity equivalents." As a result, the rating assigned to the security
has less impact on the Manager's investment decision with respect to
convertible securities than in the case of non-convertible fixed-income
securities. To determine whether convertible securities should be
regarded as "equity equivalents," the Manager examines the following
factors: (1) whether, at the option of the investor, the convertible
security can be exchanged for a fixed number of shares of common stock of
the issuer, (2) whether the issuer of the convertible securities has
restated its earnings per share of common stock on a fully diluted basis
(considering the effect of converting the convertible securities), and (3)
the extent to which the convertible security may be a defensive "equity
substitute," providing the ability to participate in any appreciation in
the price of the issuer's common stock.
- Warrants and Rights. Warrants basically are options to purchase
equity securities at specified prices valid for a specific period of time.
Their prices do not necessarily move in a manner parallel to the prices
of the underlying securities. The price paid for a warrant will be lost
unless the warrant is exercised prior to expiration. Rights are similar
to warrants, but normally have a short duration and are distributed
directly by the issuer to its shareholders. Warrants and rights have no
voting rights, receive no dividends and have no rights with respect to the
assets of the issuer.
- Illiquid and Restricted Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund,
if such registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund wishes to
sell the security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would be
permitted to sell them. The Fund would bear the risks of any downward
price fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Trustees of the Fund or by
the Manager under Board-approved guidelines. Those guidelines take into
account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it \to, an approved vendor (a U.S. commercial bank
or the U.S. branch of a foreign bank, or a broker-dealer which has been
designated a primary dealer in U.S. government securities, which must meet
credit requirements set by the Fund's Board of Trustees from time to
time), 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. The majority of these transactions run from day
to day, and delivery pursuant to the resale typically will occur within
one to five days of the purchase. Repurchase agreements are considered
"loans" under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), collateralized by the underlying security. The
Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must equal
or exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities pursuant to the Securities Lending Agreement and Guaranty (the
"Securities Lending Agreement") with The Bank of New York, subject to the
restrictions stated in the Prospectus. The Fund will lend such portfolio
securities to attempt to increase the Fund's income. Under the Securities
Lending Agreement and applicable regulatory requirements (which are
subject to change), the loan collateral must, on each business day, be at
least equal to the value of the loaned securities and must consist of
cash, bank letters of credit or securities of the U.S. Government (or its
agencies or instrumentalities), or other cash equivalents in which the
Fund is permitted to invest. To be acceptable as collateral, letters of
credit must obligate a bank to pay to The Bank of New York, as agent,
amounts demanded by the Fund if the demand meets the terms of the letter.
Such terms of the letter and the issuing bank must be satisfactory to The
Bank of New York and the Fund. The Fund will receive, pursuant to the
Securities Lending Agreement, 60% of all annual net income from securities
lending transactions. The Bank of New York has agreed, in general, to
guarantee the obligations of borrowers to return loaned securities and to
be responsible for expenses relating to securities lending. The Fund will
be responsible for risks associated with the investment of cash
collateral. The term of the Securities Lending Agreement is thirty-six
months, subject to termination by The Bank of New York or the Fund. The
Fund may incur a termination fee if it terminates the Securities Lending
Agreement during this term. The terms of the Fund's loans must also meet
applicable tests under the Internal Revenue Code and permit the Fund to
reacquire loaned securities on five business days' notice or in time to
vote on any important matter.
- Borrowing For Leverage. From time to time, the Fund may increase
its ownership of securities by borrowing from banks on an unsecured basis
and investing the borrowed funds, subject to the restrictions stated in
the Prospectus. Any such borrowing will be made only from banks, and
pursuant to the requirements of the Investment Company Act, will be made
only to the extent that the value of the Fund's assets, less its
liabilities other than borrowings, is equal to at least 300% of all
borrowings including the proposed borrowing. If the value of the Fund's
assets, when computed in that manner, should fail to meet the 300% asset
coverage requirement, the Fund is required within three days to reduce its
bank debt to the extent necessary to meet that coverage requirement. To
do so, the Fund may have to sell a portion of its investments at a time
when it would otherwise not want to sell the securities. Interest on
money the Fund borrows is an expense the Fund would not otherwise incur,
so that during periods of substantial borrowings, its expenses may
increase more than the expenses of funds that do not borrow.
Other Investment Techniques and Strategies
- Hedging With Options and Futures Contracts. The Fund may use
hedging instruments for the purposes described in the Prospectus. When
hedging to attempt to protect against declines in the market value of the
Fund's portfolio, or to permit the Fund to retain unrealized gains in the
value of portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) sell Futures,
(ii) buy puts on such Futures or securities, or (iii) write covered calls
on securities or on Futures. When hedging to establish a position in the
equity securities markets as a temporary substitute for the purchase of
individual equity securities the Fund may: (i) buy Futures, or (ii) buy
calls on such Futures or securities held by it. Normally, the Fund would
then purchase the equity securities and terminate the hedging position.
The Fund's strategy of hedging with Futures and options on Futures
will be incidental to the Fund's investment activities in the underlying
cash market. In the future, the Fund may employ hedging instruments and
strategies that are not presently contemplated but which may be developed,
to the extent such investment methods are consistent with the Fund's
investment objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments the Fund
may use is provided below.
- Stock Index Futures, Financial Futures and Interest Rate Futures.
The Fund may buy and sell futures contracts relating to a securities
index ("Financial Futures"), including "Stock Index Futures," a type of
Financial Future for which the index used as the basis for trading is a
broadly-based stock index (including stocks that are not limited to
issuers in a particular industry or group of industries). A stock index
assigns relative values to the common stocks included in the index and
fluctuates with the changes in the market value of those stocks. Stock
indices cannot be purchased or sold directly. Financial Futures are
contracts based on the future value of the basket of securities that
comprise the underlying index. The contracts obligate the seller to
deliver, and the purchaser to take, cash to settle the futures transaction
or to enter into an offsetting contract. No physical delivery of the
securities underlying the index is made on settling the futures
obligation. No monetary amount is paid or received by the Fund on the
purchase or sale of a Financial Future or Stock Index Future.
The Fund may also buy Futures relating to debt securities ("Interest
Rate Futures"). An Interest Rate Future obligates the seller to deliver
and the purchaser to take a specific type of debt security at a specific
future date for a fixed price to settle the futures transaction, or to
enter into an offsetting contract. As with Financial Futures, no monetary
amount is paid or received by the Fund on the purchase of an Interest Rate
Future.
Upon entering into a Futures transaction, the Fund will be required
to deposit an initial margin payment, in cash or U.S. Treasury bills, with
the futures commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures broker can
gain access to that account only under certain specified conditions. As
the Future is marked to market (that is, its value on the Fund's books is
changed) to reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the futures
broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position, at which time
a final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is then
realized by the Fund on the Future for tax purposes. Although Financial
Futures and Stock Index Futures by their terms call for settlement by the
delivery of cash, and Interest Rate Futures call for the delivery of a
specific debt security, in most cases the settlement obligation is
fulfilled without such delivery by entering into an offsetting
transaction. All Futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.
- Writing Covered Calls. As described in the Prospectus, the Fund
may write covered calls. When the Fund writes a call on an investment, it
receives a premium and agrees to sell the callable investment to a
purchaser of a corresponding call during the call period (usually not more
than 9 months) at a fixed exercise price (which may differ from the market
price of the underlying investment) regardless of market price changes
during the call period. To terminate its obligation on a call it has
written, the Fund may purchase a corresponding call in a "closing
purchase transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the premium
received on the call the Fund has written is more or less than the price
of the call the Fund subsequently purchased. A profit may also be
realized if the call lapses unexercised, because the Fund retains the
underlying investment and the premium received. Those profits are
considered short-term capital gains for Federal income tax purposes, as
are premiums on lapsed calls, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the
callable investment until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar value of deliverable securities or liquid assets. The Fund will
segregate additional liquid assets if the value of the escrowed assets
drops below 100% of the current value of the Future. In no circumstances
would an exercise notice as to a Future put the Fund in a short futures
position.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC"), as to the investments on which
the Fund has written options that are traded on exchanges, or as to other
acceptable escrow securities, so that no margin will be required from the
Fund for such option transactions. OCC will release the securities
covering a call on the expiration of the call or when the Fund enters into
a closing purchase transaction. Call writing affects the Fund's turnover
rate and the brokerage commissions it pays. Commissions, normally higher
than on general securities transactions, are payable on writing or
purchasing a call.
- Purchasing Puts and Calls. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not participate in
an anticipated rise in the securities market. When the Fund purchases a
call, it pays a premium (other than in a closing purchase transaction)
and, except as to calls on stock indices, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. In
purchasing a call, the Fund benefits only if the call is sold at a profit
or if, during the call period, the market price of the underlying
investment is above the sum of the call price, transaction costs, and the
premium paid, and the call is exercised. If the call is not exercised or
sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to purchase the underlying investment. When the Fund purchases a call on
a stock index, it pays a premium, but settlement is in cash rather than
by delivery of the underlying investment to the Fund.
When the Fund purchases a put, it pays a premium and, except as to
puts on stock indices, has the right to sell the underlying investment to
a seller of a corresponding put on the same investment during the put
period at a fixed exercise price. Buying a put on an investment the Fund
owns (a "protective put") enables the Fund to attempt to protect itself
during the put period against a decline in the value of the underlying
investment below the exercise price by selling the underlying investment
at the exercise price to a seller of a corresponding put. If the market
price of the underlying investment is equal to or above the exercise price
and as a result the put is not exercised or resold, the put will become
worthless at its expiration and the Fund will lose the premium payment and
the right to sell the underlying investment. However, the put may be sold
prior to expiration (whether or not at a profit).
Puts and calls on broadly-based stock indices or Stock Index Futures
are similar to puts and calls on securities or futures contracts except
that all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock market
generally) rather than on price movements of individual securities or
futures contracts. When the Fund buys a call on a stock index or Stock
Index Future, it pays a premium. If the Fund exercises the call during
the call period, a seller of a corresponding call on the same investment
will pay the Fund an amount of cash to settle the call if the closing
level of the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to the
difference between the closing price of the call and the exercise price
of the call times a specified multiple (the "multiplier") which determines
the total dollar value for each point of difference. When the Fund buys
a put on a stock index or Stock Index Future, it pays a premium and has
the right during the put period to require a seller of a corresponding
put, upon the Fund's exercise of its put, to deliver cash to the Fund to
settle the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price of the
put. That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock Index
Future not owned by it, the put protects the Fund to the extent that the
index moves in a similar pattern to the securities the Fund holds. The
Fund can either resell the put or, in the case of a put on a Stock Index
Future, buy the underlying investment and sell it at the exercise price.
The resale price of the put will vary inversely with the price of the
underlying investment. If the market price of the underlying investment
is above the exercise price, and as a result the put is not exercised, the
put will become worthless on the expiration date. In the event of a
decline in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its loss on
its portfolio securities.
The Fund's option activities may affect its portfolio turnover rate
and brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate. The exercise by the Fund of puts on securities will cause
the sale of underlying investments, increasing portfolio turnover.
Although the decision whether to exercise a put it holds is within the
Fund's control, holding a put might cause the Fund to sell the related
investments for reasons that would not exist in the absence of the put.
The Fund will pay a brokerage commission each time it buys or sells a
call, put or an underlying investment in connection with the exercise of
a put or call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market value
of the underlying investments and, consequently, put and call options
offer large amounts of leverage. The leverage offered by trading in
options could result in the Fund's net asset value being more sensitive
to changes in the value of the underlying investments.
- Options on Foreign Currency. The Fund intends to write and
purchase calls on foreign currencies. The Fund may purchase and write
puts and calls on foreign currencies that are traded on a securities or
commodities exchange or over-the-counter markets or are quoted by major
recognized dealers in such options. It does so to protect against
declines in the dollar value of foreign securities and against increases
in the dollar cost of foreign securities to be acquired. If the Manager
anticipates a rise in the dollar value of a foreign currency in which
securities to be acquired are denominated, the increased cost of such
securities may be partially offset by purchasing calls or writing puts on
that foreign currency. If a decline in the dollar value of a foreign
currency is anticipated, the decline in value of portfolio securities
denominated in that currency may be partially offset by writing calls or
purchasing puts on that foreign currency. However, in the event of
currency rate fluctuations adverse to the Fund's position, it would lose
the premium it paid and transactions costs.
A call written on a foreign currency by the Fund is covered if the
Fund owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or for additional cash consideration held
in a segregated account by its custodian) upon conversion or exchange of
other foreign currency held in its portfolio. A call may be written by
the Fund on a foreign currency to provide a hedge against a decline due
to an expected adverse change in the exchange rate in the U.S. dollar
value of a security which the Fund owns or has the right to acquire and
which is denominated in the currency underlying the option. This is a
cross-hedging strategy. In such circumstances, the Fund collateralizes
the option by maintaining in a segregated account with the Fund's
Custodian, cash or U.S. Government Securities in an amount not less than
the value of the underlying foreign currency in U.S. dollars marked-to-
market daily.
- Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. A Forward Contract involves
bilateral obligations of one party to purchase, and another party to sell,
a specific currency at a future date (which may be any fixed number of
days from the date of the contract agreed upon by the parties), at a price
set at the time the contract is entered into. These contracts are
generally traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers.
The Fund may enter into a Forward Contract in order to "lock in" the U.S.
dollar price of a security denominated in a foreign currency which it has
purchased or sold but which has not yet settled, or to protect against a
possible loss resulting from an adverse change in the relationship between
the U.S. dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the gain that
would otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. Forward contracts include standardized
foreign currency futures contracts which are traded on exchanges and are
subject to procedures and regulations applicable to other Futures. The
Fund may also enter into a forward contract to sell a foreign currency
denominated in a currency other than that in which the underlying security
is denominated. This is done in the expectation that there is a greater
correlation between the foreign currency of the forward contract and the
foreign currency of the underlying investment than between the U.S. dollar
and the foreign currency of the underlying investment. This technique is
referred to as "cross hedging." The success of cross hedging is dependent
on many factors, including the ability of the Manager to correctly
identify and monitor the correlation between foreign currencies and the
U.S. dollar. To the extent that the correlation is not identical, the
Fund may experience losses or gains on both the underlying security and
the cross currency hedge.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase.
There is no limitation as to the percentage of the Fund's assets that
may be committed to foreign currency exchange contracts. The Fund does
not enter into such forward contracts or maintain a net exposure in such
contracts to the extent that the Fund would be obligated to deliver an
amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency (or another currency that is also the subject
of the hedge), or enter into a "cross hedge," unless it is denominated in
a currency or currencies that the Manager believes will have price
movements that tend to correlate closely with the currency in which the
investment being hedged is denominated. See "Tax Aspects of Covered Calls
and Hedging Instruments" below for a discussion of the tax treatment of
foreign currency exchange contracts
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are
made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross hedge").
The Fund's Custodian will place cash or U.S. Government securities or
other liquid high-quality debt securities in a separate account of the
Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions. If the
value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the Fund's
net commitments with respect to such contracts. As an alternative to
maintaining all or part of the separate account, the Fund may purchase a
call option permitting the Fund to purchase the amount of foreign currency
being hedged by a forward sale contract at a price no higher than the
forward contract price, or the Fund may purchase a put option permitting
the Fund to sell the amount of foreign currency subject to a forward
purchase contract at a price as high or higher than the forward contract
price. Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it had not entered into such
contracts.
The precise matching of the Forward Contract amounts and the value of
the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense of
such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert all of its holdings of foreign currency
deposits into U.S. dollars on a daily basis. The Fund may convert foreign
currency from time to time, and investors should be aware of the costs of
currency conversion. Foreign exchange dealers do not charge a fee for
conversion, but they do seek to realize a profit based on the difference
between the prices at which they buy and sell various currencies. Thus,
a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
- Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use
of Futures and options on Futures established by the Commodity Futures
Trading Commission ("CFTC"). In particular the Fund is exempted from
registration with the CFTC as a "commodity pool operator" if the Fund
complies with the requirements of Rule 4.5 adopted by the CFTC. The Rule
does not limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its aggregate
initial Futures margin and related option premiums to no more than 5% of
the Fund's total assets for hedging purposes that are not considered bona
fide hedging strategies under the Rule. Under the Rule, the Fund also
must use short Futures and Futures options positions solely for "bona fide
hedging purposes" within the meaning and intent of the applicable
provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same adviser as the Fund (or an adviser
that is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
purchases a Future, the Fund will maintain, in a segregated account or
accounts with its Custodian, cash or readily-marketable, short-term
(maturing in one year or less) debt instruments in an amount equal to the
market value of the securities underlying such Future, less the margin
deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without having to pay tax on them. This
avoids a "double tax" on that income and capital gains, since shareholders
normally will be taxed on the dividends and capital gains they receive
from the Fund (unless the Fund's shares are held in a retirement account
or the shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that less
than 30% of its gross income must be derived from gains realized on the
sale of securities held for less than three months. To comply with this
30% cap, the Fund will limit the extent to which it engages in the
following activities, but will not be precluded from them: (i) selling
investments, including Stock Index Futures, held for less than three
months, whether or not they were purchased on the exercise of a call held
by the Fund; (ii) purchasing options which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv) exercising
puts or calls held by the Fund for less than three months; or (v) writing
calls on investments held less than three months.
Certain foreign currency exchange contracts (Forward Contracts) in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character and timing of gains (or losses) recognized by the
Fund on straddle positions. Generally, a loss sustained on the
disposition of a position(s) making up a straddle is allowed only to the
extent such loss exceeds any unrecognized gain in the offsetting positions
making up the straddle. Disallowed loss is generally allowed at the point
where there is no unrecognized gain in the offsetting positions making up
the straddle, or the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as an ordinary gain or loss. Currency gains and losses are
offset against market gains and losses on each trade before determining
a net "section 988" gain or loss under the Internal Revenue Code, which
may ultimately increase or decrease the amount of the Fund's investment
company income available for distribution to its shareholders.
- Risks of Hedging With Options and Futures. An option position may
be closed out only on a market that provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option. In addition to the risks
associated with hedging that are discussed in the Prospectus and above,
there is a risk in using short hedging by (i) selling Stock Index Futures
or (ii) purchasing puts on stock indices or Stock Index Futures to attempt
to protect against declines in the value of the Fund's equity securities.
The risk is that the prices of Stock Index Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices of
the Fund's equity securities. The ordinary spreads between prices in the
cash and futures markets are subject to distortions, due to differences
in the natures of those markets. First, all participants in the futures
markets are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may
close out futures contracts through offsetting transactions which could
distort the normal relationship between the cash and futures markets.
Second, the liquidity of the futures markets depends on participants
entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery,
liquidity in the futures markets could be reduced, thus producing
distortion. Third, from the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin
requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary
price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the equity securities being hedged and movements in the price of
the hedging instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of equity securities being hedged if
the historical volatility of the prices of the equity securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity securities
held in the Fund's portfolio may decline. If that occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. However, while this could occur for
a very brief period or to a very small degree, over time the value of a
diversified portfolio of equity securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position in the
equities markets as a temporary substitute for the purchase of individual
equity securities (long hedging) by buying Stock Index Futures and/or
calls on such Futures, on securities or on stock indices, it is possible
that the market may decline. If the Fund then concludes not to invest in
equity securities at that time because of concerns as to a possible
further market decline or for other reasons, the Fund will realize a loss
on the hedging instruments that is not offset by a reduction in the price
of the equity securities purchased.
- Short Sales Against-the-Box. In this type of short sale, while the
short position is open, the Fund must own an equal amount of the
securities sold short, or by virtue of ownership of other securities have
the right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may be
made to defer, for Federal income tax purposes, recognition of gain or
loss on the sale of securities "in the box" until the short position is
closed out. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and recognize a capital
gain.
Other Investment Restrictions
The Fund's most significant investment restrictions are described in
the Prospectus. The following are also fundamental policies and together
with the Fund's fundamental policies described in the Prospectus, cannot
be changed without the approval of a "majority" of the Fund's outstanding
voting securities. Under the Investment Company Act, such a "majority"
vote is defined as the vote of the holders of the lesser of: (i) 67% or
more of the shares present or represented by proxy at a shareholders
meeting, if the holders of more than 50% of the outstanding shares are
present or represented by proxy; or (ii) more than 50% of the outstanding
shares.
Under these additional restrictions, the Fund cannot:
- invest in companies for the primary purpose of acquiring control or
management thereof;
- invest in commodities or in commodities contracts; other than the
hedging instruments permitted by any of its other fundamental policies,
whether or not any such hedging instrument is considered to be a commodity
or a commodity contract;
- invest in real estate or in interests in real estate, but may
purchase readily marketable securities of companies holding real estate
or interests therein;
- purchase securities on margin; however, the Fund may make margin
deposits in connection with any of the hedging instruments permitted by
any of its other fundamental policies;
- lend money, but the Fund may invest in all or a portion of an issue
of bonds, debentures, commercial paper, or other similar corporate
obligations of the types that are usually purchased by institutions,
whether or not publicly distributed, provided that such obligations which
are not publicly distributed shall be subject to the limits on the amount
set forth in the Prospectus under the caption "Illiquid and Restricted
Securities"; the Fund may also make loans of portfolio securities, subject
to the restrictions set forth in the Prospectus and above under the
caption "Loans of Portfolio Securities";
- mortgage or pledge any of its assets; such prohibition against
mortgaging or pledging 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 fundamental policies;
- underwrite securities of other companies, except insofar as it might
be deemed to be an underwriter for purposes of the Securities Act of 1933
in the resale of any securities held in its own portfolio;
- invest or hold securities of any issuer if those officers and
directors or trustees of the Fund or its adviser owning individually more
than 1/2 of 1% of the securities of such issuer together own more than 5%
of the securities of such issuer; or
- invest in other open-end investment companies, or invest more than
5% of its net assets at the time of purchase in closed-end investment
companies, including small business investment companies, nor make any
such investments at commission rates in excess of normal brokerage
commissions. The percentage restrictions described above and in the
Prospectus apply only at the time of investment and require no action by
the Fund as a result of subsequent changes in relative values.
In connection with the qualification of its shares in certain states,
the Fund has undertaken that in addition to the above, it will not: (1)
invest more than 5% of its assets in securities of issuers, including
their predecessors, which have been in continuous operation for less than
three continuous years; or (2) invest any part of its assets in oil, gas
or other mineral exploration or development programs. In the event that
the Fund's shares cease to be qualified under such laws or if such
undertaking(s) otherwise cease to be operative, the Fund would not be
subject to such restrictions.
For purposes of the Fund's policy not to concentrate its assets, as
described in "Other Investment Restrictions" in the Prospectus, the Fund
has adopted the corporate industry classifications set forth in the
Appendix to this Statement of Additional Information. This is not a
fundamental policy.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations and occupations
during the past five years are set forth below. The address for each
Trustee and officer is Two World Trade Center, New York, New York 10048-
0203, unless another address is listed below. All of the Trustees are
also trustees of Oppenheimer Fund, Oppenheimer Growth Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer Money Market Fund, Inc., Oppenheimer
Capital Appreciation Fund, Oppenheimer U.S. Government Trust, Oppenheimer
New York Municipal Fund, Oppenheimer California Municipal Fund,
Oppenheimer Multi-State Municipal Trust, Oppenheimer Asset Allocation
Fund, Oppenheimer Developing Markets Fund, Oppenheimer Gold & Special
Minerals Fund, Oppenheimer Discovery Fund, Oppenheimer Enterprise Fund,
Oppenheimer International Growth Fund, Oppenheimer Series Fund, Inc.,
Oppenheimer Global Growth & Income Fund, Oppenheimer Global Emerging
Growth Fund, Oppenheimer Multi-Sector Income Trust and Oppenheimer World
Bond Fund (collectively, the "New York-based Oppenheimer funds"), except
that Ms. Macaskill is not a director of Oppenheimer Money Market Fund,
Inc. Ms. Macaskill and Messrs. Bishop, Bowen, Donohue, Farrar and Zack,
respectively, hold the same offices with the other New York-based
Oppenheimer funds as with the Fund. As of December 13, 1996, the Trustees
and officers of the Fund as a group owned of record or beneficially less
than 1% of each class of shares of the Fund. The foregoing statement does
not reflect ownership of shares held of record by an employee benefit plan
for employees of the Manager (for which plan a Trustee and an officer
listed below, Ms. Macaskill and Mr. Donohue, respectively, are trustees),
other than the shares beneficially owned under that plan by officers of
the Fund listed below.
Leon Levy, Chairman of the Board of Trustees; Age 71
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee*; Age 63
Vice Chairman of OppenheimerFunds, Inc. (the "Manager"); formerly he
held the following positions: Vice President and Counsel of Oppenheimer
Acquisition Corp. ("OAC"), the Manager's parent holding company; Executive
Vice President & General Counsel and a director of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"), Vice President and
a director of HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment adviser
subsidiaries of the Manager, a director of Shareholder Financial Services,
Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent
subsidiaries of the Manager and an officer of other Oppenheimer funds.
Benjamin Lipstein, Trustee; Age 73
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex Publishers, Inc
(Publishers of Psychology Today and Mother Earth News) and of Spy
Magazine, L.P.
___________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Bridget A. Macaskill, President and Trustee*; Age 48
President, Chief Executive Officer and a Director of the Manager; Chairman
and a director of SSI, and SFSI; President and a director of OAC,
HarbourView and Oppenheimer Partnership Holdings, Inc., a holding company
subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc.; formerly an Executive Vice President of the Manager.
Elizabeth B. Moynihan, Trustee; Age 67
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York
University), National Building Museum; a member of the Trustees Council,
Preservation League of New York State, and of the Indo-U.S. Sub-Commission
on Education and Culture.
Kenneth A. Randall, Trustee; Age 69
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), Enron-
Dominion Cogen Corp. (cogeneration company), Kemper Corporation (insurance
and financial services company), Fidelity Life Association (mutual life
insurance company); formerly President and Chief Executive Officer of The
Conference Board, Inc. (international economic and business research) and
a director of Lumbermens Mutual Casualty Company, American Motorists
Insurance Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York,
Senior Fellow of Jerome Levy Economic Institute, Bard College; a member
of the U.S. Competitiveness Policy Council, a director of GranCare Inc.
(health care provider), formerly New York State Comptroller and trustee,
New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age 65
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship Inc. (corporate governance
consulting); a director of Professional Staff Limited (U.K.); a trustee
of Mystic Seaport Museum, International House, Greenwich Historical
Society.
Donald W. Spiro, Vice Chairman and Trustee*; Age 71
Chairman Emeritus and a director of the Manager; formerly Chairman of the
Manager and the Distributor.
Pauline Trigere, Trustee; Age 84
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
___________________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Clayton K. Yeutter, Trustee; Age 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T. Industries,
Ltd. (tobacco and financial services), Caterpillar, Inc. (machinery),
ConAgra, Inc. (food and agricultural products), Farmers Insurance Company
(insurance), FMC Corp. (chemicals and machinery), IMC Global Inc.
(chemicals and animal feed) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order) Counsellor to the President
(Bush) for Domestic Policy, Chairman of the Republican National Committee,
Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.
Andrew J. Donohue, Secretary; Age 46
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a director of Centennial; Executive Vice
President, General Counsel and a director of HarbourView, SSI, SFSI, and
Oppenheimer Partnership Holdings, Inc.; President and director of
Oppenheimer Real Asset Management, Inc.; General Counsel of OAC; Executive
Vice President, Chief Legal Officer and a director of MultiSource
Services, Inc. (a broker-dealer); an officer of other Oppenheimer funds;
formerly Senior Vice President and Associate General Counsel of the
Manager and the Distributor; Partner in, Kraft & McManimon (a law firm);
an officer of First Investors Corporation (a broker-dealer) and First
Investors Management Company, Inc. (broker-dealer and investment adviser);
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
George C. Bowen, Treasurer; Age 60
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Senior Vice
President, Treasurer and Secretary of SSI; Vice President, Treasurer and
Secretary of SFSI; Treasurer of OAC; Vice President and Treasurer of
Oppenheimer Real Asset Management, Inc.; Chief Executive Officer,
Treasurer and a director of MultiSource Services, Inc. (a broker-dealer);
an officer of other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age 38
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Manager, prior to
which he was an Accountant for Yale & Seffinger, P.C., an accounting firm,
and previously an Accountant and Commissions Supervisor for Stuart James
Company Inc., a broker-dealer.
Scott T. Farrar, Assistant Treasurer; Age 31
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of other
Oppenheimer funds; formerly a Fund Controller for the Manager.
Robert G. Zack, Assistant Secretary; Age 48
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other Oppenheimer funds.
William L. Wilby, Vice President and Portfolio Manager; Age 52
Senior Vice President of the Manager and Vice President of HarbourView;
an officer of other Oppenheimer funds; formerly international investment
strategist at Brown Brothers Harriman & Co., prior to which he was a
Managing Director and Portfolio Manager at AIG Global Investors.
- Remuneration of Trustees. The officers of the Fund and certain
Trustees of the Fund (Ms. Macaskill and Messrs. Galli and Spiro; Ms.
Macaskill is also an officer) who are affiliated with the Manager receive
no salary or fees from the Fund. The remaining Trustees of the Fund
received the compensation shown below from the Fund. The compensation
from the Fund was paid during its fiscal year ended September 30, 1996.
The compensation from all of the New York-based Oppenheimer funds includes
the Fund and is compensation received as a director, trustee or member of
a committee of the Board of those funds during the calendar year 1996.
<TABLE>
<caption Retirement
Benefits Total Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From Fund Fund Expenses Oppenheimer Funds1
<S> <C> <C> <C>
Leon Levy, Chairman $12,011 $16,520 $152,750
and Trustee
Benjamin Lipstein, $ 7,343 $10,100 $ 91,350
Study Committee
Chairman, Audit Committee
Member and Trustee2
Elizabeth B. Moynihan, $ 7,343 $10,100 $ 91,350
Study Committee
Member and Trustee
Kenneth A. Randall, $ 6,679 $ 9,186 $ 83,450
Audit Committee Chairman
and Trustee
Edward V. Regan, $ 5,861 $ 8,061 $ 78,150
Proxy Committee Chairman,
Audit Committee
Member and Trustee
Russell S. Reynolds, Jr., $ 4,438 $ 6,104 $ 58,800
Proxy Committee Member
and Trustee
Pauline Trigere, Trustee $ 4,438 $ 6,104 $ 55,300
Clayton K. Yeutter, Proxy $ 4,438 $ 6,104 $ 58,800
Committee Member and
Trustee
</TABLE>
______________________
1 For the 1996 calendar year.
2 Committee position held during a portion of the period shown.
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was
received. A Trustee must serve in that capacity for any of the New York-
based Oppenheimer funds for at least 15 years to be eligible for the
maximum payment. Because each Trustee's retirement benefits will depend
on the amount of the Trustees' future compensation and length of service,
the amount of those benefits cannot be determined at this time, nor can
the Fund estimate the number of years of credited service that will be
used to determine those benefits.
- - Major Shareholders. As of December 13, 1996, no person owned of record
or was known by the Fund to own beneficially 5% or more of the Fund's
outstanding Class A, Class B or Class C shares, except: (i) Nationwide
Insurance Company ("Nationwide"), P.O. Box 182029, Columbus, Ohio 43218-
2029; on that date Nationwide's Qualified Plan Variable 401(k) owned
6,238,233.633 Class A shares (equal to 9.75% of the Class A shares then
outstanding) and (ii) Merrill Lynch Pierce Fenner & Smith Inc. ("Merrill
Lynch"), 4800 Deer Lake Drive East, 3rd Floor, Jacksonville, Florida
32246-6484, which was the record owner of 73,145.600 Class C shares (equal
to 13.38% of the Class C shares then outstanding). The Manager has been
advised that such shares were held by Nationwide and Merrill Lynch for the
benefit of their respective customers.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and three of whom (Ms. Macaskill and
Messrs. Spiro and Galli) serve as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. A management fee is payable
monthly to the Manager under the terms of the investment advisory
agreement between the Manager and the Fund and is computed on the
aggregate net assets of the Fund as of the close of business each day.
The investment advisory agreement requires the Manager, at its expense,
to provide the Fund with adequate office space, facilities and equipment,
and to provide and supervise the activities of all administrative and
clerical personnel required to provide effective corporate administration
for the Fund, including the compilation and maintenance of records with
respect to its operations, the preparation and filing of specified
reports, and composition of proxy materials and registration statements
for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's Agreement
are paid by the Fund. The advisory agreement lists examples of expenses
paid by the Fund, the major categories of which relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs and non-recurring expenses, including
litigation costs. For the Fund's fiscal years ended September 30, 1994,
1995 and 1996, the management fees paid by the Fund to the Manager were
$11,927,942, $16,152,873 and $19,638,352, respectively.
The Investment Advisory Agreement contains no expense limitation.
However, because of state regulations limiting fund expenses that
previously applied, the Manager had voluntarily undertaken that the Fund's
total expenses in any fiscal year (including the investment advisory fee
but exclusive of taxes, interest, brokerage commissions, distribution plan
payments and any extraordinary non-recurring expenses, including
litigation) would not exceed the most stringent state regulatory
limitation applicable to the Fund. Due to changes in federal securities
laws, such state regulations no longer apply and the Manager's undertaking
is therefore inapplicable and has been withdrawn. During the Fund's last
fiscal year, the Fund's expenses did not exceed the most stringent state
regulatory limit and the voluntary undertaking was not invoked. The
Fund's shareholders have been asked to approve a proposed investment
advisory agreement that would include the Manager's undertaking as part
of its management fee rate. This Statement of Additional Information will
not be supplemented if the proposed agreement is approved, because the fee
paid by the Fund would not change.
The Agreement provides that in the absence of willful misfeasance,
bad faith, gross negligence in the performance of its duties, or reckless
disregard for its obligations and duties thereunder, the Manager is not
liable for any loss sustained by reason of good faith errors or omissions
in connection with any matters to which the Agreement relates. The
Agreement permits the Manager to act as investment adviser for any other
person, firm or corporation and to use the name "Oppenheimer" in
connection with other investment companies for which it may act as
investment adviser or general distributor. If the Manager shall no longer
act as investment adviser to the Fund, the right of the Fund to use the
name "Oppenheimer" as part of its name may be withdrawn.
- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's Class A, Class B and Class C
shares but is not obligated to sell a specific number of shares. Expenses
normally attributable to sales, (excluding payments under the Distribution
and Service Plans but including advertising and the cost of printing and
mailing prospectuses, other than those furnished to existing
shareholders), are borne by the Distributor. During the Fund's fiscal
years ended September 30, 1994, 1995 and 1996, the aggregate sales charges
on sales of the Fund's Class A shares were $8,458,588, $6,476,502 and
$5,830,983, respectively, of which the Distributor and an affiliated
broker-dealer retained in the aggregate $2,717,037, $1,984,299 and
$1,861,170, in those respective years. During the Fund's fiscal year
ended September 30, 1996, the contingent deferred sales charges collected
on the Fund's Class B shares totaled $743,491, all of which the
Distributor retained. During the same period, Class C shares contingent
deferred sales charges collected totaled $6,445, all of which was retained
by the Distributor. For additional information about distribution of the
Fund's shares and the payments made by the Fund to the Distributor in
connection with such activities, please refer to "Distribution and Service
Plans," below.
- The Transfer Agent. OppenheimerFunds Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund
as established by its Board of Trustees. Purchases of securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid
and asked price.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would have charged if a good faith
determination is made by the Manager that the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, and the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the Manager's
portfolio managers. In certain instances, portfolio managers may directly
place trades and allocate brokerage, also subject to the provisions of the
advisory agreement and the procedures and rules described above. In
either case, brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those for which
an exchange is the primary market are generally done with principals or
market makers. Brokerage commissions are paid primarily for effecting
transactions in listed securities or for certain fixed-income agency
transactions in the secondary market, and are otherwise paid only if it
appears likely that a better price or execution can be obtained. When the
Fund engages in an option transaction, ordinarily the same broker will be
used for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders
to purchase or sell the same security by more than one of the accounts
managed by the Manager or its affiliates are combined. The transactions
effected pursuant to such combined orders are averaged as to price and
allocated in accordance with the purchase or sale orders actually placed
for each account. Option commissions may be relatively higher than those
which would apply to direct purchases and sales of portfolio securities.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions. The Board has also
permitted the Manager to use stated commissions on secondary fixed-income
agency trades to obtain research where the broker has represented to the
Manager that: (i) the trade is not from or for the broker's own
inventory, (ii) the trade was executed by the broker on an agency basis
at the stated commission, and (iii) the trade is not a riskless principal
transaction.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
During the Fund's fiscal years ended September 30, 1994, 1995 and
1996, total brokerage commissions paid by the Fund (not including spreads
or concessions on principal transactions on a net trade basis) were
$7,714,396, $10,853,162 and $13,381,857, respectively. During the fiscal
year ended September 30, 1996, $10,127,169 was paid to brokers as
commissions in return for research services; the aggregate dollar amount
of those transactions was $3,411,541,434. The transactions giving rise
to those commissions were allocated in accordance with the Manager's
internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time to
time the "average annual total return," "cumulative total return,"
"average annual total return at net asset value" and "total return at net
asset value" of an investment in a class of shares of the Fund may be
advertised. An explanation of how these total returns are calculated for
each class and the components of those calculations is set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each advertised class of shares of the
Fund for the 1, 5, and 10-year periods (or the life of the class, if less)
ending as of the most recently-ended calendar quarter prior to the
publication of the advertisement. This enables an investor to compare the
Fund's performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of each class
of shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to the
particular class.
- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return, but it does not average the
rate of return on an annual basis. Cumulative total return is determined
as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class B shares, the payment of the
applicable contingent deferred sales charge (5.0% for the first year, 4.0%
for the second year, 3.0% for the third and fourth years, 2.0% in the
fifth year, 1.0% in the sixth year and none thereafter) is applied to the
investment result for the period shown (unless the total return is shown
at net asset value, as described below). For Class C shares, the payment
of the 1.0% contingent deferred sales charge is applied to the investment
result for the one-year period (or less). Total returns also assume that
all dividends and capital gains distributions during the period are
reinvested to buy additional shares at net asset value per share, and that
the investment is redeemed at the end of the period. The "average annual
total returns" on an investment in Class A shares of the Fund for the one,
five and ten year periods ended September 30, 1996 were 6.49%, 9.33% and
12.26%, respectively. During a portion of the periods for which total
returns are shown for Class A shares, the Fund's maximum initial sales
charge rate was higher. As a result, performance of an actual investment
during those periods would be less than the results shown. The cumulative
"total return" on Class A shares for the ten year period ended September
30, 1996 was 217.88%. The average annual total return on an investment
in Class B shares of the Fund for the 12 months ended September 30, 1996
was 7.07%. The cumulative total return on Class B shares for the period
from August 17, 1993 (the commencement of the offering of the shares)
through September 30, 1996 was 46.62%. The cumulative total return at net
asset value of the Fund's Class C shares for the period from October 2,
1995 to September 30, 1996 was 11.34%.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B, or Class
C shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions. The cumulative total return
at net asset value of the Fund's Class A shares for the ten-year period
ended September 30, 1996 was 237.27%. The average annual total returns
at net asset value for the one, five and ten-year periods ended September
30, 1996, for Class A shares were 12.98%, 10.63% and 12.93%, respectively.
The cumulative total return at net asset value on the Fund's Class B
shares for the fiscal period from August 17, 1993 through September 30,
1996 was 48.62%. The cumulative total return at net asset value of the
Fund's Class C shares for the period from October 2, 1995 to September 30,
1996 was 12.34%.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B or Class C shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent mutual fund
monitoring service. Lipper monitors the performance of regulated
investment companies, including the Fund, and ranks their performance for
various periods based on categories relating to investment objectives.
The performance of the Fund's classes is ranked against (i) all other
funds, (ii) all other "global" funds and (iii) all other "global" funds
in a specific size category. The Lipper performance rankings are based
on total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or taxes
into consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B and Class C shares by Morningstar,
Inc., an independent mutual fund monitoring service. Morningstar ranks
mutual funds in broad investment categories: domestic stock funds,
international stock funds, taxable bond funds and municipal bond funds,
based on risk-adjusted total investment returns. The Fund is ranked among
international stock funds. Investment return measures a fund's or class'
one, three, five and ten-year average annual total returns (depending on
the inception of the fund or class) in excess of 90-day U.S. Treasury bill
returns after considering the fund's sales charges and expenses. Risk
measures a fund's or class' performance below 90-day U.S. Treasury bill
returns. Risk and investment return are combined to produce star rankings
reflecting performance relative to the average fund in the fund's
category. Five stars is the "highest" ranking (top 10%), four stars is
"above average" (next 22.5%), three stars is "average" (next 35%), two
stars is "below average" (next 22.5%) and one star is "lowest" (bottom
10%). The current star ranking is the fund's or class' 3-year ranking or
its combined 3- and 5-year ranking (weighted 60%/40%, respectively, or its
combined 3-, 5- and 10-year ranking (weighted 40%, 30% and 30%,
respectively), depending on the inception of the fund or class. Rankings
are subject to change monthly.
The Fund may also compare its performance to that of other funds in
its Morningstar Category. In addition to its star ranking, Morningstar
also categorizes and compares a fund's 3-year performance based on
Morningstar's classification of the fund's investments and investment
style, rather than how a fund defines its investment objective.
Morningstar's four broad categories (domestic equity, international
equity, municipal bond and taxable bond) are each further subdivided into
categories based on types of investments and investment styles. Those
comparisons by Morningstar are based on the same risk and return
measurements as its star rankings but do not consider the effect of sales
charges.
From time to time, the Fund may include in its advertisements and
sales literature performance information about the Fund cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources, including Lipper.
The total return on an investment in the Fund's Class A, Class B or
Class C shares may be compared with performance for the same period of the
Morgan Stanley World Index, an unmanaged index of issuers on the stock
exchanges of 20 foreign countries and the United States and widely
recognized as a measure of global stock market performance. The
performance of such Index includes a factor for the reinvestment of
dividends but does not reflect expenses or taxes. The performance of the
Fund's Class A, Class B or Class C shares may also be compared in
publications to (i) the performance of various market indices or to other
investments for which reliable performance data is available, and (ii) to
averages, performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B or Class C shares. However,
when comparing total return of an investment in Class A, Class B or Class
C shares of the Fund, a number of factors should be considered before
using such information as a basis for comparison with other investments.
For example, investors may also wish to compare the Fund's Class A, Class
B or Class C return to the returns on fixed income investments available
from banks and thrift institutions, such as certificates of deposit,
ordinary interest-paying checking and savings accounts, and other forms
of fixed or variable time deposits, and various other instruments such as
Treasury bills. However, the Fund's returns and share price are not
guaranteed by the FDIC or any other agency and will fluctuate daily, while
bank depository obligations may be insured by the FDIC and may provide
fixed rates of return, and Treasury bills are guaranteed as to principal
and interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance
rankings of the Oppenheimer funds themselves. Those ratings or rankings
of shareholder/investor services by third parties may compare the
Oppenheimer funds' services to those of other mutual fund families
selected by the rating or ranking services and may be based upon the
opinions of the rating or ranking service itself, based on its research
or judgment, or based upon surveys of investors, brokers, shareholders or
others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act, pursuant to which the Fund
makes payments to the Distributor in connection with the distribution
and/or servicing of the shares of that class, as described in the
Prospectus. Each Plan has been approved by a vote of (i) the Board of
Trustees of the Fund, including a majority of the Independent Trustees,
cast in person at a meeting called for the purpose of voting on that Plan,
and (ii) the holders of a "majority" (as defined in the Investment Company
Act) of the shares of each class. For the Distribution and Service Plans
for Class B and Class C shares, that vote was cast by the Manager as the
sole initial holder of Class B and Class C shares of the Fund.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund) to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform, at
no cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of payments they make to
Recipients from their own resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Any 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. None of the Plans may be amended
to increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund is required by a
Securities and Exchange Commission rule to obtain the approval of Class
B as well as Class A shareholder for a proposed amendment to the Class A
Plan that would materially increase the amount to be paid by Class A
shares under the Class A Plan. Such approval must be by a "majority" of
the Class A and Class B shares (as defined in the Investment Company Act),
voting separately by class. All material amendments must be approved by
the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. Those reports, including the allocations on
which they are based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if the
final decision on selection or nomination is approved by a majority of the
Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers, did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fees at the maximum rate and set no minimum amount of the assets.
For the fiscal year ended September 30, 1996, payments under the Plan
for Class A shares totaled $4,149,778, all of which was paid by the
Distributor to Recipients, including $252,591 paid to MML Investor
Services, Inc., an affiliate of the Distributor. Any unreimbursed
expenses incurred by the Distributor with respect to Class A shares for
any fiscal year may not be recovered in subsequent years. Payments
received by the Distributor under the Plan for Class A shares will not be
used to pay any interest expense, carrying charge, or other financial
costs, or allocation of overhead by the Distributor.
The Class B Plan and the Class C Plan allow the service fee payment
to be paid by the Distributor to Recipients in advance for the first year
such shares are outstanding, and thereafter on a quarterly basis, as
described in the Prospectus. The advance payment is based on the net
asset value of Class B and Class C shares sold. An exchange of shares
does not entitle the Recipient to an advance service fee payment. In the
event Class B or Class C shares are redeemed during the first year that
the shares are outstanding, the Recipient will be obligated to repay a pro
rata portion of the advance payment for those shares to the Distributor.
Payments made under the Class B Plan during the fiscal year ended
September 30, 1996, totaled $4,373,990, of which $3,701,675 was retained
by the Distributor and $53,520 was paid to a dealer affiliated with the
Distributor. Payments made under the Class C Plan during the fiscal year
ended September 30, 1996, totaled $81,790, of which $75,623 was retained
by the Distributor.
Although the Class B and Class C Plans permit the Distributor to
retain both the asset-based sales charges and the service fees on such
shares, or to pay Recipients the service fee on a quarterly basis, without
payment in advance, the Distributor presently intends to pay the service
fee to Recipients in the manner described above. A minimum holding period
may be established from time to time under the Class B Plan and the Class
C Plan by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B Plan and the Class C Plan are
subject to the limitations imposed by the Conduct Rules of the National
Association of Securities Dealers, Inc., on payments of asset-based sales
charges and service fees.
Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end sales
load and at the same time permit the Distributor to compensate brokers and
dealers in connection with the sale of Class B and Class C shares of the
Fund. The Distributor's actual distribution expenses for any given year
may exceed the aggregate of payments received pursuant to the Class B Plan
and Class C Plan and from contingent deferred sales charges.
The Class C Plan provides for the distributor to be compensated at
a flat rate, whether the Distributor's distribution expenses are more or
less than the amounts paid by the Fund during that period. Payments under
the Class C and Class B Plans are made in recognition that the Distributor
(i) pays sales commissions to authorized brokers and dealers at the time
of sale and pays service fees as described in the Prospectus, (ii) may
finance such commissions and/or the advance of the service fee payment to
Recipients under those Plans, or may provide such financing from its own
resources, or from an affiliate, (iii) employs personnel to support
distribution of shares, and (iv) may bear the costs of sales literature,
advertising and prospectuses (other than those furnished to current
shareholders), state "blue sky" registration fees and certain other
distribution expenses. The Fund's Board of Trustees has also proposed that
the Class B Plan provide for the Distributor to be compensated at a flat
rate, whether the Distributor's distribution expenses are more or less
than the amounts paid by the Fund during that period. The Statement of
Additional Information will not be updated if shareholders approve such
a new Class B Plan.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares. The
availability of three classes of shares permits the individual investor
to choose the method of purchasing shares that is more beneficial to the
investor depending on the amount of the purchase, the length of time the
investor expects to hold shares and other relevant circumstances.
Investors should understand that the purpose and function of the deferred
sales charge and asset-based sales charge with respect to Class B and
Class C shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to
receive compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other. The
Distributor normally will not accept any order for $500,000 or $1 million
or more of Class B or Class C shares, respectively, on behalf of a single
investor (not including dealer "street name" or omnibus accounts) because
generally it will be more advantageous for that investor to purchase Class
A shares of the Fund instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on such shares will be
reduced by incremental expenses borne solely by those classes, including
the asset-based sales charge to which both classes of shares are subject.
The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling from
the Internal Revenue Service, or an opinion of counsel or tax adviser, to
the effect that the conversion of Class B shares does not constitute a
taxable event for the holder under Federal income tax law. If such a
revenue ruling or opinion is no longer available, the automatic conversion
feature may be suspended, in which event no further conversions of Class
B shares would occur while such suspension remained in effect. Although
Class B shares could then be exchanged for Class A shares on the basis of
relative net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event for
the holder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes
two types of expenses. General expenses that do not pertain specifically
to either class are allocated pro rata to the shares of each class, based
on the percentage of the net assets of such class to the Fund's total
assets, and then equally to each outstanding share within a given class.
Such general expenses include (a) management fees, (b) legal, bookkeeping
and audit fees, (c) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (d) fees to Independent Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (a) Distribution Plan
fees, (b) incremental transfer and shareholder servicing agent fees and
expenses, (c) registration fees and (d) shareholder meeting expenses, to
the extent that such expenses pertain to a specific class rather than to
the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange (the
"Exchange") on each day that the Exchange is open, by dividing the value
of the Fund's net assets attributable to that class by the number of
shares of that class that are outstanding. The Exchange normally closes
at 4:00 P.M. New York time, but may close earlier on some days (for
example, in case of weather emergencies or on days falling before a
holiday). The Exchange's most recent annual holiday schedule (which is
subject to change) states that it will close on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It may also close on other days. The
Fund may invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges or in foreign over-the counter
markets that may trade on Saturdays or customary U.S. business holidays
on which the Exchange is closed. Because the Fund's net asset value will
not be calculated on those days, the Fund's net asset values per share of
Class A, Class B and Class C shares of the Fund may be significantly
affected at times when shareholders cannot purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a U.S. securities exchange or on the NASDAQ for which
last sale information regularly reported are valued at the last reported
sale prices on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sale prices of the
preceding trading day, or closing bid prices that day); (ii) securities
traded on a foreign securities exchange are valued generally at the last
sales price available to the pricing service approved by the Fund's Board
of Trustees or to the Manager as reported by the principal exchange on
which the security is traded, or at the mean between "bid" and "asked"
prices obtained from the principal exchange or two active market makers
in the security on the basis of reasonable inquiry; (iii) long-term debt
securities having a remaining maturity in excess of 60 days are valued
based on the mean between the "bid" and "asked" prices determined by a
portfolio pricing service approved by the Fund's Board of Trustees or
obtained by the Manager from two active market makers in the security on
the basis of reasonable inquiry; (iv) debt instruments having a maturity
of more than 397 days when issued, and non-money market type instruments
having a maturity of 397 days or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between "bid" and
"asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained by the Manager from two active market makers
in the security on the basis of reasonable inquiry; (v) money market debt
securities that had a maturity of less than 397 days when issued that have
a remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vi) securities
(including restricted securities) not having readily-available market
quotations are valued at fair value determined under the Board's
procedures. If the Manager is unable to locate two market makers willing
to give quotes (see (ii), (iii) and (iv) above), the security may be
priced at the mean between the "bid" and "ask" prices provided by a single
active market maker (which in certain cases may be the bid price if no
asked price is available).
In the case of U.S. Government Securities, mortgage-backed
securities, foreign securities and corporate bonds, when last sale
information is not generally available, such pricing procedures may
include "matrix" comparisons to the prices for comparable instruments on
the basis of quality, yield, maturity and other special factors involved.
The Manager may use pricing services approved by the Board of Trustees to
price U.S. Government Securities, mortgage-backed securities, foreign
government securities and corporate bonds for which last sale information
is not generally available. The Manager will monitor the accuracy of such
pricing services which may include comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the NYSE.
Events affecting the values of foreign securities traded in securities
markets that occur between the time their prices are determined and the
close of the NYSE will not be reflected in the Fund's calculation of net
asset value unless the Board of Trustees or the Manager, under procedures
established by the Board of Trustees, determines that the particular event
is likely to effect a material change in the value of such security.
Foreign currency, including forward contracts, will be valued at the
closing price in the London foreign exchange market that day as provided
by a reliable bank, dealer or pricing service. The values of securities
denominated in foreign currency will be converted to U.S. dollars at the
closing price in the London foreign exchange market that day as provided
by a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on the
principal exchange on which they are traded, or on NASDAQ, as applicable,
as determined by a pricing service approved by the Board of Trustees or
by the Manager. If there were no sales that day, value shall be the last
sale price on the preceding trading day if it is within the spread of the
closing bid and asked prices on the principal exchange or on NASDAQ on the
valuation date, or, if not, value shall be the closing bid price on the
principal exchange or on NASDAQ on the valuation date. If the put, call
or future is not traded on an exchange or on NASDAQ, it shall be valued
at the mean between bid and asked prices obtained by the Manager from two
active market makers (which in certain cases may be the bid price if no
asked price is available).
When the Fund writes an option, an amount equal to the premium
received is included in the Fund's Statement of Assets and Liabilities as
an asset, and an equivalent credit is included in the liability section.
The credit is adjusted ("marked-to-market") to reflect the current market
value of the call or put. In determining the Fund's gain on investments,
if a call written by the Fund is exercised, the proceeds are increased by
the premium received. If a call or put written by the Fund expires, the
Fund has a gain in the amount of the premium; if the Fund enters into a
closing purchase transaction, it will have a gain or loss depending on
whether the premium received was more or less than the cost of the
closing transaction. If the Fund exercises a put it holds, the amount the
Fund receives on its sale of the underlying investment is reduced by the
amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
("ACH") transfer to buy shares. Dividends will begin to accrue on shares
purchased by the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for the purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at
4:00 P.M., but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the shares
will be purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received by the
Fund 3 days after the transfers are initiated. The Distributor and the
Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
reduction in expenses realized by the Distributor, dealers and brokers
making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, aunts, uncles, nieces and nephews, sons- and
daughters-in-law, a sibling's spouse and a spouse's siblings.
- The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer International Growth Fund
Oppenheimer Developing Markets Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Disciplined Value Fund
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Rochester Fund Municipals
Bond Fund Series - The Bond Fund for Growth
Rochester Portfolio Series - Limited Term New York Municipal Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge). Current
shareholders of Rochester Fund Municipals, The Bond Fund for Growth or
Limited Term New York Municipal Fund (collectively referred to as the
"Rochester Funds") may exchange their shares for the same class of shares
in any of the Oppenheimer funds listed above. However, no exchange of
shares of any Oppenheimer fund for shares of any Rochester Funds is
currently permitted.
Letters of Intent. A Letter of Intent (referred to as a "Letter") is
an investor's statement in writing to the Distributor of the intention to
purchase Class A shares or Class A and Class B shares of the Fund (and
other Oppenheimer funds) during a 13-month period (the "Letter of Intent
period"), which may, at the investor's request, include purchases made up
to 90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases of shares
which, when added to the investor's holdings of shares of those funds,
will equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to
count the Class A and Class B shares purchased under the Letter to obtain
the reduced sales charge rate on purchases of Class A shares of the Fund
(and other Oppenheimer funds) that applies under the Right of Accumulation
to current purchases of Class A shares. Each purchase of Class A shares
under the Letter will be made at the public offering price applicable to
a single lump-sum purchase of shares in the amount intended to be
purchased as described in the Prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchases
amount under the Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commission paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual purchases. If total eligible purchases during the
Letter of Intent period exceed the intended purchase amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
-- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended purchase amount specified in the Letter shall be held in escrow
by the Transfer Agent. For example, if the intended purchase amount is
$50,000, the escrow shall be shares valued in the amount of $2,500
(computed at the public offering price adjusted for a $50,000 purchase).
Any dividends and capital gains distributions on the escrowed shares will
be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a) Class
A shares sold with a front-end sales charge or subject to a Class A
contingent deferred sales charge, (b) Class B shares acquired subject to
a contingent deferred sales charge, and (c) Class A or B shares acquired
in exchange for either (i) Class A shares of one of the other Oppenheimer
funds that were acquired subject to a Class A initial or contingent
deferred sales charge or (ii) Class B shares of one of the other
Oppenheimer funds that were acquired subject to a contingent deferred
sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in
the section of the Prospectus entitled "How to Exchange Shares," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b)) plans, and
SIMPLE plans) for employees of a corporation or a sole proprietorship,
members and employees of a partnership or association or other organized
group of persons (the members of which may include all members of the
group participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial institution
designated by the group.
Retirement Plans. In describing certain types of employee benefit
plans that may purchase Class A shares without being subject to the Class
A contingent deferred sales charge, the term "employee benefit plan" means
any plan or arrangement, whether or not "qualified" under the Internal
Revenue Code, including, medical savings accounts, payroll deduction plans
or similar plans in which Class A shares are purchased by a fiduciary or
other person for the account of participants who are employees of a single
employer or of affiliated employers, if the Fund account is registered in
the name of the fiduciary or other person for the benefit of participants
in the plan.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans, and
SIMPLE plans) for employees of a corporation or a sole proprietorship,
members and employees of a partnership or association or other organized
group of persons (the members of which may include other groups), if the
group has made special arrangements with the Distributor and all members
of the group participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial institution
designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Involuntary Redemptions. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if
the aggregate net asset value of those shares is less than $500 or such
lesser amount as the Board may fix. The Board of Trustees will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the Shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.
- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, the Board
of Trustees of the Fund may determine that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
of a redemption order wholly or partly in cash. In that case the Fund may
pay the redemption proceeds in whole or in part by a distribution "in
kind" of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value its portfolio securities described above under the
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of (i) Class A shares
that you purchased subject to an initial sales charge, or the Class A
contingent deferred sales charge when you redeemed them or (ii) Class B
shares that were subject to the Class B contingent deferred sales charge
when you redeemed them, without sales charge. This privilege does not
apply to Class C shares. The reinvestment may be made without sales
charge only in Class A shares of the Fund or any of the other Oppenheimer
funds into which shares of the Fund are exchangeable as described below,
at the net asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Distributor for that
privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a capital
loss on the redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the
Internal Revenue Code, if the redemption proceeds of Fund shares on which
a sales charge was paid are reinvested in shares of the Fund or another
of the Oppenheimer funds within 90 days of payment of the sales charge,
the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the
loss or increase the gain recognized from the redemption. However, in
that case the sales charge would be added to the basis of the shares
acquired by the reinvestment of the redemption proceeds. The Fund may
amend, suspend or cease offering this reinvestment privilege at any time
as to shares redeemed after the date of such amendment, suspension or
cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of transfer to
the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B or the Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans,
or pension or profit-sharing plans should be addressed to "Trustee,
Oppenheimer funds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons maintaining a plan account
in their own name) in OppenheimerFunds-sponsored prototype pension,
profit-sharing plans or 401(k) plans may not directly redeem or exchange
shares held for their accounts under those plans. The employer or plan
administrator must sign the request. Distributions from pension and
profit sharing plans are subject to special requirements under the
Internal Revenue Code and certain documents (available from the Transfer
Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P (available
from the Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless the
shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Fund, the Manager, the Distributor, the Trustee and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any tax penalties assessed in connection with a
distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers on behalf of their customers. The
shareholder should contact the broker or dealer to arrange this type of
redemption. The repurchase price per share will be the net asset value
next computed after the Distributor receives the order placed by the
dealer or broker, except that if the Distributor receives a repurchase
order from a dealer or broker after the close of The New York Stock
Exchange on a regular business day, it will be processed at that day's net
asset value if the order was received by the dealer or broker from its
customers prior to the time the Exchange closes (normally that is 4:00
P.M., but may be earlier some days) and the order was transmitted to and
received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Ordinarily, for accounts redeemed by a broker-
dealer under this procedure, payment will be made within three business
days after the shares have been redeemed upon the Distributor's receipt
of the required redemption documents in proper form, with the signature(s)
of the registered owners guaranteed on the redemption document as
described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans, because of the imposition of the contingent deferred
sales charge on such withdrawals (except where the Class B or the Class
C contingent deferred sales charge is waived as described in the
Prospectus in "Waivers of Class B and Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated
below and in the provisions of the OppenheimerFunds Application relating
to such Plans, as well as the Prospectus. These provisions may be amended
from time to time by the Fund and/or the Distributor. When adopted, such
amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment. It may not be
desirable to purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases when
made. Accordingly, a shareholder normally may not maintain an Automatic
Withdrawal Plan while simultaneously making regular purchases of Class A
shares.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who
executed the Plan authorization and application submitted to the Transfer
Agent. Neither the Fund nor the Transfer Agent shall incur any liability
to the Planholder for any action taken or omitted by the Transfer Agent
in good faith to administer the Plan. Certificates will not be issued for
shares of the Fund purchased for and held under the Plan, but the Transfer
Agent will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or ACH transfer payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to
the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use Class A shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the Class A shares in
certificated form. Share certificates are not issued for Class B shares
or Class C shares. Upon written request from the Planholder, the Transfer
Agent will determine the number of Class A shares for which a certificate
may be issued without causing the withdrawal checks to stop because of
exhaustion of uncertificated shares needed to continue payments. However,
should such uncertificated shares become exhausted, Plan withdrawals will
terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent
to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. Shares of
the Oppenheimer funds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All Oppenheimer funds offer
Class A, Class B and Class C shares, except Oppenheimer Money Market Fund,
Inc., Centennial Money Market Trust, Centennial Tax-Exempt Trust,
Centennial Government Trust, Centennial New York Tax-Exempt Trust,
Centennial California Tax-Exempt Trust, Centennial America Fund, L.P., and
Daily Cash Accumulation Fund, Inc., which only offer Class A shares and
Oppenheimer Main Street California Municipal Fund, which only offers Class
A and Class B shares (Class B and Class C shares of Oppenheimer Cash
Reserves are generally available only by exchange from the same class of
shares of other Oppenheimer funds or through OppenheimerFunds sponsored
401(k) plans). A current list showing which funds offer which classes can
be obtained by calling the Distributor at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund
purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge). However, shares of
Oppenheimer Money Market Fund, Inc., purchased with the redemption
proceeds of shares of other mutual funds (other than funds managed by the
Manager or its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales
charge, whichever is applicable. To qualify for this privilege, the
investor or the investor's dealer must notify the Distributor of
eligibility for this privilege at the time the shares of Oppenheimer Money
Market Fund, Inc., are purchased, and, if requested, must supply proof of
entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds except Oppenheimer
Cash Reserves or from any unit investment trust for which reinvestment
arrangements have been made with the Distributor may be exchanged at net
asset value for shares of any of the Oppenheimer funds. No contingent
deferred sales charge is imposed on exchanges of shares of any class
purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares. The Class B contingent
deferred sales charge is imposed on Class B shares acquired by exchange
if they are redeemed within 6 years of the initial purchase of the
exchanged Class B shares. The Class C contingent deferred sales charge
is imposed on Class C shares acquired by exchange if they are redeemed
within 12 months of the initial purchase of the exchanged Class C shares.
When Class B shares or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B or the Class C contingent
deferred sales charge will be followed in determining the order in which
the shares are exchanged. Shareholders should take into account the
effect of any exchange on the applicability and rate of any contingent
deferred sales charge that might be imposed in the subsequent redemption
of remaining shares. Shareholders owning shares of more than one class
must specify whether they intend to exchange Class A, Class B or Class C
shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account.
The Fund may accept requests for exchanges of up to 50 accounts per day
from representatives of authorized dealers that qualify for this
privilege. In connection with any exchange request, the number of shares
exchanged may be less than the number requested if the exchange or the
number requested would include shares subject to a restriction cited in
the Prospectus or this Statement of Additional Information or would
include shares covered by a share certificate that is not tendered with
the request. In those cases, only the shares available for exchange
without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of,
the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans, and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Fund's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the required
levels and to pay the excise tax on the undistributed amounts. That would
reduce the amount of income or capital gains available for
distribution to shareholders.
If the Fund has more than 50% of its total assets invested in foreign
securities at the end of its fiscal year, it may elect the application of
Section 853 of the Internal Revenue Code to permit shareholders to take
a credit (or, at their option, a deduction) for foreign taxes paid by the
Fund. Under Section 853, shareholders would be entitled to treat the
foreign taxes withheld from interest and dividends paid to the Fund from
its foreign investments as a credit on their federal income taxes. As an
alternative, shareholders could, if to their advantage, treat the foreign
tax withheld as a deduction from gross income in computing taxable income
rather than as a tax credit. In substance, the Fund's election would
enable shareholders to benefit from the same foreign tax credit or
deduction that would be received if they had been the record owners of the
Fund's foreign securities and had paid foreign taxes on the income
received.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified
during its last fiscal year, and intends to qualify in current and future
years, but reserves the right not to do so. The Internal Revenue Code
contains a number of complex tests relating to such qualification. For
example, if the Fund derives 30% or more of its gross income from the sale
of securities held less than three months, it may fail to qualify (see
"Tax Aspects of Covered Calls and Hedging Instruments," above). If it did
not so qualify, the Fund would be treated for tax purposes as an ordinary
corporation and receive no tax deduction for payments made to
shareholders.
The amount of a class's distributions may 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, as
described in "Alternative Sales Arrangements -- Class A, Class B and
Class C Shares," above. Dividends are calculated in the same manner, at
the same time and on the same day for shares of each class. However,
dividends on Class B and Class C shares are expected to be lower than
dividends on Class A shares as a result of the asset-based sales charges
on Class B and Class C shares, and Class B and Class C dividends will also
differ in amount as a consequence of any difference in net asset value
between the classes.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent to enable the investor to earn a return on otherwise
idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
the same class of any of the other Oppenheimer funds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. Class B
and Class C shareholders should be aware that as of the date of this
Statement of Additional Information, not all of the Oppenheimer funds
offer Class B and/or Class C shares. To elect this option, a shareholder
must notify the Transfer Agent in writing and either have an existing
account in the fund selected for reinvestment or must obtain a prospectus
for that fund and an application from the Distributor to establish an
account. The investment will be made at the net asset value per share in
effect at the close of business on the payable date of the dividend or
distribution. Dividends and/or distributions from shares of other
Oppenheimer funds may be invested in shares of this Fund on the same
basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates. The Fund's cash
balances with the Custodian in excess of $100,000 are not protected by
Federal Deposit insurance. Such uninsured balances at times may be
substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager
and its affiliates.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of Oppenheimer Global Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Global Fund as of September 30, 1996, 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 five year
period then ended. 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 September 30, 1996, 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 Global Fund as of September 30, 1996, 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 five year period then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
- --------------------------
KPMG Peat Marwick LLP
Denver, Colorado
October 21, 1996
<PAGE>
STATEMENT OF INVESTMENTS September 30, 1996
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
==========================================================
============
<S> <C> <C>
COMMON STOCKS--97.7%
- --------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--3.3%
- --------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--0.7% Minerals Technologies, Inc. 585,000 $ 21,864,375
- --------------------------------------------------------------------------------------------------------------------------------
GOLD--1.2% Newmont Mining Corp. 750,000 35,437,500
- --------------------------------------------------------------------------------------------------------------------------------
METALS--1.4% Cia Vale Do Rio Doce, Preference 692,000 13,724,188
-----------------------------------------------------------------------------------------------
Cia de Minas Buenaventura SA, Sponsored ADR(1)(2) 285,000 5,486,250
-----------------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc., Cl. B 757,500 23,671,875
-------------
42,882,313
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--12.9%
- --------------------------------------------------------------------------------------------------------------------------------
AUTOS & HOUSING--1.7% Autobacs Seven Co. Ltd. 140,000 12,356,452
-----------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones, SA 3,314,458 9,679,456
-----------------------------------------------------------------------------------------------
Porsche AG, Preference(2) 44,100 30,156,268
-------------
52,192,176
- --------------------------------------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--0.4% Resorts World Berhad 2,125,000
12,038,584
- --------------------------------------------------------------------------------------------------------------------------------
MEDIA--1.1% News Corp. Ltd., ADR(1) 1,000,000 20,875,000
-----------------------------------------------------------------------------------------------
Reuters Holdings PLC, Series B, ADR 165,500 11,460,875
-------------
32,335,875
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--0.6% PT Matahari Putra Prima 3,499,750 3,806,534
-----------------------------------------------------------------------------------------------
Sonae Investimentos 489,000 14,187,161
-------------
17,993,695
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--9.1% adidas AG(1) 600,000 54,679,023
-----------------------------------------------------------------------------------------------
Benetton Group SpA(1) 1,602,100 18,051,977
-----------------------------------------------------------------------------------------------
Cifra SA de CV, Unsponsored ADR, B Shares(1)(2) 7,500,000 10,807,500
-----------------------------------------------------------------------------------------------
Circuit City Stores, Inc. 466,300 16,845,087
-----------------------------------------------------------------------------------------------
FamilyMart Co. 385,000 17,249,380
-----------------------------------------------------------------------------------------------
Giordano International Ltd. 14,160,000 12,451,542
-----------------------------------------------------------------------------------------------
Jusco Co. 600,000 18,262,624
-----------------------------------------------------------------------------------------------
Reebok International Ltd. 900,000 31,275,000
-----------------------------------------------------------------------------------------------
Wella AG(1) 120,000 72,459,540
-----------------------------------------------------------------------------------------------
Wolford AG(1) 105,200 26,863,399
-------------
278,945,072
- --------------------------------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--17.5%
- --------------------------------------------------------------------------------------------------------------------------------
BEVERAGES--2.4% Allied Domecq PLC 1,999,800 14,006,654
-----------------------------------------------------------------------------------------------
Fomento Economico Mexicano SA, Cl. B,
Sponsored ADR(1)(3) 2,600,000 7,972,121
-----------------------------------------------------------------------------------------------
Hellenic Bottling Co., SA 230,000 7,826,698
-----------------------------------------------------------------------------------------------
Panamerican Beverages, Inc., Cl. A 600,000 24,675,000
-----------------------------------------------------------------------------------------------
South African Breweries Ltd. 681,300 18,171,913
-------------
72,652,386
</TABLE>
<PAGE
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/DRUGS--9.8% Amgen, Inc.(2) 835,000 $ 52,709,375
---------------------------------------------------------------------------------------------
Astra AB Free, Series A 397,800 16,798,226
---------------------------------------------------------------------------------------------
BioChem Pharma, Inc.(2) 700,000 28,087,500
---------------------------------------------------------------------------------------------
Ciba-Geigy AG 20,000 25,591,321
---------------------------------------------------------------------------------------------
Eisai Co. Ltd. 800,000 15,227,832
---------------------------------------------------------------------------------------------
Genzyme Corp.(1)(2) 1,354,270 34,533,885
---------------------------------------------------------------------------------------------
Glaxo Wellcome PLC, Sponsored ADR 2,000,000 62,250,000
---------------------------------------------------------------------------------------------
Johnson & Johnson 500,000 25,625,000
---------------------------------------------------------------------------------------------
K-V Pharmaceutical Co., Cl. A(2)(4) 376,800 4,474,500
---------------------------------------------------------------------------------------------
K-V Pharmaceutical Co., Cl. B(2)(4) 264,900 3,112,575
---------------------------------------------------------------------------------------------
Sanofi SA 400,000 32,798,250
-------------
301,208,464
- ------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES &
SERVICES--4.4% Clinica y Maternidad Suizo Argentino(2)(4)(5) 1,800 15,989,454
---------------------------------------------------------------------------------------------
Gehe AG 280,000 18,724,615
---------------------------------------------------------------------------------------------
Quintiles Transnational Corp.(2)(5) 486,392 32,065,393
---------------------------------------------------------------------------------------------
Rhoen-Klinikum AG, Preference, Non-vtg. 144,688 16,126,352
---------------------------------------------------------------------------------------------
United States Surgical Corp. 1,200,000 51,000,000
-------------
133,905,814
- ------------------------------------------------------------------------------------------------------------------------------
TOBACCO--0.9% B.A.T. Industries PLC 3,005,000 19,990,049
---------------------------------------------------------------------------------------------
Philip Morris Cos., Inc. 100,000 8,975,000
-------------
28,965,049
- ------------------------------------------------------------------------------------------------------------------------------
ENERGY--7.2%
- ------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES &
PRODUCERS--2.9% Coflexip SA, Sponsored ADR(2)(4) 681,000 14,811,750
---------------------------------------------------------------------------------------------
Global Marine, Inc.(2) 1,635,000 25,751,250
---------------------------------------------------------------------------------------------
Transocean Offshore, Inc. 501,549 30,719,876
---------------------------------------------------------------------------------------------
Western Atlas, Inc.(2) 300,700 18,718,575
-------------
90,001,451
- ------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED--4.3% British Petroleum Co. PLC, ADR(1) 189,402 23,675,250
---------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd.(2) 2,826,000 17,632,848
---------------------------------------------------------------------------------------------
Lukoil Oil Co., Sponsored ADR(1) 190,300 6,941,059
---------------------------------------------------------------------------------------------
Renaissance Energy Ltd.(2) 285,900 8,384,213
---------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 177,100 27,649,737
---------------------------------------------------------------------------------------------
Total SA, B Shares 379,627 29,899,413
---------------------------------------------------------------------------------------------
Unocal Corp. 454,000 16,344,000
-------------
130,526,520
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL--16.9%
- -----------------------------------------------------------------------------------------------------------------------------
BANKS--9.2% Banco Bradesco SA, Preference 2,354,116,632 $ 19,943,420
--------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA,
Sponsored ADR(1) 575,000 15,021,875
--------------------------------------------------------------------------------------------
Banco Latinoamericano de Exportaciones
SA, Cl. E 380,000 21,327,500
--------------------------------------------------------------------------------------------
Bank of East Asia Ltd.(1) 3,629,000 13,351,197
--------------------------------------------------------------------------------------------
Barclays PLC 2,025,561 29,767,544
--------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 300,000 24,037,500
--------------------------------------------------------------------------------------------
Citicorp 300,000 27,187,500
--------------------------------------------------------------------------------------------
HSBC Holdings PLC 2,026,155 37,598,935
--------------------------------------------------------------------------------------------
Industrial Credit & Investment Corp. of
India Ltd. (The), GDR(3) 872,800 9,709,900
--------------------------------------------------------------------------------------------
Industrial Finance Corp.(4) 4,190,099 17,144,507
--------------------------------------------------------------------------------------------
Northern Trust Corp. 300,000 19,725,000
--------------------------------------------------------------------------------------------
Philippine National Bank(2) 750,000 12,364,208
--------------------------------------------------------------------------------------------
PT Lippo Bank 2,454,000 3,805,470
--------------------------------------------------------------------------------------------
Standard Chartered Bank PLC 2,884,200 31,406,266
-------------
282,390,822
- -----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--5.6% ABN Amro Holding NV 300,000 16,639,878
--------------------------------------------------------------------------------------------
American Express Co. 400,000 18,500,000
--------------------------------------------------------------------------------------------
Cie Financiere de Paribas, Series A 500,000 32,162,745
--------------------------------------------------------------------------------------------
First NIS Regional Fund(2)(5) 1,320,000 13,860,000
--------------------------------------------------------------------------------------------
ING Groep NV 645,947 20,160,478
--------------------------------------------------------------------------------------------
MBNA Corp. 700,000 24,325,000
--------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc.(1) 200,000 13,125,000
--------------------------------------------------------------------------------------------
Societe Generale 300,000 33,189,628
-------------
171,962,729
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.1% American International Group, Inc. 200,000 20,150,000
--------------------------------------------------------------------------------------------
National Mutual Asia Ltd. 10,000,000 8,793,462
--------------------------------------------------------------------------------------------
Reinsurance Australia Corp. Ltd. 2,200,000 6,301,391
--------------------------------------------------------------------------------------------
Skandia Forsakrings AB 1,000,000 27,674,303
-------------
62,919,156
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--13.0%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.0% FORE Systems, Inc.(2) 250,000 10,343,750
--------------------------------------------------------------------------------------------
LEM Holdings SA(4) 25,000 5,803,518
--------------------------------------------------------------------------------------------
Ushio, Inc. 1,200,000 13,683,500
-------------
29,830,768
</TABLE>
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL SERVICES--6.6% Adecco SA 100,000 $ 27,521,838
--------------------------------------------------------------------------------------------
Boskalis Westminster 1,255,000 24,499,255
--------------------------------------------------------------------------------------------
Cordiant PLC(2) 10,070,000 17,632,639
--------------------------------------------------------------------------------------------
IHC Caland NV 500,000 26,330,401
--------------------------------------------------------------------------------------------
PT Citra Marga Nusaphala Persada 8,300,000 5,631,057
--------------------------------------------------------------------------------------------
Rentokil Group PLC 2,500,000 16,337,519
--------------------------------------------------------------------------------------------
VBH Vereinigter Baubeschlag Handel AG 298,100 7,383,778
--------------------------------------------------------------------------------------------
WMX Technologies, Inc. 515,000 16,930,625
--------------------------------------------------------------------------------------------
WPP Group PLC 15,920,000 58,365,435
-------------
200,632,547
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING--4.1% Bic Corp. 200,000 26,272,700
--------------------------------------------------------------------------------------------
Bobst Bearers AG 12,830 16,682,940
--------------------------------------------------------------------------------------------
Bombardier, Inc., Cl. B 1,977,900 28,166,787
--------------------------------------------------------------------------------------------
Hutchison Whampoa Ltd. 5,001,000 33,628,785
--------------------------------------------------------------------------------------------
Powerscreen International PLC 2,580,000 22,164,463
-------------
126,915,675
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.3% Brambles Industries Ltd.(1) 1,500,000 24,330,457
--------------------------------------------------------------------------------------------
Guangshen Railway Co. Ltd., Sponsored ADR(2) 750,000 14,250,000
-------------
38,580,457
- -----------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--19.6%
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--1.2% Rolls-Royce PLC 10,000,000 37,424,644
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--0.6% Cascade Communications Corp.(2) 69,600
5,672,400
--------------------------------------------------------------------------------------------
QUALCOMM, Inc.(2) 329,000 13,982,500
-------------
19,654,900
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--10.1% Cap Gemini SA(2) 400,000 17,515,133
--------------------------------------------------------------------------------------------
Computer Associates International, Inc. 300,000 17,925,000
--------------------------------------------------------------------------------------------
First Data Corp. 376,000 30,691,000
--------------------------------------------------------------------------------------------
Ines Corp.(1) 600,000 10,828,281
--------------------------------------------------------------------------------------------
Microsoft Corp.(2) 200,000 26,375,000
--------------------------------------------------------------------------------------------
Misys PLC 1,260,000 17,177,377
--------------------------------------------------------------------------------------------
Nintendo Co. Ltd. 1,545,900 99,242,949
--------------------------------------------------------------------------------------------
Oracle Corp.(2) 375,000 15,960,938
--------------------------------------------------------------------------------------------
SAP AG, Preference 317,500 53,289,101
--------------------------------------------------------------------------------------------
SAP AG, Sponsored ADR, Series 1996(5) 350,000 19,687,500
---------------
308,692,279
</TABLE>
Oppenheimer Global Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS--4.1% Advanced Semiconductor Engineering, Inc., GDR 641,580 $ 4,876,008
--------------------------------------------------------------------------------------------
Intel Corp. 240,000 22,905,000
--------------------------------------------------------------------------------------------
Keyence Corp. 200,000 24,781,141
--------------------------------------------------------------------------------------------
Rohm Co. 204,000 12,876,496
--------------------------------------------------------------------------------------------
SGS-Thomson Microelectronics NV(2) 700,000 33,162,500
--------------------------------------------------------------------------------------------
Sony Corp.(1) 320,000 20,198,426
--------------------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.(5) 3,434,000 6,685,543
------------
125,485,114
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS- Ascend Communications, Inc.(2) 87,900 5,812,388
TECHNOLOGY--3.6% --------------------------------------------------------------------------------------------
Cisco Systems, Inc.(2) 495,400 30,745,763
--------------------------------------------------------------------------------------------
Korea Mobile Telecommunications Corp. 21,819 25,336,848
--------------------------------------------------------------------------------------------
Millicom International Cellular SA(2) 600,000 24,225,000
--------------------------------------------------------------------------------------------
Millicom, Inc.(2) 207,000 --
--------------------------------------------------------------------------------------------
Telecom Italia Mobile SpA(1) 10,918,200 24,245,927
-------------
110,365,926
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES--7.3%
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.3% Consolidated Electric Power Asia Ltd., ADS 12,000,000 25,371,724
--------------------------------------------------------------------------------------------
Empresa Nacional de Electricidad SA 400,000 23,550,482
--------------------------------------------------------------------------------------------
Veba AG 400,000 20,958,981
-------------
69,881,187
- -----------------------------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--5.0% Cia de Telecommunicaciones de Chile SA,
Sponsored ADR(1) 16,600 1,603,975
--------------------------------------------------------------------------------------------
CPT Telefonica del Peru SA, Cl. B 11,599,949 26,203,430
--------------------------------------------------------------------------------------------
PLD Telekom, Inc.(2) 1,136,200 8,237,450
--------------------------------------------------------------------------------------------
Portugal Telecom SA 777,700 20,005,947
--------------------------------------------------------------------------------------------
PT Telekomunikasi Indonesia, Sponsored ADR(1) 342,000 10,644,750
--------------------------------------------------------------------------------------------
Telecom Italia SpA(1) 13,000,000 28,911,662
--------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA, Preference 732,452,000 57,854,758
--------------
153,461,972
--------------
Total Common Stocks (Cost $2,431,368,922) 2,989,147,450
==========================================================
==========================================================
=========
PREFERRED STOCKS--0.5%
- -----------------------------------------------------------------------------------------------------------------------------
Marschollek, Lautenschlaeger und Partner-VO,
Non-vtg. Preferred Stock (Cost $8,842,223) 127,000 15,986,730
</TABLE>
<PAGE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
UNITS SEE NOTE 1
==========================================================
==========================================================
=========
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.1%
- -----------------------------------------------------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 51,750 $ --
----------------------------------------------------------------------------------------------
PT Matahari Putra Prima Rts., Exp. 11/96 3,499,750 2,298,996
------------
Total Rights, Warrants and Certificates (Cost $0) 2,298,996
<CAPTION>
FACE
AMOUNT
==========================================================
==========================================================
=========
<S> <C> <C>
REPURCHASE AGREEMENT--0.7%
- -----------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Zion First National Bank, 5.62%,
dated 9/30/96, to be repurchased at $20,303,169 on 10/1/96,
collateralized by U.S. Treasury Nts., 5.75%--8.875%,
5/15/97--8/15/04, with a value of $20,717,367 (Cost
$20,300,000) $20,300,000 20,300,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $2,460,511,145) 99.0%
3,027,733,176
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.0 29,867,779
---------- --------------
NET ASSETS 100.0% $3,057,600,955
==========
==============
<CAPTION>
Distribution of investments by country of issue, as a percentage of
total investments at value, is as follows:
COUNTRY MARKET VALUE PERCENT
----------------------------------------------------------------------------------------------
<S> <C> <C>
United States $ 822,042,630 27.1%
----------------------------------------------------------------------------------------------
Great Britain 361,658,715 11.9
----------------------------------------------------------------------------------------------
Germany 309,451,887 10.2
----------------------------------------------------------------------------------------------
Japan 244,707,080 8.1
----------------------------------------------------------------------------------------------
France 219,812,119 7.3
----------------------------------------------------------------------------------------------
Hong Kong 131,195,646 4.3
----------------------------------------------------------------------------------------------
The Netherlands 115,279,750 3.8
----------------------------------------------------------------------------------------------
Brazil 91,522,366 3.0
----------------------------------------------------------------------------------------------
Canada 82,271,348 2.7
----------------------------------------------------------------------------------------------
Switzerland 75,599,617 2.5
----------------------------------------------------------------------------------------------
Italy 71,209,566 2.4
----------------------------------------------------------------------------------------------
Australia 51,506,848 1.7
----------------------------------------------------------------------------------------------
Sweden 44,472,529 1.5
----------------------------------------------------------------------------------------------
Mexico 43,454,621 1.4
----------------------------------------------------------------------------------------------
Argentina 40,690,785 1.3
----------------------------------------------------------------------------------------------
Portugal 34,193,108 1.1
----------------------------------------------------------------------------------------------
Peru 31,689,680 1.0
----------------------------------------------------------------------------------------------
Russia 29,038,509 1.0
----------------------------------------------------------------------------------------------
Austria 26,863,399 0.9
----------------------------------------------------------------------------------------------
Indonesia 26,186,807 0.9
----------------------------------------------------------------------------------------------
Korea, Republic of (South) 25,336,848 0.8
----------------------------------------------------------------------------------------------
Spain 23,550,482 0.8
----------------------------------------------------------------------------------------------
Panama 21,327,500 0.7
----------------------------------------------------------------------------------------------
South Africa 18,171,913 0.6
----------------------------------------------------------------------------------------------
Thailand 17,144,507 0.6
----------------------------------------------------------------------------------------------
China 14,250,000 0.5
----------------------------------------------------------------------------------------------
Philippines 12,364,208 0.4
----------------------------------------------------------------------------------------------
Malaysia 12,038,584 0.4
----------------------------------------------------------------------------------------------
Taiwan 11,561,551 0.4
----------------------------------------------------------------------------------------------
India 9,709,900 0.3
----------------------------------------------------------------------------------------------
Greece 7,826,698 0.3
----------------------------------------------------------------------------------------------
Chile 1,603,975 0.1
-------------- ------
Total $3,027,733,176 100.0%
============== ======
</TABLE>
<PAGE>
1. Loaned security--See Note 7 of Notes to Financial Statements.
2. Non-income producing security.
3. Represents securities sold under Rule 144A, which is 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 $17,682,021 or 0.58%
of the Fund's net assets, at September 30, 1996.
4. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended September
30, 1996. The aggregate fair value of all securities of affiliated
companies as of September 30, 1996 amounted to $44,191,797. Transactions
during the period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
BALANCE SEPTEMBER 30, 1995 GROSS ADDITIONS GROSS REDUCTIONS
-------------------------- ------------------ --------------------
SHARES COST SHARES COST SHARES COST
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Clinica y Maternidad Suizo Argentino 1,800 $6,990,000 -- $6,300,000 -- $ --
- -----------------------------------------------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR 681,000 11,809,866 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Industrial Finance Corp.(6) 5,929,999 9,939,527 1,260,100 4,723,154 3,000,000 6,286,924
- -----------------------------------------------------------------------------------------------------------------------
International de Ceramica--UB 385,000 2,007,953 -- -- 385,000 2,007,953
- -----------------------------------------------------------------------------------------------------------------------
LEM Holdings SA 25,000 5,024,555 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
K-V Pharmaceutical Co., Cl. A 376,800 2,120,350 -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
K-V Pharmaceutical Co., Cl. B 264,900 928,721 -- -- -- --
----------- ----------- ----------
$38,820,972 $11,023,154 $8,294,877
=========== ===========
==========
<CAPTION>
BALANCE SEPTEMBER 30, 1996
-------------------------- DIVIDEND
SHARES COST INCOME
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Clinica y Maternidad Suizo Argentino 1,800 $13,290,000 $ --
- ------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR 681,000 11,809,866 --
- ------------------------------------------------------------------------------
Industrial Finance Corp.(6) 4,190,099 8,375,757 --
- ------------------------------------------------------------------------------
International de Ceramica--UB -- -- --
- ------------------------------------------------------------------------------
LEM Holdings SA 25,000 5,024,555 235,753
- ------------------------------------------------------------------------------
K-V Pharmaceutical Co., Cl. A 376,800 2,120,350 --
- ------------------------------------------------------------------------------
K-V Pharmaceutical Co., Cl. B 264,900 928,721 --
----------- --------
$41,549,249 $235,753
=========== ========
</TABLE>
5. Identifies issues considered to be illiquid--See Note 6 of Notes to
Financial Statements.
6. Not an affiliate as of September 30, 1996.
See accompanying Notes to Financial Statements.
<PAGE>
Statement of Assets and Liabilities September 30, 1996
<TABLE>
==========================================================
==========================================================
=========
<S> <C> <C>
ASSETS Investments, at value--see accompanying statement:
Unaffiliated companies (cost $2,427,337,653) $2,983,541,379
Affiliated companies (cost $33,173,492) 44,191,797
----------------------------------------------------------------------------------------------
Cash 5,046,698
----------------------------------------------------------------------------------------------
Collateral for securities loaned--Note 7 230,470,279
----------------------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency exchange contracts--Note 5 16,440,657
----------------------------------------------------------------------------------------------
Receivables:
Investments sold 15,197,168
Interest and dividends 6,985,490
Shares of beneficial interest sold 4,508,578
----------------------------------------------------------------------------------------------
Other 64,199
--------------
Total assets 3,306,446,245
==========================================================
==========================================================
=========
LIABILITIES Return of collateral for securities loaned--Note 7 230,470,279
----------------------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency exchange contracts--Note 5 4,862
----------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 10,444,530
Shares of beneficial interest redeemed 4,715,946
Distribution and service plan fees 1,402,720
Transfer and shareholder servicing agent fees 278,435
Trustees' fees 274,972
Other 1,253,546
--------------
Total liabilities 248,845,290
==========================================================
==========================================================
=========
NET ASSETS $3,057,600,955
==============
==========================================================
==========================================================
=========
COMPOSITION OF
NET ASSETS
Paid-in capital $2,357,134,687
----------------------------------------------------------------------------------------------
Undistributed net investment income 19,988,584
----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency
transactions 95,703,909
----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets
and liabilities denominated in foreign currencies 584,773,775
--------------
Net assets $3,057,600,955
==============
==========================================================
==========================================================
=========
NET ASSET VALUE
PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$2,498,748,991 and 64,074,825 shares of beneficial interest
outstanding) $39.00
Maximum offering price per share (net asset value plus sales charge of
5.75% of offering price) $41.38
----------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based
on net assets of $541,225,350 and 14,172,475 shares of beneficial interest
outstanding) $38.19
----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $17,626,614 and 455,146 shares of beneficial interest outstanding) $38.73
See accompanying Notes to Financial Statements.
</TABLE>
14 Oppenheimer Global Fund
<PAGE> 15
Statement of Operations For the Year Ended September 30, 1996
<TABLE>
==========================================================
==========================================================
=========
<S> <C> <C>
INVESTMENT INCOME Interest $12,222,133
----------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $2,646,317) 37,079,276
Affiliated companies (net of foreign withholding taxes of $41,604) 235,753
--------------
Total income 49,537,162
==========================================================
==========================================================
=========
EXPENSES Management fees--Note 4 19,638,352
----------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 4,149,778
Class B 4,373,990
Class C 81,790
----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 4,246,782
----------------------------------------------------------------------------------------------
Custodian fees and expenses 1,789,474
----------------------------------------------------------------------------------------------
Shareholder reports 1,104,222
----------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 174,654
----------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 34,685
Class B 49,648
Class C 5,682
----------------------------------------------------------------------------------------------
Legal and auditing fees 85,064
----------------------------------------------------------------------------------------------
Insurance expenses 35,117
----------------------------------------------------------------------------------------------
Other 249,885
--------------
Total expenses 36,019,123
==========================================================
==========================================================
=========
NET INVESTMENT INCOME 13,518,039
==========================================================
==========================================================
=========
REALIZED AND UNREALIZED
GAIN (LOSS)
Net realized gain (loss) on:
Investments:
Unaffiliated companies 130,775,299
Affiliated companies 586,139
Foreign currency transactions (5,377,602)
--------------
Net realized gain 125,983,836
----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 220,550,346
Translation of assets and liabilities denominated in foreign currencies (26,103,773)
--------------
Net change 194,446,573
--------------
Net realized and unrealized gain 320,430,409
==========================================================
==========================================================
=========
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$333,948,448
==============
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Global Fund
<PAGE> 16
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30,
1996 1995
==========================================================
==========================================================
=========
<S> <C> <C> <C>
OPERATIONS Net investment income $13,518,039 $18,111,834
----------------------------------------------------------------------------------------------
Net realized gain 125,983,836 118,657,828
----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 194,446,573 76,284,116
----------- -----------
Net increase in net assets resulting from operations 333,948,448 213,053,778
==========================================================
==========================================================
=========
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income:
Class A (14,009,023) --
Class B (3,568) --
Class C (7,369) --
----------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (120,623,278) (194,601,466)
Class B (20,905,412) (22,711,659)
Class C (131,770) --
==========================================================
==========================================================
=========
BENEFICIAL INTEREST
TRANSACTIONS
Net increase in net assets resulting from beneficial interest
transactions--Note 2:
Class A 165,278,694 273,668,816
Class B 170,668,404 150,133,375
Class C 16,731,958 --
==========================================================
==========================================================
=========
NET ASSETS Total increase 530,947,084 419,542,844
----------------------------------------------------------------------------------------------
Beginning of period 2,526,653,871 2,107,111,027
-------------- -------------
End of period (including undistributed net investment
income of $19,988,584 and $13,182,028, respectively) $3,057,600,955 $2,526,653,871
==============
==============
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A Class B
------------------------------------------- ------------------------------------
Year Ended September 30, Year Ended September 30,
1996 1995 1994 1993 1992 1996 1995 1994 1993(2)
==========================================================
==========================================================
===========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $36.84 $37.69 $35.04 $30.03 $32.05 $36.16 $37.36 $34.99 $33.33
- -------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .23 .31 .17 .26 .17 (.05) .06 .08 .03
Net realized and unrealized
gain (loss) 4.22 2.59 6.10 4.99 (1.50) 4.13 2.49 5.83 1.63
Total income (loss) from ---- ---- ---- ---- ----- ---- ---- ---- ----
investment operations 4.45 2.90 6.27 5.25 (1.33) 4.08 2.55 5.91 1.66
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.24) -- (.25) (.12) (.11) -- -- (.18) --
Distributions from net realized gain (2.05) (3.75) (3.37) (.12) (.58) (2.05) (3.75) (3.36) --
Total dividends and distributions ---- ---- ---- ---- ----- ---- ---- ---- ----
to shareholders (2.29) (3.75) (3.62) (.24) (.69) (2.05) (3.75) (3.54) --
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $39.00 $36.84 $37.69 $35.04 $30.03 $38.19 $36.16 $37.36 $34.99
====== ====== ====== ====== ====== ======
====== ====== ======
==========================================================
==========================================================
===========
TOTAL RETURN, AT NET ASSET VALUE(3) 12.98% 9.26% 19.19% 17.67% (4.23)% 12.07% 8.34%
18.10% 3.64%
==========================================================
==========================================================
===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions) $2,499 $2,186 $1,921 $1,389 $1,215 $541 $340 $187 $6
- -------------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $2,309 $1,979 $1,711 $1,213 $1,194 $438 $258 $ 88 $3
- -------------------------------------------------------------------------------------------------------------------------------
Amount of debt outstanding at end
of period (in thousands) N/A N/A N/A N/A $60,000 N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding
throughout each period
(in thousands) N/A N/A N/A $18,247 $60,000 N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Average number of shares outstanding
throughout each period
(in thousands) N/A N/A N/A 39,853 37,435 N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Average amount of debt per share
outstanding throughout each period N/A N/A N/A $0.46 $1.60 N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.62% 0.90% 0.38% 0.84% 0.55% (0.17)% 0.09% (0.30)%
1.52%(4)
Expenses 1.17% 1.20% 1.15% 1.18% 1.36% 2.00% 2.03% 2.08% 2.40%(4)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 102.9% 84.4% 78.3% 86.9% 18.0% 102.9% 84.4% 78.3% 86.9%
Average brokerage
commission rate(6) $0.0071 -- -- -- -- $0.0071 -- -- --
<CAPTION>
Class C
-------
Period
Ended
Sept. 30,
1996(1)
==========================================================
<S> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $36.67
- ----------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .09
Net realized and unrealized
gain (loss) 4.13
Total income (loss) from ----
investment operations 4.22
- ----------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.11)
Distributions from net realized gain (2.05)
Total dividends and distributions ------
to shareholders (2.16)
- ----------------------------------------------------------
Net asset value, end of period $38.73
======
==========================================================
TOTAL RETURN, AT NET ASSET VALUE(3) 12.34%
==========================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in millions) $18
- ----------------------------------------------------------
Average net assets (in millions) $8
- ----------------------------------------------------------
Amount of debt outstanding at end
of period (in thousands) N/A
- ----------------------------------------------------------
Average amount of debt outstanding
throughout each period
(in thousands) N/A
- ----------------------------------------------------------
Average number of shares outstanding
throughout each period
(in thousands) N/A
- ----------------------------------------------------------
Average amount of debt per share
outstanding throughout each period N/A
- ----------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.04%(4)
Expenses 1.99%(4)
- ----------------------------------------------------------
Portfolio turnover rate(5) 102.9%
Average brokerage
commission rate(6) $0.0071
</TABLE>
1. For the period from October 2, 1995 (inception of offering) to
September 30, 1996.
2. For the period from August 17, 1993 (inception of offering) to
September 30, 1993.
3. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
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.
4. Annualized.
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 September 30, 1996 were $2,961,733,794
and $2,678,446,475, respectively.
6. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Global 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 invests primarily in common stocks of U.S. and
foreign companies. The Fund's investment adviser is OppenheimerFunds, Inc.
(the Manager). The Fund offers Class A, Class B and Class C shares. Class
A shares are sold with a front-end sales charge. Class B and Class C
shares may be subject to a contingent deferred sales charge. All three
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service
plan, expenses directly attributable to a particular class and exclusive
voting rights with respect to matters affecting a single class.
Class B shares will automatically convert to Class A shares six years
after the date of purchase. The following is a summary of significant
accounting policies consistently followed by the Fund.
INVESTMENT VALUATION. Portfolio securities are valued at the close of the
New York Stock Exchange on each trading day. Listed and unlisted
securities for which such information is regularly reported are valued at
the last sale price of the day or, in the absence of sales, at values
based on the closing bid or the last sale price on the prior trading day.
Long-term and short-term "non-money market" debt securities are valued by
a portfolio pricing service approved by the Board of Trustees. Such
securities which cannot be valued by the approved portfolio pricing
service are valued using dealer-supplied valuations provided the Manager
is satisfied that the firm rendering the quotes is reliable and that the
quotes reflect current market value, or are valued under consistently
applied procedures established by the Board of Trustees to determine fair
value in good faith. Short-term "money market type" debt securities having
a remaining maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to maturity of any
premium or discount. Forward foreign currency exchange contracts are
valued based on the closing prices of the forward currency contract rates
in the London foreign exchange markets on a daily basis as provided by a
reliable bank or dealer.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in foreign
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on
the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on investments
is separately identified from 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, AND GAINS AND LOSSES. Income, expenses
(other than those attributable to a specific class) and gains and losses
are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the
operations of that class.
FEDERAL TAXES. The Fund intends to continue to comply with provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain
on investments not offset by loss carryovers, to shareholders. Therefore,
no federal income or excise tax provision is required.
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement
plan for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during the years of service. During
the year ended September 30, 1996, a provision of $101,127 was made for
the Fund's projected benefit obligations and payments of $7,479 were made
to retired trustees, resulting in an accumulated liability of $262,675 at
September 30, 1996.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
<PAGE>
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income
(loss) and net realized gain (loss) may differ for financial statement and
tax purposes. The character of the distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gain (loss) was
recorded by the Fund.
During the year ended September 30, 1996, the Fund adjusted the
classification of distributions to shareholders to reflect the differences
between the financial statement amounts and distributions determined in
accordance with income tax regulations.
Accordingly, during the year ended September 30, 1996, amounts have been
reclassified to reflect a decrease in undistributed net investment income
and an increase in accumulated net realized gain on investments of
$367,527. In addition, to properly reflect foreign currency gain in the
components of capital, $7,676,004 of foreign exchange gain determined
according to U.S. federal income tax rules has been reclassified from net
realized gain to net investment income.
OTHER. Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1996(1) Year Ended September 30, 1995
-------------------------------- ------------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 13,445,573 $494,129,386 14,970,471 $515,346,870
Dividends and distributions reinvested 3,791,424 129,022,228 5,837,688 185,638,506
Redeemed (12,511,334) (457,872,920) (12,413,877) (427,316,560)
----------- ------------ ----------- ------------
Net increase 4,725,663 $165,278,694 8,394,282 $273,668,816
=========== ============ ===========
============
- -------------------------------------------------------------------------------------------------------------------
Class B:
Sold 6,760,563 $244,252,699 5,628,673 $192,633,540
Dividends and distributions reinvested 596,683 20,012,734 687,798 21,610,609
Redeemed (2,599,758) (93,597,029) (1,894,767) (64,110,774)
----------- ------------ ----------- ------------
Net increase 4,757,488 $170,668,404 4,421,704 $150,133,375
=========== ============ ===========
============
- -------------------------------------------------------------------------------------------------------------------
Class C:
Sold 549,240 $20,205,091 -- $ --
Dividends and distributions reinvested 4,029 137,151 -- --
Redeemed (98,123) (3,610,284) -- --
----------- ------------ ----------- ------------
Net increase 455,146 $16,731,958 -- $ --
=========== ============ ===========
============
</TABLE>
1. For the year ended September 30, 1996 for Class A and Class
B shares, and for the period from October 2, 1995 (inception of offering)
to September 30, 1996 for Class C shares.
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At September 30, 1996, net unrealized appreciation on investments of
$567,222,031 was composed of gross appreciation of $597,401,994, and gross
depreciation of $30,179,963.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of 0.80% on the
first $250 million of net assets, 0.77% on the next $250 million, 0.75%
on the next $500 million, 0.69% on the next $1 billion and 0.67% on net
assets in excess of $2 billion. The Manager has voluntarily agreed to
reduce the management fee to which it is entitled under the Agreement to
0.65% on net assets in excess of $3.5 billion. The Manager has agreed to
reimburse the Fund if aggregate expenses (with specified exceptions)
exceed the most stringent applicable regulatory limit on Fund expenses.
For the year ended September 30, 1996, commissions (sales charges paid by
investors) on sales of Class A shares totaled $5,830,983, of which
$1,861,170 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by an affiliated
broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales
of the Fund's Class B and Class C shares totaled $6,952,591 and $156,720,
of which $413,273 and $2,797, respectively, was paid to an affiliated
broker/dealer. During the year ended September 30, 1996, OFDI received
contingent deferred sales charges of $743,491 and $6,445, respectively,
upon redemption of Class B and Class C shares, as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OFS's total costs of providing such
services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal
service and maintenance of accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund. OFDI
uses the service fee to reimburse brokers, dealers, banks and other
financial institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares.
During the year ended September 30, 1996,
OFDI paid $252,591 to an affiliated broker/dealer as reimbursement for
Class A personal service and maintenance expenses.
The Fund has adopted a reimbursement type Distribution and Service Plan
for Class B shares to reimburse OFDI for its services and costs in
distributing Class B shares and servicing accounts. Under the Plan, the
Fund pays OFDI an annual asset-based sales charge of 0.75% per year on
Class B shares.
OFDI also receives a service fee of 0.25% per year to reimburse dealers
for providing personal services for accounts that hold Class B shares.
Both fees are computed on the average annual net assets of Class B shares,
determined as of the close of each regular business day. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for certain
expenses it incurred before the Plan was terminated. During the year ended
September 30, 1996, OFDI paid $53,520 to an affiliated broker/dealer as
reimbursement for Class B personal service and maintenance expenses and
retained $3,701,675 as reimbursement for Class B sales commissions and
service fee advances, as well as financing costs.
As of September 30, 1996, OFDI had incurred unreimbursed expenses of
$16,226,094 for Class B.
The Fund has adopted a compensation type Distribution and Service Plan for
Class C shares to compensate OFDI for its services and costs in
distributing Class C shares and servicing accounts. Under the Plan, the
Fund pays OFDI an annual asset-based sales charge of 0.75% per year on
Class C shares. OFDI also receives a service fee of 0.25% per year to
compensate dealers for providing personal services for accounts that hold
Class C shares. Both fees are computed on the average annual net assets
of Class C shares, determined as of the close of each regular business
day. If the Plan is terminated by the Fund, the Board of Trustees may
allow the Fund to continue payments of the asset-based sales charge to
OFDI for certain expenses it incurred before the Plan was terminated.
During the year September 30, 1996, OFDI retained $75,623 as compensation
for Class C sales commissions and service fee advances, as well as
financing costs. As of September 30, 1996, OFDI had incurred unreimbursed
expenses of $200,447 for Class C.
Oppenheimer Global Fund
<PAGE>
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a
commitment to purchase or sell a foreign currency at a future date, at a
negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency risks.
They may also be used to tactically shift portfolio currency risk. The
Fund generally enters into forward contracts as a hedge upon the purchase
or sale of a security denominated in a foreign currency. In addition, the
Fund may enter into such contracts as a hedge against changes in foreign
currency exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the forward
currency contract rates in the London foreign exchange markets on a daily
basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.
Securities held in segregated accounts to cover net exposure on
outstanding forward contracts are noted in the Statement of Investments
where applicable. Unrealized appreciation or depreciation on forward
contracts is reported in the Statement of Assets and Liabilities. Realized
gains and losses are reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.
Risks include the potential inability of the counterparty to meet the
terms of the contract and unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
At September 30, 1996, the Fund had outstanding forward contracts to
purchase and sell currencies as follows:
<TABLE>
<CAPTION>
CONTRACT AMOUNT VALUATION AS OF UNREALIZED
UNREALIZED
CONTRACTS TO PURCHASE EXCHANGE DATE (000S) SEPT. 30, 1996 APPRECIATION
DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
German Deutsche Mark (DEM) 10/1/96--10/2/96 5,025 DEM $3,294,412 $ -- $4,862
========== --------- ------
CONTRACTS TO SELL
- ----------------------------------------------------------------------------------------------------------------------------
Swiss Franc (CHF) 10/8/96 114,690 CHF $91,561,452 $8,438,548 $ --
- ----------------------------------------------------------------------------------------------------------------------------
Italian Lira (ITL) 10/1/96 2,250,167 ITL 1,478,379 5,313 --
- ----------------------------------------------------------------------------------------------------------------------------
German Deutsche Mark (DEM) 10/1/96--1/8/97 149,342 DEM 98,494,144 5,431,912 --
- ----------------------------------------------------------------------------------------------------------------------------
Indonesian Rupiah (IDR) 10/1/96--10/2/96 393,913 IDR 169,680 35 --
- ----------------------------------------------------------------------------------------------------------------------------
Japanese Yen (JPY) 10/7/96 15,382,499 JPY 138,205,862 2,564,849 --
------------ ----------- -------
$329,909,517 16,440,657 --
============ =========== -------
Total Unrealized Appreciation and Depreciation $16,440,657 $4,862
=========== =======
</TABLE>
6. ILLIQUID AND RESTRICTED SECURITIES
At September 30, 1996, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in
private placement transactions, are not registered under the Securities
Act of 1933, may have contractual restrictions on resale, and are valued
under methods approved by the Board of Trustees as reflecting fair value.
A security may 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 10% of its net assets (determined
at the time of purchase and reviewed from time to time) in illiquid or
restricted securities. Certain restricted securities, eligible for resale
to qualified institutional investors, are not subject to that limit. The
aggregate value of illiquid or restricted securities subject to this
limitation at September 30, 1996 was $88,287,890, which represents 2.89%
of the Fund's net assets. Information concerning restricted securities is
as follows:
<TABLE>
<CAPTION>
VALUATION PER UNIT AS
SECURITY ACQUISITION DATE COST PER UNIT OF SEPT. 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Quintiles Transnational Corp. 8/2/93 $ 8.64 $ 65.93
- ---------------------------------------------------------------------------------------------------------------------------
Clinica y Maternidad Suizo Argentino 5/16/94 7,383.33 8,883.03
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain
unregistered securities are determined to be liquid and are not included
within the 10% limitation specified above.
<PAGE>
Notes to Financial Statements (Continued)
7. SECURITIES LOANED
The Fund has entered into a securities lending arrangement with the
custodian. Under the terms of the agreement, the Fund receives 60% of the
annual net income from lending transactions. In exchange for such fees,
the custodian is authorized to loan securities on behalf of the Fund,
against receipt of collateral at least equal in value to the value of the
securities loaned. Cash collateral is invested by the custodian in money
market instruments approved by the Manager.
As of September 30, 1996, the Fund had on loan securities valued at
$223,463,921. Cash of $187,481,049 was received as collateral for the
loans, and has been invested in the approved instruments identified below.
U.S. Treasury Bills, Notes and Bonds valued at $42,989,230 were also
received as collateral. The Fund bears the risk of any deficiency in the
amount of collateral available for return to a borrower due to a loss in
an approved investment.
<TABLE>
<CAPTION>
VALUATION AS OF
SECURITY SEPTEMBER 30, 1996
----------------------------------------------------------------------------------------------------------
<S> <C>
Repurchase agreement with CS First Boston Corp., 5.975%, dated 9/30/96 and maturing
12/31/96, collateralized by Federal Home Loan Mortgage Corp., 7%--9.50%,
5/15/17--7/1/26, with a value of $117,360,046, and by Federal National Mortgage Assn.,
0%, 6/1/23, with a value of $46,110,000 $160,470,046
----------------------------------------------------------------------------------------------------------
Repurchase agreement with Goldman, Sachs & Co., 5.75%, dated 9/30/96 and maturing
10/1/96, collateralized by Federal Mortgage Acceptance Corp., 7.31%, 8/7/01, with a
value of $10,068,530, and by Federal Home Loan Bank, 5.60%, 7/24/97, with a value of
$10,001,710, and by Federal National Mortgage Assn., 7.15%, 6/26/01, with a value of
$6,940,763 27,011,003
----------------------------------------------------------------------------------------------------------
U.S. Treasury Bills, 1/2/97--5/29/97 1,083,519
----------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 5.125%--8.50%, 11/30/97--3/31/00 25,925,761
----------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 6.25%, 8/15/23 15,979,950
------------
$230,470,279
============
</TABLE>
Appendix
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Transmission*
Gas Utilities*
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
____________________________
* For purposes of the Fund's policy not to concentrate in securities
of issuers in the same industry, gas utilities and gas
transmission utilities will each be considered a separate industry.
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
