Oppenheimer Global Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated November 17, 1998, revised June 5,
1999
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 November 17, 1998. 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................................... 16
How the Fund is Managed........................................... 18
Organization and History........................................ 18
Trustees and Officers of the Fund............................... 18
The Manager and Its Affiliates.................................. 25
Brokerage Policies of the Fund.................................... 27
Performance of the Fund........................................... 29
Distribution and Service Plans.................................... 32
About Your Account
How to Buy Shares............................................... 35
How to Sell Shares.............................................. 44
How to Exchange Shares....................... .................. 48
Dividends, Capital Gains and Taxes................................ 50
Additional Information About the Fund............................. 52
Financial Information About the Fund
Independent Auditors' Report...................................... 53
Financial Statements.............................................. 54
Appendix A: Corporate Industry Classifications.................... A-1
Appendix B: Special Sales Charge and Waivers...................... B-1
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.
<PAGE>
-- 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.
<PAGE>
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.
<PAGE>
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.
-- Zero Coupon Securities. The Fund may invest in zero coupon securities
issued by the U.S. Treasury. Zero coupon U.S. Treasury securities are U.S.
Treasury notes and bonds that have been stripped of their unmatured interest
coupons and receipts or bills issued without interest coupons, U.S. Treasury
certificates representing interest in such stripped debt obligations or coupons.
The Fund may also invest in zero coupon securities issued by other issuers,
including foreign governments.
<PAGE>
These securities usually trade at a deep discount from their face or par
value and will be subject to greater fluctuations in market value in response to
changing interest rates than debt obligations of comparable maturities that make
current payments of interest. However, the interest rate is "locked in" and
there is no risk of having to reinvest periodic interest payments in securities
having lower rates. Because the Fund accrues taxable income from zero coupon
securities issued by either the U.S. Treasury or other issuers without receiving
cash, the Fund may be required to sell portfolio securities in order to pay a
dividend depending, among other things, upon the proportion of shareholders who
elect to receive dividends in cash rather than reinvesting dividends in
additional shares of the Fund. The Fund might also sell portfolio securities to
maintain portfolio liquidity. In either case, cash distributed or held by the
Fund and not reinvested in Fund shares will hinder the Fund in seeking a high
level of current income.
-- 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.
<PAGE>
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's Custodian will
identify additional liquid assets as segregated 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.
<PAGE>
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.
<PAGE>
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 may pay a brokerage commission each time it buys a
put or a call, sells a call, or buys or sells an underlying investment in
connection with the exercise of a put or call. Such 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.
<PAGE>
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.
<PAGE>
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").
<PAGE>
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,
<PAGE>
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).
<PAGE>
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.
<PAGE>
-- 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. ? Debt
Securities. The Manager does not currently intend to invest more than 5% of the
Fund's assets in debt securities. 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.
Short Sales. The Fund may not sell securities short except in
collateralized transactions where the Fund owns an equivalent amount of the
securities sold short. 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 time.
<PAGE>
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 ? 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.
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 during the past five years are
set forth below. The address for each Trustee and officer is Two World Trade
Center, New York, New York 10048-0203, unless another address is listed below.
All of the Trustees are also trustees or directors of Oppenheimer Enterprise
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 Multiple
Strategies Fund, Oppenheimer Gold & Special Minerals Fund, Oppenheimer Global
Growth & Income Fund, Oppenheimer Discovery Fund, Oppenheimer International
Small Company Fund, Oppenheimer International Growth Fund, Oppenheimer
Developing Markets Fund, Oppenheimer Series Fund, Inc., Oppenheimer Multi-Sector
Income Trust, and Oppenheimer World Bond Fund (collectively, the "New York-based
Oppenheimer funds"), except that Ms. Macaskill and Mr. Griffiths are not
Directors of Oppenheimer Money Market Fund, Inc.; Mr. Griffiths is not a Trustee
of Oppenheimer Discovery Fund. Ms. Macaskill and Messrs. Spiro, Donohue, Bishop,
Bowen, Farrar and Zack hold the same respective offices with the New York-based
Oppenheimer funds as with the Fund. As of October 31, 1998, the Trustees and
officers of the Fund as a group owned less than 1% of the outstanding Class A
shares; none held any Class B or Class C shares of the Fund. That statement does
not include ownership of shares held of record by an employee benefit plan for
employees of the Manager (one of the Trustees of the Fund listed below, Ms.
Macaskill, and one of the officers, Mr. Donohue, are trustees of that plan)
other than the shares beneficially owned under that plan by the officers of the
Fund listed above.
Leon Levy, Chairman of the Board of Trustees; Age: 73
280 Park Avenue, New York, NY 10017
General Partner of Odyssey Partners, L.P. (investment partnership)(since 1982)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee; Age: 65
19750 Beach Road, Jupiter Island, FL 33469
A Trustee or Director of other Oppenheimer funds; formerly he held the following
positions: Vice Chairman of OppenheimerFunds, Inc. (the "Manager") (October
1995-December 1997); Vice President (June 1990 to March 1994) and Counsel of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding company;
Executive Vice President (December 1977 to October 1995) General Counsel and a
director (December 1975 to October 1993) of the Manager; Executive Vice
President and a director of OppenheimerFunds Distributor, Inc. (the
"Distributor") (July 1978 to October 1993), Executive Vice President and a
director of HarbourView Asset Management Corporation ("HarbourView") (April 1986
to October 1995), an investment adviser subsidiary of the Manager; Vice
President and a director (October 1988 to October 1993) and Secretary (March
1981 to September 1988) of Centennial Asset Management Corporation
("Centennial"), an investment adviser subsidiary of the Manager, a director
(November 1989 to October 1993) and Executive Vice President (November 1989 to
January 1990) of Shareholder Financial Services, Inc. ("SFSI"), a transfer agent
subsidiary of the Manager; a director of Shareholder Services, Inc. ("SSI")
(August 1984 to October 1993), a transfer agent subsidiary of the Manager; an
officer of other Oppenheimer funds.
Dr. Phillip Griffiths, Trustee, Age: 60
97 Olden Lane, Princeton, New Jersey 08540
The Director of the Institute for Advanced Study, Princeton, N.J. (since 1991)
and a member of the National Academy of Sciences (since 1979); formerly a
director of Bankers Trust Corporation (1994 through June, 1999), Provost and
Professor of Mathematics at Duke University (1983-1991), a director of Research
Triangle Institute, Raleigh, N.C. (1983-1991), and a Professor of Mathematics at
Harvard University (1972-1983).
Benjamin Lipstein, Trustee; Age: 75
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
Bridget A. Macaskill, President and Trustee*; Age: 50
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager; President and director (since
June 1991) of HarbourView; Chairman and a director of SSI (since August 1994),
and SFSI (September 1995); President (since September 1995) and a director
(since October 1990) of OAC; President (since September 1995) and a director
(since November 1989) of Oppenheimer Partnership Holdings, Inc., a holding
company subsidiary of the Manager; a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); President and a director (since October
1997) of OppenheimerFunds International Ltd., an offshore fund manager
subsidiary of the Manager ("OFIL") and Oppenheimer Millennium Funds plc (since
October 1997); President and a director or trustee of other Oppenheimer funds;
Member, Board of Governors, National Association of Securities Dealers, Inc. and
a director of Hillsdown Holdings plc (a U.K. food company); formerly an
Executive Vice President of the Manager, a director of the NASDAQ Stock Market,
Inc.
Elizabeth B. Moynihan, Trustee; Age: 69
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York University),
National Building Museum; a member of the Trustees Council, Preservation League
of New York State, and of the Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 71
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding company),
Dominion Energy, Inc. (electric power and oil & gas producer), Texan
Cogeneration Company (cogeneration company), Prime Retail, Inc. (real estate
investment trust); formerly President and Chief Executive Officer of The
Conference Board, Inc. (international economic and business research) and a
director of Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age: 68
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; a member of the U.S.
Competitiveness Policy Council; a director of River Bank America (real estate
manager); Trustee, Financial Accounting Foundation (FASB and GASB); formerly New
York State Comptroller and trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 66
8 Sound Shore Drive, Greenwich, Connecticut 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate governance consulting); a director of
Professional Staff Limited (U.K); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
Donald W. Spiro, Vice Chairman and Trustee*; Age: 72
Chairman Emeritus (since August 1991) and a director (since January 1969) of the
Manager; formerly Chairman of the Manager and the Distributor.
Pauline Trigere, Trustee; Age: 86
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale of
women's fashions).
Clayton K. Yeutter, Trustee; Age: 67
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T. Industries, Ltd.
(tobacco and financial services), Caterpillar, Inc. (machinery), ConAgra, Inc.
(food and agricultural products), Farmers Insurance Company (insurance), FMC
Corp. (chemicals and machinery) and Texas Instruments, Inc. (electronics);
formerly (in descending chronological order) 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.
William L. Wilby, Vice President and Portfolio Manager; Age: 54
Senior Vice President (since July 1994) of the Manager and Vice President of
HarbourView (since October 1993); an officer of other Oppenheimer funds.
Brian W. Wixted, Treasurer; Age: 39
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (April 1999) of the Manager; formerly
President and Chief Operating Officer, Bankers Trust Company - Mutual Fund
Services Division (March 1995 - March 1999); Vice President and Chief Financial
Officer of CS First Boston Investment Management Corp. (September 1991 - March
1995); and Vice President and Accounting Manager, Merrill Lynch Asset Management
(November 1987 - September 1991).
Andrew J. Donohue, Secretary; Age: 48
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager; Executive Vice
President and General Counsel (since September 1993), and a director (since
January 1992) of the Distributor; Executive Vice President, General Counsel and
a director of HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc.
since (September 1995); President and a director of Centennial (since September
1995); President, General Counsel and a director of Oppenheimer Real Asset
Management, Inc. (since July 1996); General Counsel (since May 1996) and
Secretary (since April 1997) of OAC; Vice President and a director of OFIL and
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 40
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); an
officer of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 33
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an officer
of other Oppenheimer funds; formerly an Assistant Vice President of the
Manager/Mutual Fund Accounting (April 1994-May 1996), and a Fund Controller for
the Manager.
Robert G. Zack, Assistant Secretary; Age: 50
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
Remuneration of Trustees. The officers of the Fund and certain Trustees of
the Fund (Ms. Macaskill and Mr. Spiro) who are affiliated with the Manager
receive no salary or fee from the Fund. Mr. Griffiths was not appointed to the
Board until June 5, 1999. The remaining Trustees of the Fund received the
compensation shown below. The compensation from the Fund was paid during its
fiscal year ended September 30, 1998. 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 during the 1997 calendar
year.
<TABLE>
<CAPTION>
Retirement Total
Aggregate Benefits Compensation
Compensation Accrued as From All
From Part of Fund New York-based
Name and Position the Fund(1) Expenses Oppenheimer Funds(2)
<S> <C> <C> <C>
Leon Levy, $11,732 $0 $158,500
Chairman and Trustee
Robert G. Galli(3) $5,192 $0 $0
Study Committee
Member and Trustee
Benjamin Lipstein $10,142 $0 $137,000
Study Committee Chairman,
Audit Committee Member
and Trustee
Elizabeth B. Moynihan $ 7,144 $0 $96,500
Study Committee Member
and Trustee
Kenneth A. Randall $6,552 $0 $88,500
Audit Committee Chairman
and Trustee
Edward V. Regan $6,481 $0 $87,500
Proxy Committee Chairman,
Audit Committee Member
and Trustee
Russell S. Reynolds, Jr. $4,849 $0 $65,500
Proxy Committee Member
and Trustee
Pauline Trigere, Trustee $4,329 $0 $58,500
Clayton K. Yeutter $4,849 $0 $65,500
Proxy Committee Member
and Trustee
</TABLE>
- ----------------------
(1)For the fiscal year ended September 30, 1998.
(2)For the 1997 calendar year.
(3)Mr. Galli received no salary or fee prior to January 1, 1998.
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was received.
A Trustee must serve in that capacity for any of the New York-based Oppenheimer
funds for at least 15 years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the Trustee's future
compensation and length of service, the amount of those benefits cannot be
determined as of this time nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits.
Deferred Compensation Plan. The Board of Trustees has adopted a Deferred
Compensation Plan for disinterested trustees that enables Trustees to elect to
defer receipt of all or a portion of the annual fees they are entitled to
receive from the Fund. Under the plan, the compensation deferred by a Trustee is
periodically adjusted as though an equivalent amount had been invested in shares
of one or more Oppenheimer funds selected by the Trustee. The amount paid to the
Trustee under the plan will be determined based upon the performance of the
selected funds. Deferral of Trustees? fees under the plan will not materially
affect the Fund?s assets, liabilities or net income per share. The plan will not
obligate the Fund to retain the services of any Trustee or to pay any particular
amount of compensation to any Trustee. Pursuant to an Order issued by the
Securities and Exchange Commission, the Fund may, without shareholder approval
and notwithstanding its fundamental policy restricting investment in other
open-end investment companies, as described in the Statement of Additional
Information, invest in the funds selected by a Trustee under the plan for the
limited purpose of determining the value of the Trustee?s deferred fee account.
Major Shareholders. As of October 31, 1998, 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 6,894,092.534 Class A shares
(equal to 9.17% 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
234,973.793 Class C shares (equal to 9.58% 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 two
of whom (Ms. Macaskill and Mr. Spiro) 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.
Portfolio Manager. The portfolio manager of the Fund is Mr. William L.
Wilby, a Senior Vice President of the Manager. He is the person principally
responsible for the day-to-day management of the Fund's portfolio. Mr. Wilby's
background is described in the Prospectus under "Portfolio Manager." Other
members of the Manager's Equity Portfolio Department, particularly Mr. George
Evans and Mr. Frank Jennings, provide the Portfolio Manager with counsel and
support in managing the Fund's portfolio.
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.
<PAGE>
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, 1996, 1997 and 1998, the management fees paid
by the Fund to the Manager were $19,638,352, $25,187,599 and $30,654,007,
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 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, 1996, 1997 and 1998, the
aggregate sales charges on sales of the Fund's Class A shares were $5,830,983,
$5,685,337 and $6,261,092, respectively, of which the Distributor and an
affiliated broker-dealer retained in the aggregate $1,861,170, $1,827,212 and
$1,978,731, in those respective years. During the Fund's fiscal years ended
September 30, 1996, 1997 and 1998, the contingent deferred sales charges
collected on the Fund's Class B shares totaled $743,491, $1,011,172 and
$1,504,663, all of which the Distributor retained. During the same periods,
contingent deferred sales charges collected on Class C shares totaled $6,445,
$17,175 and $25,625, respectively, all of which 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.
<PAGE>
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.
<PAGE>
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, 1996, 1997 and 1998,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $13,381,857,
$9,330,335 and $10,871,416, respectively. During the fiscal year ended September
30, 1998, $9,686,374 was paid to brokers as commissions in return for research
services; the aggregate dollar amount of those transactions was $3,855,994,677.
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:
1/n
( ERV )
( -------- ) - 1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation uses some of the same factors as average
annual total return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
-------- = Total Return
P
<PAGE>
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, 1998 were -15.03%, 10.68% and
12.79%, 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, 1998 was 233.27%. The average
annual total returns on an investment in Class B shares of the Fund for the one
and five year periods ended September 30, 1998 and from August 17, 1993 (the
inception of the offering of Class B shares) through September 30, 1998 were
- -14.43%, 10.80%, and 11.45%, respectively. The cumulative total return on Class
B shares for the period from August 17, 1993 through September 30, 1998 was
74.15%. The average annual total returns on an investment in Class C shares for
the fiscal year ended September 30, 1998 and from October 2, 1995 (the inception
of the offering of Class C shares) through September 30, 1998 were -11.31% and
9.83%, respectively. The cumulative total return on the Fund's Class C shares
for the period from October 2, 1995 through September 30, 1998 was 32.42%.
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, 1998 was 253.60%. The average annual total
returns at net asset value for the one, five and ten-year periods ended
September 30, 1998, for Class A shares were -9.85%, 12.00% and 13.46%,
respectively. The cumulative total return at net asset value on the Fund's Class
B shares for the period from August 17, 1993 through September 30, 1998 was
75.16%. The average annual total returns at net asset value on the Fund's Class
B shares for the one and five year periods ended September 30, 1998 and from
August 17, 1993 through September 30, 1998 were -10.56%, 11.06% and 11.57%,
respectively. 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, 1998 was 32.42%.
The average annual total returns at net asset value on the Fund's Class C shares
for the fiscal year ended September 30, 1998 and from October 2, 1995 through
September 30, 1998 were -10.53% and 9.83%, respectively.
<PAGE>
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A, Class B, Class C or Class Y 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, Class C and Class Y 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.
<PAGE>
The total return on an investment in the Fund's Class A, Class B, Class
C or Class Y 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, Class C or Class Y 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, Class C or Class Y shares. However,
when comparing total return of an investment in Class A, Class B, Class C or
Class Y 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, Class C
or Class Y 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.
<PAGE>
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.
<PAGE>
For the fiscal year ended September 30, 1998, payments under the Plan
for Class A shares totaled $7,503,574, all of which was paid by the Distributor
to Recipients, including $441,221 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, 1998, totaled $9,656,431, of which $7,793,329 was retained
by the Distributor and $132,174 was paid to a dealer affiliated with the
Distributor. Payments made under the Class C Plan during the fiscal year ended
September 30, 1998, totaled $793,141, of which $501,769 was retained by the
Distributor and $9,111 was paid to an affiliate.
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.
<PAGE>
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.
<PAGE>
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, Class C and Class Y shares of the Fund are determined as of
the close of business of The New York Stock Exchange (the "NYSE") on each day
that the NYSE 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 NYSE 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 NYSE's most recent annual holiday schedule (which
is subject to change) states that it will close on New Year's Day, Martin Luther
King, Jr. 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 portion of its assets in foreign securities primarily
listed on foreign exchanges which may trade on Saturdays or customary U.S.
business holidays on which the NYSE is closed. Because the Fund's price and net
asset value will not be calculated on those days, the Fund's net asset values
per share may be significantly affected on such days when shareholders may not
purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows:
(i) equity securities traded on a U.S. securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market, Inc.
for which last sale information is regularly reported are valued at the
last reported sale price on the principal exchange for such security or
NASDAQ that day (the "Valuation Date") or, in the absence of sales that
day, at the last reported sale price preceding the Valuation Date if it
is within the spread of the closing "bid" and "asked" prices on the
Valuation Date or, if not, the closing "bid" price on the Valuation
Date;
(ii) equity securities traded on a foreign securities exchange
are valued generally at the last sales price available to the pricing
service approved by the Fund's Board of Trustees or to the Manager as
reported by the principal exchange on which the security is traded at
its last trading session on or immediately preceding the Valuation
Date, or, if unavailable, 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;
<PAGE>
(iii) a non-money market fund will value (x) debt instruments
that had a maturity of more than 397 days when issued, (y) debt
instruments that had a maturity of 397 days or less when issued and
have a remaining maturity in excess of 60 days, and (z) non-money
market type debt instruments that had a maturity of 397 days or less
when issued and have a remaining maturity of sixty days or less, at the
mean between "bid" and "asked" prices determined by a pricing service
approved by the Fund's Board of Trustees or, if unavailable, obtained
by the Manager from two active market makers in the security on the
basis of reasonable inquiry;
(iv) money market-type debt securities held by a non-money
market fund that had a maturity of less than 397 days when issued and
have a remaining maturity of 60 days or less, and debt instruments held
by a money market fund that have a remaining maturity of 397 days or
less, shall be valued at cost, adjusted for amortization of premiums
and accretion of discount; and
(v) 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 active market makers willing to
give quotes (see (ii) and (iii) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a single active market maker
(which in certain cases may be the "bid" price if no "asked" price is available)
provided that the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect the current market value.
The Manager may use pricing services approved by the Board of Trustees
to price U.S. Government securities, corporate debt securities or
mortgage-backed securities for which last sale information is not generally
available. The pricing service, when valuing such securities, may use "matrix"
comparisons to the prices for comparable instruments on the basis of quality,
yield, maturity and other special factors involved. The Manager will monitor the
accuracy of the 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 New York
Stock Exchange. Events affecting the values of foreign securities traded in
securities markets that occur between the time their prices are determined and
the close of the New York Stock Exchange will not be reflected in the Fund's
calculation of net asset value unless the Board of Trustees or the Manager,
under procedures established by the Board of Trustees, determines that the
particular event is likely to effect a material change in the value of such
security. Foreign currency, including 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.
<PAGE>
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
"ask" 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 "ask"
prices obtained by the Manager from two active market makers. If the Manager is
unable to locate two active market makers willing to give quotes, the security
may be priced at the mean between the "bid" and "asked" prices provided by a
single active market maker (which in certain cases may be the "bid" price if no
"asked" price is available) provided that the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect the current market
value.
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 option.
In determining the Fund's gain on investments, if a call or put written by the
Fund is exercised, the proceeds are increased by the premium received. If a call
or put written by the Fund expires, the Fund has a gain in the amount of the
premium; if the Fund enters into a closing purchase transaction, it will have a
gain or loss depending on whether the premium received was more or less than the
cost of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is reduced by
the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House ("ACH")
transfer to buy 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.
<PAGE>
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. Relations by virtue of a remarriage (step-children,
step-parents, etc.) are included.
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:
<PAGE>
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 MunicipalFund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer MidCap 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 World Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer International Small Company 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 Balanced Value Fund
Oppenheimer Quest Capital Value Fund, Inc.
Rochester Fund Municipals
Oppenheimer Convertible Securities Fund
Limited Term New York Municipal Fund
<PAGE>
and the following "Money Market Funds":
<PAGE>
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.
<PAGE>
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund shares
may be subject to a contingent deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as a "Letter") is an
investor's statement in writing to the Distributor of the intention to purchase
Class A shares 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.
<PAGE>
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.
<PAGE>
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. If you make payments from your
bank account to purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to the
investment dates selected in the Account Application. Neither the Distributor
the Transfer Agent nor the Fund shall be responsible for any delays in
purchasing shares resulting from delays in ACH transmission.
There is a front-end sales charge on the purchase of certain Oppenheimer
funds, or a contingent deferred sales charge may apply to shares purchased by
Asset Builder payments. An application should be obtained from the Distributor,
completed and returned, and a prospectus of the selected fund(s) should be
obtained from the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may be changed or
the automatic investments may be terminated at any time by writing to the
Transfer Agent. A reasonable period (approximately 15 days) is required after
the Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans at any
time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset value of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee benefit plans
that may purchase Class A shares without being subject to the Class A contingent
deferred sales charge, the term "employee benefit plan" means any plan or
arrangement, whether or not "qualified" under the Internal Revenue Code,
including, medical savings accounts, payroll deduction plans or similar plans in
which Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or of affiliated
employers, if the Fund account is registered in the name of the fiduciary or
other person for the benefit of participants in the plan.
<PAGE>
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans other than
public school 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 or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the plan(s) purchase Class A shares of the Fund
through a single investment dealer, broker, or other financial institution
designated by the group. "Group retirement plan" also includes qualified
retirement plans and non-qualified deferred compensation plans and IRAs that
purchase Class A shares of the Fund through a single investment dealer, broker,
or other financial institution, if that broker-dealer has made special
arrangements with the Distributor enabling those plans to purchase Class A
shares of the Fund at net asset value but subject to a contingent deferred sales
charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases:
(i) the recordkeeping for the Retirement Plan is performed on a daily
valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch")
and, on the date the plan sponsor signs the Merrill Lynch recordkeeping service
agreement, the Retirement Plan has $3 million or more in assets invested in
mutual funds other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM") that are made available pursuant to a Service
Agreement between Merrill Lynch and the mutual fund's principal underwriter or
distributor and in funds advised or managed by MLAM (collectively, the
"Applicable Investments"); or
(ii) the recordkeeping for the Retirement Plan is performed on a daily
valuation basis by an independent record keeper whose services are provided
under a contract or arrangement between the Retirement Plan and Merrill Lynch.
On the date the plan sponsor signs the Merrill Lynch record keeping service
agreement, the Plan must have $3 million or more in assets, excluding assets
held in money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.
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.
<PAGE>
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.
<PAGE>
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. Shares are
normally redeemed pursuant to an Automatic Withdrawal Plan three business days
before the date you select in the Account Application. If a contingent deferred
sales charge applies to the redemption, the amount of the check or payment will
be reduced accordingly. The Fund cannot guarantee receipt of a payment on the
date requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A 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, as
well as in 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.
<PAGE>
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.
<PAGE>
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 and Centennial America
Fund, L.P., 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.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds. Exchanges to Class M shares of
Oppenheimer Convertible Securities Fund are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge). However, shares of Oppenheimer Money Market Fund, Inc., purchased
with the redemption proceeds of shares of other mutual funds (other than funds
managed by the Manager or its subsidiaries) redeemed within 30 days prior to
that purchase may subsequently be exchanged for shares of other Oppenheimer
funds without being subject to an initial or contingent deferred sales charge,
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.
<PAGE>
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, if you redeem Class A shares of the Fund that were
acquired by exchange of Class A shares of other Oppenheimer funds purchased
subject to a Class A contingent deferred sales charge within 18 months of the
end of the calendar month of the purchase of the sales charge within 18 months
of the end of the calendar month of the purchase of the exchanged Class A
shares, the Class A contingent deferred sales charge is imposed on the redeemed
shares (see "Class A Contingent Deferred Sales Charge" in the Prospectus). (A
different holding period may apply to shares purchased prior to June 1, 1998).
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.
<PAGE>
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 qualifying 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.
<PAGE>
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. 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.
<PAGE>
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, 1998, 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, 1998, 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, 1998, 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.
KPMG Peat Marwick LLP
Denver, Colorado
October 21, 1998
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments September 30, 1998
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
================================================================================
Common Stocks--90.1%
- --------------------------------------------------------------------------------
Basic Materials--0.9%
- --------------------------------------------------------------------------------
Chemicals--0.7%
Minerals Technologies, Inc. 585,000 $ 25,776,562
- --------------------------------------------------------------------------------
Metals--0.2%
Cia de Minas Buenaventura SA,
Sponsored ADR, B Shares(1) 701,500 8,154,937
- --------------------------------------------------------------------------------
Consumer Cyclicals--20.9%
- --------------------------------------------------------------------------------
Autos & Housing--4.4%
Brisa-Auto Estradas de Portugal SA 281,525 12,817,104
- --------------------------------------------------------------------------------
IRSA Inversiones y Representaciones SA 7,296,101 15,936,565
- --------------------------------------------------------------------------------
Porsche AG, Preference 58,455 102,125,941
- --------------------------------------------------------------------------------
Solidere, GDR(1)(2) 540,000 5,616,000
- --------------------------------------------------------------------------------
Volkswagen AG(3) 500,000 36,347,776
------------
172,843,386
- --------------------------------------------------------------------------------
Leisure & Entertainment--4.5%
Granada Group plc 3,400,000 42,756,975
- --------------------------------------------------------------------------------
Hasbro, Inc. 1,400,000 41,300,000
- --------------------------------------------------------------------------------
International Game Technology 1,411,900 26,208,394
- --------------------------------------------------------------------------------
Nintendo Co. Ltd. 681,600 64,091,864
- --------------------------------------------------------------------------------
Resorts World Berhad(4) 2,804,000 2,007,074
------------
176,364,307
- --------------------------------------------------------------------------------
Media--10.2%
Canal Plus 871,000 211,502,781
- --------------------------------------------------------------------------------
Carlton Communications plc 11,000,000 74,773,725
- --------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored
GDR(1)(2)(3) 1,623,300 31,349,981
- --------------------------------------------------------------------------------
Prosieben Media AG, Preferred 365,460 20,116,815
- --------------------------------------------------------------------------------
Singapore Press Holdings Ltd.(1) 2,000,000 16,620,051
- --------------------------------------------------------------------------------
Television Broadcasts Ltd. 4,000,000 10,221,334
- --------------------------------------------------------------------------------
Television Francaise 1 200,000 34,256,346
------------
398,841,033
- --------------------------------------------------------------------------------
Retail: General--0.4%
Sonae Investimentos 528,000 15,392,624
- --------------------------------------------------------------------------------
Retail: Specialty--1.4%
Borders Group, Inc.(3) 1,000,000 22,250,000
- --------------------------------------------------------------------------------
Dixons Group plc 3,000,000 30,665,724
- --------------------------------------------------------------------------------
Giordano International Ltd. 22,160,000 3,002,904
------------
55,918,628
13 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Consumer Non-Cyclicals--15.1%
- --------------------------------------------------------------------------------
Beverages--2.0%
Cadbury Schweppes plc 4,900,000 $ 63,452,303
- --------------------------------------------------------------------------------
Cia Cervejaria Brahma, Preference 36,978,000 14,660,194
------------
78,112,497
- --------------------------------------------------------------------------------
Food--2.9%
Carrefour Supermarche SA 58,500 37,063,493
- --------------------------------------------------------------------------------
Dairy Farm International Holdings
Ltd.(1) 36,683,456 38,884,463
- --------------------------------------------------------------------------------
Raisio Group plc 2,516,000 36,588,316
------------
112,536,272
- --------------------------------------------------------------------------------
Healthcare/Drugs--7.5%
Amgen, Inc.(3) 700,000 52,893,750
- --------------------------------------------------------------------------------
BioChem Pharma, Inc.(1)(3) 888,100 16,318,837
- --------------------------------------------------------------------------------
Fresenius AG, Preference 254,100 43,025,176
- --------------------------------------------------------------------------------
Genzyme Corp. (General Division)(1)(3) 1,000,000 36,125,000
- --------------------------------------------------------------------------------
Gilead Sciences, Inc.(3) 866,200 18,731,575
- --------------------------------------------------------------------------------
Glaxo Wellcome plc, Sponsored ADR 500,000 28,562,500
- --------------------------------------------------------------------------------
Incyte Pharmaceuticals, Inc.(3) 140,500 2,985,625
- --------------------------------------------------------------------------------
Millennium Pharmaceuticals, Inc.(3) 513,000 8,913,375
- --------------------------------------------------------------------------------
Novartis AG 12,000 19,235,548
- --------------------------------------------------------------------------------
Pfizer, Inc. 600,000 63,562,500
------------
290,353,886
- --------------------------------------------------------------------------------
Healthcare/Supplies & Services--1.1%
Quintiles Transnational Corp.(1)(3) 472,784 20,684,300
- --------------------------------------------------------------------------------
Swiss Medical SA(3)(4)(5) 300,000 20,706,000
------------
41,390,300
- --------------------------------------------------------------------------------
Household Goods--1.6%
Wella AG, Preference 85,000 61,689,504
- --------------------------------------------------------------------------------
Energy--2.4%
- --------------------------------------------------------------------------------
Energy Services & Producers--2.0%
Baker Hughes, Inc. 664,740 13,917,994
- --------------------------------------------------------------------------------
Coflexip SA, Sponsored ADR(1) 350,000 13,868,750
- --------------------------------------------------------------------------------
IHC Caland NV 123,608 5,770,323
- --------------------------------------------------------------------------------
McDermott International, Inc. 1,000,000 26,937,500
- --------------------------------------------------------------------------------
Transocean Offshore, Inc. 503,198 17,454,681
------------
77,949,248
- --------------------------------------------------------------------------------
Oil-Integrated--0.4%
British Petroleum Co. plc, ADR(1) 199,966 17,447,033
14 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Financial--18.0%
- --------------------------------------------------------------------------------
Banks--11.0%
Banco Bradesco SA, Preference 3,997,522,476 $ 23,401,776
- --------------------------------------------------------------------------------
Banco Espirito Santo e Comercial de
Lisboa SA 701,950 19,227,974
- --------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA,
Sponsored ADR(1) 1,562,055 30,264,816
- --------------------------------------------------------------------------------
Banco Latinoamericano de Exportaciones
SA, Cl. E 123,800 1,988,537
- --------------------------------------------------------------------------------
Banco Pinto & Sotto Mayor SA 603,350 9,791,753
- --------------------------------------------------------------------------------
Banco Rio de la Plata SA, ADR(1) 1,825,600 15,517,600
- --------------------------------------------------------------------------------
Banque Libanaise Pour Le Commercial, GDR 230,000 4,312,500
- --------------------------------------------------------------------------------
Barclays plc 900,000 14,698,135
- --------------------------------------------------------------------------------
Bayerische Hypo-Und Vereinsbank 700,000 52,771,585
- --------------------------------------------------------------------------------
Cie Financiere de Paribas(3) 419,980 22,629,521
- --------------------------------------------------------------------------------
Cie Financiere Richemont AG, A Units 20,140 25,751,276
- --------------------------------------------------------------------------------
Citicorp 200,000 18,587,500
- --------------------------------------------------------------------------------
Credito Italiano SpA 9,167,600 38,169,436
- --------------------------------------------------------------------------------
Istituto Bancario San Paolo di Torino 2,000,000 25,114,223
- --------------------------------------------------------------------------------
National Westminster Bank plc 2,627,414 35,162,149
- --------------------------------------------------------------------------------
Northern Trust Corp. 301,600 20,584,200
- --------------------------------------------------------------------------------
UBS AG(3) 250,000 48,760,684
- --------------------------------------------------------------------------------
Unibanco-Uniao de Bancos Brasileiros
SA, Sponsored GDR(1) 1,605,800 21,678,300
-------------
428,411,965
- --------------------------------------------------------------------------------
Diversified Financial--5.4%
American Express Co. 400,000 31,050,000
- --------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 400,000 26,100,000
- --------------------------------------------------------------------------------
Credit Saison Co. Ltd.(1) 1,000,000 19,333,577
- --------------------------------------------------------------------------------
Egypt Investment Co.(3) 96,500 1,447,500
- --------------------------------------------------------------------------------
Fannie Mae 800,000 51,400,000
- --------------------------------------------------------------------------------
First NIS Regional Fund(2) 479,909 1,919,636
- --------------------------------------------------------------------------------
Housing Development Finance Corp. Ltd. 118,910 6,782,192
- --------------------------------------------------------------------------------
ICICI Ltd. 50 63
- --------------------------------------------------------------------------------
ICICI Ltd., GDR(2) 2,178,200 18,242,425
- --------------------------------------------------------------------------------
Ladbroke Group plc 9,000,000 33,571,703
- --------------------------------------------------------------------------------
Sedgwick Group plc 5,964,920 20,121,552
-------------
209,968,648
- --------------------------------------------------------------------------------
Insurance--1.6%
American International Group, Inc. 195,300 15,038,100
- --------------------------------------------------------------------------------
Chubb Corp. 500,000 31,500,000
- --------------------------------------------------------------------------------
Marschollek, Lautenschlaeger und
Partner AG 27,200 13,800,547
-------------
60,338,647
15 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Real Estate Investment Trusts--0.0%
Unit Trust of India-Masterplus 91(3) 20,900 $ 8,355
- --------------------------------------------------------------------------------
Industrial--5.2%
- --------------------------------------------------------------------------------
Industrial Materials--0.4%
Hanson plc 2,314,413 14,670,538
- --------------------------------------------------------------------------------
Industrial Services--3.7%
Adecco SA 61,818 22,908,589
- --------------------------------------------------------------------------------
Rentokil Initial plc 10,200,000 62,098,729
- --------------------------------------------------------------------------------
Service Corp. International(1) 682,500 21,754,688
- --------------------------------------------------------------------------------
WPP Group plc 8,400,000 38,792,268
-------------
145,554,274
- --------------------------------------------------------------------------------
Manufacturing--1.1%
Societe BIC SA 746,729 41,581,159
- --------------------------------------------------------------------------------
Technology--20.5%
- --------------------------------------------------------------------------------
Aerospace/Defense--1.3%
Rolls-Royce plc 15,094,246 52,071,945
- --------------------------------------------------------------------------------
Computer Hardware--2.4%
International Business Machines Corp. 350,000 44,800,000
- --------------------------------------------------------------------------------
Sun Microsystems, Inc.(3) 1,000,000 49,812,500
-------------
94,612,500
- --------------------------------------------------------------------------------
Computer Software/Services--4.3%
Cap Gemini SA(1) 600,000 91,849,827
- --------------------------------------------------------------------------------
Lernout & Hauspie Speech Products NV(1)(3) 500,000 20,093,750
- --------------------------------------------------------------------------------
Microsoft Corp.(3) 250,000 27,515,625
- --------------------------------------------------------------------------------
Misys plc 3,000,000 27,122,469
-------------
166,581,671
- --------------------------------------------------------------------------------
Electronics--3.6%
Advanced Micro Devices, Inc.(1)(3) 2,000,000 37,125,000
- --------------------------------------------------------------------------------
National Semiconductor Corp.(3) 4,000,000 38,750,000
- --------------------------------------------------------------------------------
Royal Philips Electronics NV 500,000 26,921,977
- --------------------------------------------------------------------------------
Sony Corp.(1) 400,000 27,799,341
- --------------------------------------------------------------------------------
STMicroelectronics NV(1)(3) 170,000 7,639,375
-------------
138,235,693
- --------------------------------------------------------------------------------
Telecommunications-Technology--8.9%
Alcatel 600,000 53,311,438
- --------------------------------------------------------------------------------
Cable & Wireless Communications plc(3) 1,600,000 10,699,440
- --------------------------------------------------------------------------------
Cisco Systems, Inc.(3) 558,000 34,491,375
- --------------------------------------------------------------------------------
Energis plc(3) 2,400,000 29,875,502
- --------------------------------------------------------------------------------
General Instrument Corp.(3) 2,000,000 43,250,000
- --------------------------------------------------------------------------------
Kinnevik Investments AB Free, Series B(1) 1,400,000 36,811,402
- --------------------------------------------------------------------------------
Leap Wireless International, Inc.(1)(3) 250,000 1,171,875
16 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Market Value
Shares See Note 1
- --------------------------------------------------------------------------------
Telecommunications-Technology (continued)
Lucent Technologies, Inc. 100,000 $ 6,906,250
- --------------------------------------------------------------------------------
QUALCOMM, Inc.(1)(3) 1,000,000 47,937,500
- --------------------------------------------------------------------------------
Scientific-Atlanta, Inc. 1,145,200 24,192,350
- --------------------------------------------------------------------------------
SK Telecom Co. Ltd. 48,568 22,668,402
- --------------------------------------------------------------------------------
Societe Europeenne de Communication SA,
ADS, A Shares(3) 28,000 643,306
- --------------------------------------------------------------------------------
Societe Europeenne de Communication SA,
ADS, B Shares(3) 252,000 5,789,750
- --------------------------------------------------------------------------------
Telecom Italia Mobile SpA 5,000,000 29,108,292
--------------
346,856,882
- --------------------------------------------------------------------------------
Utilities--7.1%
- --------------------------------------------------------------------------------
Electric Utilities--1.0%
Vivendi (Ex-Generale des Eaux) 200,000 39,823,002
- --------------------------------------------------------------------------------
Telephone Utilities--6.1%
AT&T Corp.(1) 800,000 46,750,000
- --------------------------------------------------------------------------------
Cia de Telecommunicaciones de Chile SA,
Sponsored ADR(1) 380,000 7,267,500
- --------------------------------------------------------------------------------
CPT Telefonica del Peru SA, Cl. B 9,279,949 11,396,736
- --------------------------------------------------------------------------------
Hellenic Tellecommunication Organization SA 2,000,000 47,915,825
- --------------------------------------------------------------------------------
MCI WorldCom, Inc.(3) 1,332,600 65,130,825
- --------------------------------------------------------------------------------
Portugal Telecom SA 750,000 27,268,353
- --------------------------------------------------------------------------------
Telecomunicacoes de Sao Paulo SA, Preference 159,977,692 23,210,597
- --------------------------------------------------------------------------------
Telesp Celular SA, Cl. B(3) 159,207,000 6,849,057
--------------
235,788,893
--------------
Total Common Stocks (Cost $3,272,476,560) 3,507,274,389
Units
================================================================================
Rights, Warrants and Certificates--0.0%
- --------------------------------------------------------------------------------
American Satellite Network, Inc. Wts., Exp. 6/99 51,750 --
- --------------------------------------------------------------------------------
Industrial Finance Corp. of Thailand (The) Rts.,
Exp. 6/99 3,693,249 --
--------------
Total Rights, Warrants and Certificates
(Cost $0) --
Face
Amount
================================================================================
U.S. Government Obligations--1.9%
- --------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 5.09%,
11/15/18 (Cost $54,577,517)(8) $ 216,900,000 73,944,897
================================================================================
Short-Term Notes--7.1%(9)
- --------------------------------------------------------------------------------
Countrywide Home Loans, 5.53%, 10/27/98 25,000,000 24,900,153
- --------------------------------------------------------------------------------
Countrywide Home Loans, 5.54%, 10/14/98 25,000,000 24,949,896
- --------------------------------------------------------------------------------
Countrywide Home Loans, 5.58%, 10/20/98 25,000,000 24,926,111
- --------------------------------------------------------------------------------
Ford Motor Credit Co., 5.52%, 10/6/98 50,000,000 49,961,666
- --------------------------------------------------------------------------------
General Electric Capital Services, 5.53%,
10/7/98 50,000,000 49,953,917
- --------------------------------------------------------------------------------
General Motors Acceptance Corp., 5.50%,
10/23/98 50,000,000 49,831,944
- --------------------------------------------------------------------------------
Goldman Sachs Group, LP, 5.51%, 10/9/98 50,000,000 49,938,667
--------------
Total Short-Term Notes (Cost $274,462,354) 274,462,354
17 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Investments (Continued)
- --------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
================================================================================
Repurchase Agreements--0.9%
- --------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 5.50%, dated 9/30/98, to be
repurchased at $36,555,584 on 10/1/98, collateralized by U.S. Treasury Bonds,
7.625%, 2/15/25, with a value of
$38,193,772 (Cost $36,550,000) $ 36,550,000 $ 36,550,000
- --------------------------------------------------------------------------------
Total Investments, at Value
(Cost $3,638,066,431) 100.0% 3,892,231,640
- --------------------------------------------------------------------------------
Other Assets Net of Liabilities 0.0 710,888
------------- -------------
Net Assets 100.0% $3,892,942,528
============= ==============
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
Country Market Value Percent
- -------------------------------------------------------------------------------
United States $1,446,546,292 37.2%
- -------------------------------------------------------------------------------
Great Britain 596,542,689 15.3
- -------------------------------------------------------------------------------
France 553,525,690 14.2
- -------------------------------------------------------------------------------
Germany 329,877,345 8.5
- -------------------------------------------------------------------------------
Switzerland 116,656,096 3.0
- -------------------------------------------------------------------------------
Japan 111,224,782 2.9
- -------------------------------------------------------------------------------
Italy 92,391,951 2.4
- -------------------------------------------------------------------------------
Brazil 89,799,925 2.3
- -------------------------------------------------------------------------------
Portugal 84,497,808 2.2
- -------------------------------------------------------------------------------
Argentina 82,424,981 2.1
- -------------------------------------------------------------------------------
Singapore 55,504,515 1.4
- -------------------------------------------------------------------------------
Greece 47,915,825 1.2
- -------------------------------------------------------------------------------
Sweden 43,244,458 1.1
- -------------------------------------------------------------------------------
Finland 36,588,316 0.9
- -------------------------------------------------------------------------------
The Netherlands 32,692,301 0.8
- -------------------------------------------------------------------------------
Mexico 31,349,981 0.8
- -------------------------------------------------------------------------------
India 25,033,034 0.6
- -------------------------------------------------------------------------------
Korea, Republic of (South) 22,668,402 0.6
- -------------------------------------------------------------------------------
Belgium 20,093,750 0.5
- -------------------------------------------------------------------------------
Peru 19,551,674 0.5
- -------------------------------------------------------------------------------
Canada 16,318,838 0.4
- -------------------------------------------------------------------------------
China 13,224,239 0.3
- -------------------------------------------------------------------------------
Lebanon 9,928,500 0.3
- -------------------------------------------------------------------------------
Chile 7,267,500 0.2
- -------------------------------------------------------------------------------
Malaysia 2,007,074 0.1
- -------------------------------------------------------------------------------
Panama 1,988,538 0.1
- -------------------------------------------------------------------------------
Russia 1,919,636 0.1
- -------------------------------------------------------------------------------
Egypt 1,447,500 0.0
-------------- -------
Total $3,892,231,640 100.0%
============== =======
18 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Loaned security--See Note 9 of Notes to Financial Statements.
2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $57,128,042 or 1.47% of the Fund's net
assets as of September 30, 1998.
3. Non-income producing security.
4. Identifies issues considered to be illiquid or restricted--See Note 7 of
Notes to Financial Statements.
5. 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,
1998. The aggregate fair value of all securities of affiliated companies held by
the Fund as of September 30, 1998 amounts to $20,706,000. Transactions during
the period in which the issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
Shares Gross Gross Shares
Sept. 30, 1997 Additions Reductions Sept. 30, 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Clinica y Maternidad
Suizo Argentino(6) 1,800 -- 1,800 --
- ----------------------------------------------------------------------------------------
Swiss Medical SA(6) -- 300,000 -- 300,000
- ----------------------------------------------------------------------------------------
LEM Holdings SA 25,000 -- 25,000 --
- ----------------------------------------------------------------------------------------
Wella AG, Preference(7) 163,000 7,000 85,000 85,000
</TABLE>
6. Swiss Medical SA signed a Share Exchange Agreement to acquire all outstanding
shares of Swiss Medical Group SA and Clinica y Maternidad Suizo Argentino in
exchange for shares of Swiss Medical SA.
7. Not an affiliate as of September 30, 1998.
8. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
9. Short-term notes are generally traded on a discount basis; the interest rate
is the discount rate received by the Fund at the time of purchase.
See accompanying Notes to Financial Statements.
19 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities September 30, 1998
- --------------------------------------------------------------------------------
================================================================================
Assets
Investments, at value--see accompanying statement:
Unaffiliated companies (cost $3,624,776,431) $3,871,525,640
Affiliated companies (cost $13,290,000) 20,706,000
- --------------------------------------------------------------------------------
Cash 220,018
- --------------------------------------------------------------------------------
Collateral for securities loaned--Note 9 291,899,764
- --------------------------------------------------------------------------------
Unrealized appreciation on forward foreign currency
exchange contracts--Note 5 2,365
- --------------------------------------------------------------------------------
Receivables:
Investments sold 50,235,498
Interest and dividends 7,141,852
Shares of beneficial interest sold 3,251,103
- --------------------------------------------------------------------------------
Other 152,346
--------------
Total assets 4,245,134,586
================================================================================
Liabilities
Return of collateral for securities loaned--Note 9 291,899,764
- --------------------------------------------------------------------------------
Unrealized depreciation on forward foreign currency
exchange contracts--Note 5 62,083
- --------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased 49,886,980
Distribution and service plan fees 2,270,344
Shares of beneficial interest redeemed 5,949,402
Transfer and shareholder servicing agent fees 642,644
Custodian fees 465,331
Shareholder reports 440,484
Trustees' fees--Note 1 317,504
Other 257,522
--------------
Total liabilities 352,192,058
================================================================================
Net Assets $3,892,942,528
==============
================================================================================
Composition of Net Assets
Paid-in capital $3,302,267,050
- --------------------------------------------------------------------------------
Undistributed net investment income 31,649,782
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign
currency transactions 303,407,647
- --------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of
assets and liabilities denominated in foreign currencies 255,618,049
--------------
Net assets $3,892,942,528
==============
20 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on
net assets of $2,904,762,558 and 75,761,847 shares of
beneficial interest outstanding) $38.34
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $40.68
- --------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $897,472,603 and
24,045,890
shares of beneficial interest outstanding) $37.32
- --------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $90,707,367 and
2,400,552
shares of beneficial interest outstanding) $37.79
See accompanying Notes to Financial Statements.
21 Oppenheimer Global Fund
<PAGE>
- -------------------------------------------------------------------------------
Statement of Operations For the Year Ended September 30, 1998
- -------------------------------------------------------------------------------
===============================================================================
Investment Income
Dividends (net of foreign withholding taxes of $1,174,417) $ 48,697,049
- -------------------------------------------------------------------------------
Interest 42,666,054
- -------------------------------------------------------------------------------
Lending fees--Note 9 1,740,989
-------------
Total income 93,104,092
===============================================================================
Expenses
Management fees--Note 4 30,654,007
- -------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 7,503,574
Class B 9,656,431
Class C 793,141
- -------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 6,265,309
- -------------------------------------------------------------------------------
Custodian fees and expenses 2,121,713
- -------------------------------------------------------------------------------
Shareholder reports 893,357
- -------------------------------------------------------------------------------
Registration and filing fees 172,316
- -------------------------------------------------------------------------------
Legal, auditing and other professional fees 112,273
- -------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 61,270
- -------------------------------------------------------------------------------
Insurance expenses 26,067
- -------------------------------------------------------------------------------
Other 222,125
-------------
Total expenses 58,481,583
===============================================================================
Net Investment Income 34,622,509
===============================================================================
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investments:
Unaffiliated companies 529,632,943
Affiliated companies 232,157
Closing of futures contracts (16,533,101)
Foreign currency transactions (104,194,692)
-------------
Net realized gain 409,137,307
- -------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (748,040,170)
Translation of assets and liabilities denominated in
foreign currencies (134,233,001)
-------------
Net change (882,273,171)
-------------
Net realized and unrealized loss (473,135,864)
===============================================================================
Net Decrease in Net Assets Resulting from Operations $(438,513,355)
=============
See accompanying Notes to Financial Statements.
22 Oppenheimer Global Fund
<PAGE>
- -------------------------------------------------------------------------------
Statements of Changes in Net Assets
- -------------------------------------------------------------------------------
Year Ended September 30,
1998 1997
===============================================================================
Operations
Net investment income $ 34,622,509 $ 19,306,936
- -------------------------------------------------------------------------------
Net realized gain 409,137,307 494,542,865
- -------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation (882,273,171) 516,162,745
--------------- ---------------
Net increase (decrease) in net assets
resulting from operations (438,513,355) 1,030,012,546
===============================================================================
Dividends and Distributions to Shareholders Dividends from net investment
income:
Class A (56,873,734) (33,892,204)
Class B (9,622,535) (3,899,147)
Class C (754,610) (207,585)
- -------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (393,765,656) (88,232,113)
Class B (109,218,961) (20,402,731)
Class C (7,621,412) (788,673)
===============================================================================
Beneficial Interest Transactions Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 262,647,406 206,934,768
Class B 230,002,915 184,954,826
Class C 51,057,171 33,524,657
===============================================================================
Net Assets
Total increase (decrease) (472,662,771) 1,308,004,344
- -------------------------------------------------------------------------------
Beginning of period 4,365,605,299 3,057,600,955
--------------- ---------------
End of period (including undistributed
net investment income of $31,649,782 and
$56,492,098, respectively) $ 3,892,942,528 $ 4,365,605,299
=============== ===============
See accompanying Notes to Financial Statements.
23 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Class A
-----------------------------
Year Ended September 30,
1998 1997 1996
================================================================================
Per Share Operating Data
Net asset value, beginning of period $49.32 $39.00 $36.84
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 1.08 .32 .23
Net realized and unrealized gain (loss) (5.49) 11.91 4.22
------ ------ ------
Total income (loss) from investment operations (4.41) 12.23 4.45
- --------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.83) (.53) (.24)
Distributions from net realized gain (5.74) (1.38) (2.05)
------ ------ ------
Total dividends and distributions to shareholders (6.57) (1.91) (2.29)
- --------------------------------------------------------------------------------
Net asset value, end of period $38.34 $49.32 $39.00
====== ====== ======
===============================================================================
Total Return, at Net Asset Value(2) (9.85)% 32.85% 12.98%
===============================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $2,905 $3,408 $2,499
- -------------------------------------------------------------------------------
Average net assets (in millions) $3,381 $2,869 $2,309
- -------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.96% 0.74% 0.62%
Expenses 1.14% 1.13% 1.17%
- -------------------------------------------------------------------------------
Portfolio turnover rate(5) 64.8% 65.9% 102.9%
1. For the period from October 2, 1995 (inception of offering) to September 30,
1996.
2. 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.
3. Annualized.
24 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------------- -----------------------------------------------
Year Ended September 30,
1995 1994 1998 1997 1996 1995 1994
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $37.69 $35.04 $ 48.19 $38.19 $36.16 $37.36 $34.99
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .31 .17 .69 (.04) (.05) .06 .08
Net realized and unrealized gain (loss) 2.59 6.10 (5.31) 11.68 4.13 2.49 5.83
------ ------ ------- ------ ------ ------ ------
Total income (loss) from investment operations 2.90 6.27 (4.62) 11.64 4.08 2.55 5.91
- ----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.25) (.51) (.26) -- -- (.18)
Distributions from net realized gain (3.75) (3.37) (5.74) (1.38) (2.05) (3.75) (3.36)
------ ------ ------- ------ ------ ------ ------
Total dividends and distributions to shareholders (3.75) (3.62) (6.25) (1.64) (2.05) (3.75) (3.54)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $36.84 $37.69 $ 37.32 $48.19 $38.19 $36.16 $37.36
====== ====== ======= ====== ====== ====== ======
======================================================================================================================
Total Return, at Net Asset Value(2) 9.26% 19.19% (10.56)% 31.77% 12.07% 8.34% 18.10%
======================================================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $2,186 $1,921 $ 897 $ 897 $ 541 $ 340 $ 187
- ----------------------------------------------------------------------------------------------------------------------
Average net assets (in millions) $1,979 $1,711 $ 966 $ 692 $ 438 $ 258 $ 88
- ----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.90% 0.38% 0.20% (0.23)% (0.17)% 0.09% (0.30)%
Expenses 1.20% 1.15% 1.91% 1.94% 2.00% 2.03% 2.08%
- ----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 84.4% 78.3% 64.8% 65.9% 102.9% 84.4% 78.3%
</TABLE>
4. Due to the acquisition of the net assets of Oppenheimer Global Emerging
Growth Fund, the ratios for Class C shares are not necessarily comparable to
those of prior periods.
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, 1998, were $2,584,104,436 and $2,817,472,485, respectively.
25 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
----------------------------
Year Ended September 30,
1998 1997 1996(1)
================================================================================
<S> <C> <C> <C>
Per Share Operating Data
Net asset value, beginning of period $48.77 $38.73 $36.67
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .75 (.08) .09
Net realized and unrealized gain (loss) (5.42) 11.86 4.13
------ ------ ------
Total income (loss) from investment operations (4.67) 11.78 4.22
- --------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.57) (.36) (.11)
Distributions from net realized gain (5.74) (1.38) (2.05)
------ ------ ------
Total dividends and distributions to shareholders (6.31) (1.74) (2.16)
- --------------------------------------------------------------------------------
Net asset value, end of period $37.79 $48.77 $38.73
====== ====== ======
================================================================================
Total Return, at Net Asset Value(2) (10.53)% 31.76% 12.34%
================================================================================
Ratios/Supplemental Data
Net assets, end of period (in millions) $91 $60 $18
- --------------------------------------------------------------------------------
Average net assets (in millions) $79 $35 $8
- --------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.23% (0.86)%(4) 0.04%(3)
Expenses 1.91% 1.94% 1.99%(3)
- --------------------------------------------------------------------------------
Portfolio turnover rate(5) 64.8% 65.9% 102.9%
</TABLE>
1. For the period from October 2, 1995 (inception of offering) to September 30,
1996.
2. 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.
3. Annualized.
4. Due to the acquisition of the net assets of Oppenheimer Global Emerging
Growth Fund, the ratios for Class C shares are not necessarily comparable to
those of prior periods.
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, 1998, were $2,584,104,436 and $2,817,472,485, respectively.
See accompanying Notes to Financial Statements.
26 Oppenheimer Global Fund
<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. 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 have appreciation possibilities. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class
B and Class C shares. Class A shares are sold with a front-end sales charge.
Class B and Class C shares may be subject to a contingent deferred sales charge.
All 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 that class and exclusive voting rights with
respect to matters affecting that 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 an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. 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.
27 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
1. Significant Accounting Policies (continued)
Foreign Currency Translation. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and reported with all other foreign currency
gains and losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required. As of September 30, 1998,
the Fund had available for federal tax purposes an unused capital loss carryover
of approximately $18,661,000, which expires between 1999 and 2004. The capital
loss carryover was acquired in connection with the Oppenheimer Global Emerging
Growth Fund merger. There are certain limitations to the amount that may be used
each year.
- --------------------------------------------------------------------------------
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, 1998, a credit of $18,129 was made for the Fund's projected
benefit obligations and payments of $13,577 were made to retired trustees,
resulting in an accumulated liability of $296,418 as of September 30, 1998.
28 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
The Board of Trustees has adopted a deferred compensation plan for independent
Trustees that enables Trustees to elect to defer receipt of all or a portion of
annual fees they are entitled to receive from the Fund. Under the plan, the
compensation deferred is periodically adjusted as though an equivalent amount
had been invested for the Trustee in shares of one or more Oppenheimer funds
selected by the Trustee. The amount paid to the Trustee under the plan will be
determined based upon the performance of the selected funds. Deferral of
Trustees' fees under the plan will not affect the net assets of the Fund, and
will not materially affect the Fund's assets, liabilities or net income per
share.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from its ultimate characterization for federal income tax purposes. Also, due to
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the fiscal year in which the income or realized gain
was recorded by the Fund.
The Fund adjusts the classification of distributions to
shareholders to reflect the differences between financial statement amounts and
distributions determined in accordance with income tax regulations. Accordingly,
during the year ended September 30, 1998, amounts have been reclassified to
reflect an increase in paid-in capital of $8,255,776, an increase in
undistributed net investment income of $7,786,054, and a decrease in accumulated
net realized gain on investments of $16,041,830.
- --------------------------------------------------------------------------------
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.
29 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1998 Year Ended September 30, 1997
---------------------------- ----------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 14,196,415 $630,090,478 11,624,466 $495,244,280
Dividends and distributions
reinvested 10,509,965 432,695,731 3,097,502 117,118,681
Issued in connection with the
acquisition of Oppenheimer
Global Emerging Growth
Fund--Note 10 -- -- 3,204,584 145,520,176
Redeemed (18,038,607) (800,138,803) (12,907,303) (550,948,369)
------------- ------------- ------------- -------------
Net increase 6,667,773 $262,647,406 5,019,249 $206,934,768
============= ============= ============= =============
- ------------------------------------------------------------------------------------------------
Class B:
Sold 6,370,879 $277,884,257 5,824,454 $244,964,288
Dividends and distributions
reinvested 2,816,048 113,599,323 624,025 23,201,893
Issued in connection with the
acquisition of Oppenheimer
Global Emerging Growth
Fund--Note 10 -- -- 312,088 13,881,679
Redeemed (3,761,661) (161,480,436) (2,312,418) (97,093,034)
------------- ------------- ------------- -------------
Net increase 5,425,266 $230,002,915 4,448,149 $184,954,826
============= ============= ============= =============
- ------------------------------------------------------------------------------------------------
Class C:
Sold 1,722,952 $75,968,436 1,111,161 $47,405,719
Dividends and distributions
reinvested 196,350 8,016,932 25,342 953,635
Issued in connection with the
acquisition of Oppenheimer
Global Emerging Growth
Fund--Note 10 -- -- 95,479 4,297,523
Redeemed (756,877) (32,928,197) (449,001) (19,132,220)
------------- ------------- ------------- -------------
Net increase 1,162,425 $51,057,171 782,981 $33,524,657
============= ============= ============= =============
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Investments
As of September 30, 1998, net unrealized appreciation on investments of
$254,165,209 was composed of gross appreciation of $693,488,661, and gross
depreciation of $439,323,452.
30 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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% 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, 0.67% of the next $1.5
billion, 0.65% of the next $2.5 billion and 0.63% of average annual net assets
in excess of $6 billion. The agreement was amended per resolutions adopted by
the Board of Trustees on December 11, 1997 to add the final breakpoint of 0.63%
on average annual net assets in excess of $6 billion. The Fund's management fee
for the year ended September 30, 1998, was 0.69% of average annual net assets
for Class A, Class B and Class C shares.
For the year ended September 30, 1998, commissions (sales charges
paid by investors) on sales of Class A shares totaled $6,261,092, of which
$1,978,731 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 $8,602,381 and $521,410, respectively,
of which $746,915 and $13,202, respectively, was paid to an affiliated
broker/dealer. During the year ended September 30, 1998, OFDI received
contingent deferred sales charges of $1,504,663 and $25,625, 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
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.
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 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. 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, 1998, OFDI paid $441,211 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
31 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
4. Management Fees and Other Transactions with Affiliates (continued)
The Fund has adopted Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its costs in distributing Class B and Class C
shares and servicing accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares for its
services rendered in distributing Class B and 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 B and Class C shares. Each fee is computed
on the average annual net assets of Class B or Class C shares, determined as of
the close of each regular business day. During the year ended September 30,
1998, OFDI paid $132,174 and $9,111, respectively, to an affiliated
broker/dealer as compensation for Class B and Class C personal service and
maintenance expenses and retained $7,793,329 and $501,769, respectively, as
compensation for Class B and Class C sales commissions and service fee advances,
as well as financing costs. If either Plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments of the asset-based sales
charge to OFDI for distributing shares before the Plan was terminated. As of
September 30, 1998, OFDI had incurred excess distribution and servicing costs of
$20,969,247 for Class B and $1,028,248 for Class C.
================================================================================
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.
32 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
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.
As of September 30, 1998, the Fund had outstanding forward contracts as follows:
<TABLE>
<CAPTION>
Contract Valuation as of Unrealized Unrealized
Expiration Dates Amount (000s) Sept. 30, 1998 Appreciation Depreciation
- --------------------------------------------------------------------------------------------------------------------------------
Contracts to Purchase
- ---------------------
<S> <C> <C> <C> <C> <C>
German Mark (DEM) 10/1/98 2,104 DEM $ 1,258,795 $2,365 $ --
British Pound Sterling (GBP) 10/1/98-10/5/98 10,915 GBP 18,546,510 -- 62,083
------ -------
Total Unrealized Appreciation and Depreciation $2,365 $62,083
====== =======
</TABLE>
================================================================================
6. Futures Contracts
The Fund may buy and sell interest rate futures contracts in order to gain
exposure to or protect against changes in interest rates. The Fund may also buy
or write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against
increases in interest rates and the resulting negative effect on the value of
fixed rate portfolio securities. The Fund may also purchase futures contracts to
gain exposure to charges in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to
deposit either cash or securities (initial margin) in an amount equal to a
certain percentage of the contract value. Subsequent payments (variation margin)
are made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Fund recognizes a realized gain or loss when the contract
is closed or expires.
Risks of entering into futures contracts (and related options)
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying securities.
33 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
================================================================================
7. Illiquid and Restricted Securities
As of September 30, 1998, investments in securities included issues that are
illiquid or restricted. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may be considered
illiquid if it lacks a readily available market or if its valuation has not
changed for a certain period of time. The Fund intends to invest no more than
10% of its net assets (determined at the time of purchase and reviewed
periodically) in illiquid or restricted securities. Certain restricted
securities, eligible for resale to qualified institutional investors, are not
subject to that limit. The aggregate value of illiquid or restricted securities
subject to this limitation as of September 30, 1998, was $22,713,074, which
represents 0.58% of the Fund's net assets, of which $20,706,000 is considered
restricted. Information concerning restricted securities is as follows:
Valuation
Cost Per Unit as of
Security Acquisition Date Per Unit Sept. 30, 1998
- --------------------------------------------------------------------------------
Stocks
- ------
Swiss Medical SA 10/28/97 $44.30 $69.02
================================================================================
8. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended
September 30, 1998.
34 Oppenheimer Global Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
9. 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 fee 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, 1998, the Fund had on loan securities valued at
$273,159,888. Cash of $291,899,764 was received as collateral for the loans, and
has been invested in approved instruments. 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.
================================================================================
10. Acquisition of Oppenheimer Global Emerging Growth Fund
On June 20, 1997, the Fund acquired all the net assets of Oppenheimer Global
Emerging Growth Fund, pursuant to an agreement and plan of reorganization
approved by the Oppenheimer Global Emerging Growth Fund shareholders on June 17,
1997. The Fund issued 3,204,584, 312,088 and 95,479 shares of beneficial
interest for Class A, Class B and Class C, respectively, valued at $145,520,176,
$13,881,679, and $4,297,523, in exchange for the net assets, resulting in
combined Class A net assets of $3,183,354,282, Class B net assets of
$783,786,956 and Class C net assets of $46,691,471 on June 20, 1997. The net
assets acquired included net unrealized appreciation of $36,954,700. The
exchange qualified as a tax-free reorganization for federal income tax purposes.
================================================================================
11. Other Matters
The Board of Trustees approved the inception of Class Y for the Fund, to be
offered on November 17, 1998.
<PAGE>
Appendix A
Corporate Industry Classifications
<PAGE>
Aerospace/Defense Food
Air Transportation Gas Utilities
Auto Parts Distribution Gold
Automotive Health Care/Drugs
Bank Holding Companies Health Care/Supplies & Services
Banks Homebuilders/Real Estate
Beverages Hotel/Gaming
Broadcasting Industrial Services
Broker-Dealers Information Technology
Building Materials Insurance
Cable Television Leasing & Factoring
Chemicals Leisure
Commercial Finance Manufacturing
Computer Hardware Metals/Mining
Computer Software Nondurable Household Goods
Conglomerates Oil - Integrated
Consumer Finance Paper
Containers Publishing/Printing
Convenience Stores Railroads & Truckers
Department Stores Restaurants
Diversified Financial Savings & Loans
Diversified Media Shipping
Drug Stores Special Purpose Financial
Drug Wholesalers Specialty Retailing
Durable Household Goods Steel
Education Supermarkets
Electric Utilities Telecommunications - Long Distance
Electrical Equipment Telephone - Utility
Electronics Textile, Apparel & Home Furnishings
Energy Services Tobacco
Entertainment/Film Toys
Environmental Trucking
Wireless Services
<PAGE>
B-1
Appendix B
OppenheimerFunds Special Sales Charge Arrangements and Waivers
In certain cases, the initial sales charge that applies to purchases of
Class A shares1 of the Oppenheimer funds or the contingent deferred sales charge
that may apply to Class A, Class B or Class C shares may be waived. That is
because of the economies of sales efforts realized by OppenheimerFunds
Distributor, Inc., (referred to in this document as the "Distributor"), or by
dealers or other financial institutions that offer those shares to certain
classes of investors.
Not all waivers apply to all funds. For example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares of
those funds are not available for purchase by or on behalf of retirement plans.
Other waivers apply only to shareholders of certain funds that were merged into
or became Oppenheimer funds.
For the purposes of some of the waivers described below and in the
Prospectus and Statement of Additional Information of the applicable Oppenheimer
funds, the term "Retirement Plan" refers to the following types of plans:
(1) plans qualified under Sections 401(a) or 401(k) of the Internal Revenue
Code,
(2) non-qualified deferred compensation plans,
(3) employee benefit plans2
(4) Group Retirement Plans3
(5) 403(b)(7) custodial plan accounts
(6) Individual Retirement Accounts ("IRAs"), including traditional IRAs, Roth
IRAs, SEP-IRAs, SARSEPs or SIMPLE plans
The interpretation of these provisions as to the applicability of a
special arrangement or waiver in a particular case is in the sole discretion of
the Distributor or the transfer agent (referred to in this document as the
"Transfer Agent") of the particular Oppenheimer fund. These waivers and special
arrangements may be amended or terminated at any time by a particular fund, the
Distributor, and/or OppenheimerFunds, Inc. (referred to in this document as the
"Manager").
Waivers that apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.
--------------
1. Certain waivers also apply to Class M. shares of Oppenheimer Convertible
Securities Fund.
2. An "employee benefit plan" means any plan or arrangement, whether or not it
is "qualified" under the Internal Revenue Code, under which Class A shares
of an Oppenheimer fund or funds are purchased by a fiduciary or other
administrator for the account of participants who are employees of a single
employer or of affiliated employers. These may include, for example,
medical savings accounts, payroll deduction plans or similar plans. The
fund accounts must be registered in the name of the fiduciary or
administrator purchasing the shares for the benefit of participants in the
plan.
3. The term "Group Retirement Plan" means any qualified or non-qualified
retirement plan for employees of a corporation or sole proprietorship, members
and employees of a partnership or association or other organized group of
persons (the members of which may include other groups), if the group has made
special arrangements with the Distributor and all members of the group
participating in (or who are eligible to participate in) the plan purchase Class
A shares of an Oppenheimer fund or funds through a single investment dealer,
broker or other financial institution designated by the group. Such plans
include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than
plans for public school employees. The term "Group Retirement Plan" also
includes qualified retirement plans and non-qualified deferred compensation
plans and IRAs that purchase Class A shares of an Oppenheimer fund or funds
through a single investment dealer, broker or other financial institution that
has made special arrangements with the Distributor enabling those plans to
purchase Class A shares at net asset value but subject to the Class A contingent
deferred sales charge.
I. Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial
Sales Charge but May Be Subject to the Class A Contingent Deferred Sales Charge
(unless a waiver applies).
There is no initial sales charge on purchases of Class A shares of any
of the Oppenheimer funds in the cases listed below. However, these purchases may
be subject to the Class A contingent deferred sales charge if redeemed within 18
months of the end of the calendar month of their purchase, as described in the
Prospectus (unless a waiver described elsewhere in this Appendix applies to the
redemption). Additionally, on shares purchased under these waivers that are
subject to the Class A contingent deferred sales charge, the Distributor will
pay the applicable commission described in the Prospectus under "Class A
Contingent Deferred Sales Charge."1 This waiver provision applies to:
|_| Purchases of Class A shares aggregating $1 million or more.
|_| Purchases by a Retirement Plan (other than an IRA or 403(b)(7) custodial
plan) that: (1) buys shares costing $500,000 or more, or (2) has, at the time of
purchase, 100 or more eligible employees or total plan assets of $500,000 or
more, or (3) certifies to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
|_| Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases
are made:
(1) through a broker, dealer, bank or registered investment adviser that has
made special arrangements with the Distributor for those purchases, or
(2) by a direct rollover of a distribution from a qualified Retirement Plan if
the administrator of that Plan has made special arrangements with the
Distributor for those purchases.
|_| Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements:
(1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc.
("Merrill Lynch") on a daily valuation basis for the Retirement Plan. On the
date the plan sponsor signs the record-keeping service agreement with Merrill
Lynch, the Plan must have $3 million or more of its assets invested in (a)
mutual funds, other than those advised or managed by Merrill Lynch Asset
Management, L.P. ("MLAM"), that are made available under a Service Agreement
between Merrill Lynch and the mutual fund's principal underwriter or
distributor, and (b) funds advised or managed by MLAM (the funds described in
(a) and (b) are referred to as "Applicable Investments").
(2) The record keeping for the Retirement Plan is performed on a
daily valuation basis by a record keeper whose services are
provided under a contract or arrangement between the
Retirement Plan and Merrill Lynch. On the date the plan
sponsor signs the record keeping service agreement with
Merrill Lynch, the Plan must have $3 million or more of its
assets (excluding assets invested in money market funds)
invested in Applicable Investments.
(3) The record keeping for a Retirement Plan is handled under a
service agreement with Merrill Lynch and on the date the plan
sponsor signs that agreement, the Plan has 500 or more
eligible employees (as determined by the Merrill Lynch plan
conversion manager).
|_| Purchases by a Retirement Plan whose record keeper had a
cost-allocation agreement with the Transfer Agent on or before May
1, 1999.
<PAGE>
II. Waivers of Class A Sales Charges of Oppenheimer Funds
A. Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers.
Class A shares purchased by the following investors are not subject to any Class
A sales charges (and no commissions are paid by the Distributor on such
purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's
spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents,
etc.) are included.
|_| Registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose.
|_| Dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees.
|_| Employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that
have entered into sales arrangements with such dealers or brokers
(and which are identified as such to the Distributor) or with the
Distributor. The purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children).
|_| Dealers, brokers, banks or registered investment advisors that
have entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients. Those clients
may be charged a transaction fee by their dealer, broker, bank or
advisor for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into
an agreement for this purpose with the Distributor and who charge
an advisory, consulting or other fee for their services and buy
shares for their own accounts or the accounts of their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the
purchases are made through a broker or agent or other financial
intermediary that has made special arrangements with the
Distributor for those purchases.
|_| Clients of investment advisors or financial planners (that have
entered into an agreement for this purpose with the Distributor)
who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a
master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial
intermediary with which the Distributor has made such special
arrangements . Each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares.
|_| Directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension,
profit sharing or other benefit plan which beneficially owns
shares for those persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the
investment advisor (the Distributor must be advised of this
arrangement) and persons who are directors or trustees of the
company or trust which is the beneficial owner of such accounts.
|_| A unit investment trust that has entered into an appropriate agreement with
the Distributor.
|_| Dealers, brokers, banks, or registered investment advisers that
have entered into an agreement with the Distributor to sell shares
to defined contribution employee retirement plans for which the
dealer, broker or investment adviser provides administration
services.
<PAGE>
Retirement Plans and deferred compensation plans and trusts used to fund those
plans (including, for example, plans qualified or created under sections 401(a),
401(k), 403(b) or 457 of the Internal Revenue Code), in each case if those
purchases are made through a broker, agent or other financial intermediary that
has made special arrangements with the Distributor for those purchases.
|_| A TRAC-2000 401(k) plan (sponsored by the former Quest for Value Advisors)
whose Class B or Class C shares of a Former Quest for Value Fund were exchanged
for Class A shares of that Fund due to the termination of the Class B and Class
C TRAC-2000 program on November 24, 1995.
|_| A qualified Retirement Plan that had agreed with the former Quest for Value
Advisors to purchase shares of any of the Former Quest for Value Funds at net
asset value, with such shares to be held through DCXchange, a sub-transfer
agency mutual fund clearinghouse, if that arrangement was consummated and share
purchases commenced by December 31, 1996.
B. Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions.
Class A shares issued or purchased in the following transactions are not subject
to sales charges (and no commissions are paid by the Distributor on such
purchases):
|_| Shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party.
|_| Shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor.
|_| Shares purchased through a broker-dealer that has entered into a
special agreement with the Distributor to allow the broker's
customers to purchase and pay for shares of Oppenheimer funds
using the proceeds of shares redeemed in the prior 30 days from a
mutual fund (other than a fund managed by the Manager or any of
its subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid. This waiver also applies to shares
purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner. This waiver
must be requested when the purchase order is placed for shares of
the Fund, and the Distributor may require evidence of
qualification for this waiver.
|_| Shares purchased with the proceeds of maturing principal units of any
Qualified Unit Investment Liquid Trust Series.
|_| Shares purchased by the reinvestment of loan repayments by a participant in
a Retirement Plan for which the Manager or an affiliate acts as sponsor.
C. Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions.
The Class A contingent deferred sales charge is also waived if shares that would
otherwise be subject to the contingent deferred sales charge are redeemed in the
following cases:
|_| To make Automatic Withdrawal Plan payments that are limited annually to no
more than 12% of the account value measured at the time the Plan is established,
adjusted annually.
|_| Involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (please refer to
"Shareholder Account Rules and Policies," in the applicable fund
Prospectus).
|_| For distributions from Retirement Plans, deferred compensation
plans or other employee benefit plans for any of the following
purposes:
(1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established.
(2) To return excess contributions.
(3) To return contributions made due to a mistake of fact.
(4) Hardship withdrawals, as defined in the plan.2
(5) Under a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code, or, in the case of an IRA, a divorce or separation agreement
described in Section 71(b) of the Internal Revenue Code.
(6) To meet the minimum distribution requirements of the Internal Revenue Code.
(7) To make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code.
(8) For loans to participants or beneficiaries.
(9) Separation from service.
(10)Participant-directed redemptions to purchase shares of a mutual fund (other
than a fund managed by the Manager or a subsidiary of the Manager) if the plan
has made special arrangements with the Distributor.
(11)Plan termination or "in-service distributions," if the redemption proceeds
are rolled over directly to an OppenheimerFunds-sponsored IRA.
|_| For distributions from Retirement Plans having 500 or more
eligible employees, except distributions due to termination of all
of the Oppenheimer funds as an investment option under the Plan.
|_| For distributions from 401(k) plans sponsored by broker-dealers
that have entered into a special agreement with the Distributor
allowing this waiver.
III. Waivers of Class B and Class C Sales Charges of Oppenheimer Funds
The Class B and Class C contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions or redeemed in certain
circumstances described below.
A. Waivers for Redemptions in Certain Cases.
The Class B and Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases:
|_| Shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies," in the applicable Prospectus.
|_| 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.
|_| Distributions from accounts for which the broker-dealer of record has
entered into a special agreement with the Distributor allowing this waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records are
maintained on a daily valuation basis by Merrill Lynch or an independent record
keeper under a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into a special
arrangement with the Distributor for this purpose.
|_| Redemptions requested in writing by a Retirement Plan sponsor of Class C
shares of an Oppenheimer fund in amounts of $1 million or more held by the
Retirement Plan for more than one year, if the redemption proceeds are invested
in Class A shares of one or more Oppenheimer funds.
|_| Distributions from Retirement Plans or other employee benefit plans for any
of the following purposes: (1) Following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was established in an
Oppenheimer fund. (2) To return excess contributions made to a participant's
account. (3) To return contributions made due to a mistake of fact. (4) To make
hardship withdrawals, as defined in the plan.4 (5) To make distributions
required under a Qualified Domestic Relations Order or, in the case of an IRA, a
divorce or separation agreement described in Section 71(b) of the Internal
Revenue Code. (6) To meet the minimum distribution requirements of the Internal
Revenue Code. (7) To make "substantially equal periodic payments" as described
in Section 72(t) of the Internal Revenue Code. (8) For loans to participants or
beneficiaries.5 (9) On account of the participant's separation from service.6
(10) Participant-directed redemptions to purchase shares of a mutual fund (other
than a fund managed by the Manager or a subsidiary of the Manager) offered as an
investment option in a Retirement Plan if the plan has made special arrangements
with the Distributor. (11) Distributions made on account of a plan termination
or "in-service" distributions," if the redemption proceeds are rolled over
directly to an OppenheimerFunds-sponsored IRA. (12) Distributions from
Retirement Plans having 500 or more eligible employees, but excluding
distributions made because of the Plan's elimination as investment options under
the Plan of all of the Oppenheimer funds that had been offered. (13) For
distributions from a participant's account under an Automatic Withdrawal Plan
after the participant reaches age 59 1/2, as long as the aggregate value of
the distributions does not exceed 10% of the account's value annually (measured
from the establishment of the Automatic Withdrawal Plan).
B. Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
|_| Shares sold to the Manager or
its affiliates.
|_| Shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose.
|_| Shares issued in plans of reorganization to which the Fund is a party.
<PAGE>
IV. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers for Class A,
Class B and Class C shares described in the Prospectus or Statement of
Additional Information of the Oppenheimer funds are modified as described below
for certain persons who were shareholders of the former Quest for Value Funds.
To be eligible, those persons must have been shareholders on November 24, 1995,
when OppenheimerFunds, Inc. became the investment advisor to those former Quest
for Value Funds. Those funds include:
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Global Value Fund
Oppenheimer Quest Opportunity Value Fund
These arrangements also apply to shareholders of the following funds
when they merged (were reorganized) into various Oppenheimer funds on November
24, 1995:
Quest for Value U.S. Government Income Fund
Quest for Value New York Tax-Exempt Fund
Quest for Value Investment Quality Income Fund
Quest for Value National Tax-Exempt Fund
Quest for Value Global Income Fund
Quest for Value California Tax-Exempt Fund
All of the funds listed above are referred to in this Appendix as the
"Former Quest for Value Funds." The waivers of initial and contingent deferred
sales charges described in this Appendix apply to shares of an Oppenheimer fund
that are either:
|_| acquired by such shareholder pursuant to an exchange of shares of an
Oppenheimer fund that was one of the Former Quest for Value Funds or
|_| purchased by such shareholder by exchange of shares of another
Oppenheimer fund that were acquired pursuant to the merger of any
of the Former Quest for Value Funds into that other Oppenheimer
fund on November 24, 1995.
A. Reductions or Waivers of Class A Sales Charges.
|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest for
Value Funds Shareholders.
Purchases by Groups and Associations. The following table sets forth the initial
sales charge rates for Class A shares purchased by members of "Associations"
formed for any purpose other than the purchase of securities. The rates in the
table apply if that Association purchased shares of any of the Former Quest for
Value Funds or received a proposal to purchase such shares from OCC Distributors
prior to November 24, 1995.
<TABLE>
<CAPTION>
Number of Eligible Employees Initial Sales Charge as a Initial Sales Charge as a Commission as % of
or Members % of Offering Price % of Net Amount Invested Offering Price
<S> <C> <C> <C>
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
9 or Fewer 2.50% 2.56% 2.00%
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
At least 10 but not more 2.00% 2.04% 1.60%
than 49
- ------------------------------ ---------------------------- ---------------------------- ----------------------------
</TABLE>
For purchases by Associations having 50 or more eligible employees or
members, there is no initial sales charge on purchases of Class A shares, but
those shares are subject to the Class A contingent deferred sales charge
described in the applicable fund's Prospectus.
Purchases made under this arrangement qualify for the lower of either
the sales charge rate in the table based on the number of members of an
Association, or the sales charge rate that applies under the Right of
Accumulation described in the applicable fund's Prospectus and Statement of
Additional Information. Individuals who qualify under this arrangement for
reduced sales charge rates as members of Associations also may purchase shares
for their individual or custodial accounts at these reduced sales charge rates,
upon request to the Distributor.
|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A
shares purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
|_| Shareholders who were shareholders of the AMA Family of Funds on February
28, 1991 and who acquired shares of any of the Former Quest for Value Funds by
merger of a portfolio of the AMA Family of Funds.
|_| Shareholders who acquired shares of any Former Quest for Value Fund by
merger of any of the portfolios of the Unified Funds.
|X| Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares purchased by the following investors who were
shareholders of any Former Quest for Value Fund:
Investors who purchased Class A shares from a dealer that is or was not
permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship, under the Employee
Retirement Income Security Act of 1974 and regulations adopted under that law.
B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers.
|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for Value Fund
into the fund or by exchange from an Oppenheimer fund that was a Former Quest
for Value Fund or into which such fund merged. Those shares must have been
purchased prior to March 6, 1995 in connection with:
|_| withdrawals under an automatic withdrawal plan holding only either Class B
or Class C shares if the annual withdrawal does not exceed 10% of the initial
value of the account, and
|_| liquidation of a shareholder's account if the aggregate net asset value of
shares held in the account is less than the required minimum value of such
accounts.
|X| Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995. In the following cases, the contingent
deferred sales charge will be waived for redemptions of Class A, Class B or
Class C shares of an Oppenheimer fund. The shares must have been acquired by the
merger of a Former Quest for Value Fund into the fund or by exchange from an
Oppenheimer fund that was a Former Quest For Value Fund or into which such
Former Quest for Value Fund merged. Those shares must have been purchased on or
after March 6, 1995, but prior to November 24, 1995:
|_| redemptions following the death or disability of the shareholder(s) (as
evidenced by a determination of total disability by the U.S. Social Security
Administration);
|_| withdrawals under an automatic withdrawal plan (but only for Class
B or Class C shares) where the annual withdrawals do not exceed
10% of the initial value of the account; and
|_| liquidation of a shareholder's account if the aggregate net asset
value of shares held in the account is less than the required
minimum account value.
A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A, Class B
or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer
Funds Who Were Shareholders of Connecticut Mutual Investment Accounts, Inc.
The initial and contingent deferred sale charge rates and waivers for Class A
and Class B shares described in the respective Prospectus (or this Appendix) of
the following Oppenheimer funds (each is referred to as a "Fund" in this
section):
o Oppenheimer U. S. Government Trust,
o Oppenheimer Bond Fund,
o Oppenheimer Disciplined Value Fund and
o Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were
shareholders of the following funds (referred to as the "Former Connecticut
Mutual Funds") on March 1, 1996, when OppenheimerFunds, Inc. became the
investment adviser to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account
Connecticut Mutual Total Return Account
Connecticut Mutual Government Securities Account
CMIA LifeSpan Capital Appreciation Account
Connecticut Mutual Income Account
CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account
CMIA Diversified Income Account
A. Prior Class A CDSC and Class A Sales Charge Waivers.
|X| Class A Contingent Deferred Sales Charge. Certain shareholders of a
Fund and the other Former Connecticut Mutual Funds are entitled to continue to
make additional purchases of Class A shares at net asset value without a Class A
initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class A CDSC, if any of those shares are redeemed within one
year of purchase, they will be assessed a 1% contingent deferred sales charge on
an amount equal to the current market value or the original purchase price of
the shares sold, whichever is smaller (in such redemptions, any shares not
subject to the prior Class A CDSC will be redeemed first).
Those shareholders who are eligible for the prior Class A CDSC are:
(1) persons whose purchases of Class A shares of a Fund and other
Former Connecticut Mutual Funds were $500,000 prior to March 18,
1996, as a result of direct purchases or purchases pursuant to the
Fund's policies on Combined Purchases or Rights of Accumulation,
who still hold those shares in that Fund or other Former
Connecticut Mutual Funds, and
(2) persons whose intended purchases under a Statement of Intention
entered into prior to March 18, 1996, with the former general
distributor of the Former Connecticut Mutual Funds to purchase
shares valued at $500,000 or more over a 13-month period entitled
those persons to purchase shares at net asset value without being
subject to the Class A initial sales charge.
Any of the Class A shares of a Fund and the other Former Connecticut
Mutual Funds that were purchased at net asset value prior to March 18, 1996,
remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this arrangement
they will be subject to the prior Class A CDSC.
|X| Class A Sales Charge Waivers. Additional Class A shares of a Fund
may be purchased without a sales charge, by a person who was in one (or more) of
the categories below and acquired Class A shares prior to March 18, 1996, and
still holds Class A shares:
(1) any purchaser, provided the total initial amount invested in the Fund or any
one or more of the Former Connecticut Mutual Funds totaled $500,000 or more,
including investments made pursuant to the Combined Purchases, Statement of
Intention and Rights of Accumulation features available at the time of the
initial purchase and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged;
(2) any participant in a qualified plan, provided that the total initial amount
invested by the plan in the Fund or any one or more of the Former Connecticut
Mutual Funds totaled $500,000 or more;
(3) Directors of the Fund or any one or more of the Former Connecticut Mutual
Funds and members of their immediate families;
(4) employee benefit plans sponsored by Connecticut Mutual Financial Services,
L.L.C. ("CMFS"), the prior distributor of the Former Connecticut Mutual Funds,
and its affiliated companies;
(5) one or more members of a group of at least 1,000 persons (and persons who
are retirees from such group) engaged in a common business, profession, civic or
charitable endeavor or other activity, and the spouses and minor dependent
children of such persons, pursuant to a marketing program between CMFS and such
group; and
(6) an institution acting as a fiduciary on behalf of an individual or
individuals, if such institution was directly compensated by the individual(s)
for recommending the purchase of the shares of the Fund or any one or more of
the Former Connecticut Mutual Funds, provided the institution had an agreement
with CMFS.
Purchases of Class A shares made pursuant to (1) and (2) above may be
subject to the Class A CDSC of the Former Connecticut Mutual Funds described
above.
Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company through the Panorama Separate Account
which is beyond the applicable surrender charge period and which was used to
fund a qualified plan, if that holder exchanges the variable annuity contract
proceeds to buy Class A shares of the Fund.
B. Class A and Class B Contingent Deferred Sales Charge Waivers.
In addition to the waivers set forth in the Prospectus and in this Appendix,
above, the contingent deferred sales charge will be waived for redemptions of
Class A and Class B shares of a Fund and exchanges of Class A or Class B shares
of a Fund into Class A or Class B shares of a Former Connecticut Mutual Fund
provided that the Class A or Class B shares of the Fund to be redeemed or
exchanged were (i) acquired prior to March 18, 1996 or (ii) were acquired by
exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund.
Additionally, the shares of such Former Connecticut Mutual Fund must have been
purchased prior to March 18, 1996:
(1) by the estate of a deceased shareholder;
(2) upon the disability of a shareholder, as defined in Section 72(m)(7) of the
Internal Revenue Code;
(3) for retirement distributions (or loans) to participants or beneficiaries
from retirement plans qualified under Sections 401(a) or 403(b)(7)of the Code,
or from IRAs, deferred compensation plans created under Section 457 of the Code,
or other employee benefit plans;
(4) as tax-free returns of excess contributions to such retirement or employee
benefit plans;
(5) in whole or in part, in connection with shares sold to any state,
county, or city, or any instrumentality, department, authority, or
agency thereof, that is prohibited by applicable investment laws
from paying a sales charge or commission in connection with the
purchase of shares of any registered investment management
company;
(6) in connection with the redemption of shares of the Fund due to a
combination with another investment company by virtue of a merger,
acquisition or similar reorganization transaction;
(7) in connection with the Fund's right to involuntarily redeem or liquidate the
Fund;
(8) in connection with automatic redemptions of Class A shares and Class B
shares in certain retirement plan accounts pursuant to an Automatic Withdrawal
Plan but limited to no more than 12% of the original value annually; or (9) as
involuntary redemptions of shares by operation of law, or under procedures set
forth in the Fund's Articles of Incorporation, or as adopted by the Board of
Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of Advance America
Funds, Inc.
Shareholders of Oppenheimer Municipal Bond Fund, Oppenheimer U.S. Government
Trust, Oppenheimer Strategic Income Fund and Oppenheimer Equity Income Fund who
acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those Oppenheimer
funds on October 18, 1991, and who held shares of Advance America Funds, Inc. on
March 30, 1990, may purchase Class A shares of those four Oppenheimer funds at a
maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer
Convertible Securities Fund
Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to purchase
those shares at net asset value without sales charge:
|_| the Manager and its affiliates,
|_| present or former officers, directors, trustees and employees (and
their "immediate families" as defined in the Fund's Statement of
Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them or the prior
investment advisor of the Fund for their employees,
|_| registered management investment companies or separate accounts of
insurance companies that had an agreement with the Fund's prior
investment advisor or distributor for that purpose,
|_| 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 in the preceding section or financial
institutions that have entered into sales arrangements with those
dealers or brokers (and whose identity is made known to the
Distributor) or with the Distributor, but only if the purchaser
certifies to the Distributor at the time of purchase that the
purchaser meets these qualifications,
|_| dealers, brokers, or registered investment advisors that had
entered into an agreement with the Distributor or the prior
distributor of the Fund specifically providing for the use of
Class M shares of the Fund in specific investment products made
available to their clients, and
|_| dealers, brokers or registered investment advisors that had
entered into an agreement with the Distributor or prior
distributor of the Fund's shares to sell shares to defined
contribution employee retirement plans for which the dealer,
broker, or investment advisor provides administrative services.
<PAGE>
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
