<PAGE>
Oppenheimer Global
Bio-Tech Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Oppenheimer Global Bio-Tech Fund (the "Fund") is a mutual fund with
the investment objective of aggressively seeking capital appreciation
through investment in securities of companies whose principal business or
principal investment is in biotechnology. Current income is not an
objective of the Fund. In an uncertain investment environment, defensive
investment methods may be stressed. The Fund is designed for investors
who are willing to accept greater risks of loss in the hopes of greater
gains, and is not intended for those who desire assured income and
conservation of capital.
This Prospectus sets forth concisely information about the Fund that
a prospective investor should know before investing. A Statement of
Additional Information about the Fund (the "Additional Statement") dated
February 1, 1994, has been filed with the Securities and Exchange
Commission ("SEC") and is available without charge upon written request
to the Fund's Transfer and Shareholder Servicing Agent, Oppenheimer
Shareholder Services (the "Transfer Agent"), P.O. Box 5270, Denver,
Colorado 80217, or by calling the Transfer Agent at the toll-free number
shown above. The Additional Statement (which is incorporated in its
entirety by reference in this Prospectus) contains more detailed
information about the Fund and its management, including more complete
information about certain risk factors.
Investors are advised to read and retain this Prospectus for future
reference. These securities may be considered to be speculative. Shares
of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency,
and involve investment risks, including the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is effective February 1, 1994.
<PAGE>
Table Of Contents
Page
Fund Expenses 2
Financial Highlights 4
The Fund and Its Investment Policies 5
Special Investment Methods 7
Investment Restrictions 10
Management of the Fund 10
How to Buy Shares 11
Minimum Investment 11
Sales Charge Table 12
Contingent Deferred Sales Charge 13
Reduced Sales Charges 14
Right of Accumulation 14
Letter of Intent 14
Other Circumstances 15
Purchase Programs for Shares 15
AccountLink 15
PhoneLink 16
Asset Builder Plans 16
Service Plan 16
How to Redeem Shares 17
Regular Redemption Procedures 17
Telephone Redemptions 17
Distributions from Retirement Plans 18
Automatic Withdrawal and Exchange Plans 18
Repurchase 19
Reinvestment Privilege 19
General Information on Redemptions 19
Exchanges of Shares and Retirement Plans 20
Dividends, Distributions and Taxes 22
Fund Performance Information 23
Additional Information 24
<PAGE>
Fund Expenses
The following table sets forth the fees that an investor in the Fund
might pay and the expenses paid by the Fund in its fiscal year ended
September 30, 1993.
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases (as
a percentage of offering price) 5.75%
Sales Charge on Reinvested Dividends None
Redemption Fees None
Deferred Sales Load None*
Exchange Fee $5.00
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees .81%
12b-1 (Service Plan) Fees .24%
Other Expenses .53%
Total Fund Operating Expenses 1.58%
___________________
*Certain purchases of $1 million or more are not subject to front-end
sales charges, but a contingent deferred sales charge (maximum of 1%) is
imposed on the proceeds of such shares redeemed within 18 months of the
end of the calendar month of their purchase, subject to certain
conditions. See "How to Buy Shares -- Contingent Deferred Sales Charge,"
below.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly (shareholder transaction expenses) or indirectly (annual fund
operating expenses). The sales charge rate in the table is the current
maximum rate applicable to purchases of Fund shares. Investors may be
entitled to reduced sales charges based on the amount purchased or the
value of shares already owned, and may be subject to a contingent deferred
sales charge in limited circumstances (see "How to Buy Shares"). "Other
Expenses" includes such expenses as custodial and transfer agent fees,
audit, legal and other business operating expenses, but excludes
extraordinary expenses. For further details, see the Fund's financial
statements included in the Additional Statement.
The following example applies the above-stated expenses and current
maximum sales charge to a hypothetical $1,000 investment in shares of the
Fund over the time periods shown below, assuming a 5% annual rate of
return on the investment and also assuming that the shares are redeemed
at the end of each stated period. The amounts below are the cumulative
costs of such hypothetical $1,000 investment for the periods shown.
1 year 3 years 5 years 10 years
$73 $105 $139 $236
This example should not be considered a representation of past or
future expenses or performance. Expenses are subject to change and actual
performance and expenses may be less or greater than those illustrated
above.
<PAGE>
Financial Highlights
For a share of the Fund outstanding throughout each period
The information in the table below has been audited by KPMG Peat
Marwick, independent auditors, whose report on the financial statements
of the Fund for the fiscal year ended September 30, 1993 is included in
the Additional Statement.
<PAGE>
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992 1991+ 1990 1989 1988++
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 20.25 $ 26.90 $ 11.81 $ 12.09 $ 10.63 $ 10.00
Income (loss) from investment operations:
Net investment income (loss) (.10) (.17) (.03) (.02) (.10) .14
Net realized and unrealized gain (loss)
on investments, options written
and translation of assets and
liabilities in foreign currencies 1.69 (6.47) 15.12 (.26) 1.69 .49
Total income (loss) from
investment operations 1.59 (6.64) 15.09 (.28) 1.59 .63
Dividends and distributions to shareholders:
Dividends from net investment income -- (.01) -- -- (.10) --
Distributions from net realized
gain on investments (.20) -- -- -- (.03) --
Total dividends and
distributions to shareholders (.20) (.01) -- -- (.13) --
Net asset value, end of period $ 21.64 $ 20.25 $ 26.90 $ 11.81 $ 12.09 $ 10.63
Total Return,
at Net Asset Value** 7.79% (24.70)% 127.78% (2.32)% 15.21% 6.30%
Ratios/Supplemental Data:
Net assets, end of
period (in thousands) $199,697 $129,634 $103,352 $16,217 $3,872 $1,921
Average net assets
(in thousands) $194,184 $166,144 $ 50,989 $ 8,716 $2,343 $1,394
Number of shares outstanding
at end of period (in thousands) 9,226 6,400 3,841 1,373 320 181
Ratios to average net assets:
Net investment income (loss) (.80)% (.71)% (.18)% (.37)% (.70)% 1.41%*
Expenses 1.59% 1.39% 1.50% 1.78% 2.40% 2.06%*
Portfolio turnover rate*** 41.0% 2.6% 11.2% 16.6% 17.1% 1.7%
</TABLE>
* Annualized.
** Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
*** 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 year ended September 30, 1993 were
$119,628,848 and $70,050,079, respectively.
+ Per share amounts calculated based on the weighted average number of
shares outstanding during the period.
++ For the period from December 30, 1987 (commencement of operations) to
September 30, 1988. Per share amounts calculated based on the weighted
average number of shares outstanding during the period.
<PAGE>
The Fund And Its Investment Policies
The Fund is an open-end, diversified management investment company
organized October 30, 1987, as a Massachusetts business trust. Its
investment objective is to aggressively seek capital appreciation through
investment in securities of companies whose principal business or
principal investment is in biotechnology. Such companies must have at
least 50% of their research and development expenditures invested in, or
derive at least 50% of their revenues from, biotechnology. As a
fundamental policy, the Fund will, under normal circumstances, have at
least 65% of its assets invested in securities of biotechnology companies
located in the United States and in at least three foreign countries.
"Biotechnology" refers to the study and manipulation of substances
produced by organisms which are synthesized or obtained for application
in fields such as human health care, drug development, genetic engineering
and plant genetics. Currently, the majority of biotechnology companies
are small, start-up companies whose stock is thinly traded (see "Risks and
Possible Rewards of Investing in Biotechnology Companies" below and
"Investment Objective and Policies" in the Additional Statement).
Biotechnology may represent the leading edge of innovation in health
care, genetic engineering and plant genetics. In the field of health
care, drugs developed with new techniques of genetic engineering and
molecular biology herald an era in medicine in which physicians will
manipulate the patient's own network of internal defenses and biochemical
balances to treat illness and injury. "Quality of life" improvements
possible from biotechnological drugs and ongoing research range from
advances in the fight against cancer, AIDS and cardiovascular disease to
altering the genetic composition of individuals to prevent development or
transmission of genetically-inherited diseases. More information about
biotechnology is contained in the Additional Statement in "Investment
Objective and Policies."
The Fund is intended for investors seeking capital appreciation over
the long term and who are willing to accept greater risks of loss in the
hopes of greater gains. It is not intended for investors whose principal
objective is assured income and conservation of capital. Current income
is not an objective of the Fund. Investments in securities having
appreciation possibilities also involve risks of loss, and there is no
assurance that the Fund will achieve its objective. The investment
policies and practices described below are not "fundamental" policies
unless a particular policy is identified as "fundamental." "Fundamental
policies" are those that cannot be changed without the approval of a
"majority," as defined in the Investment Company Act of 1940 (the
"Investment Company Act") of the Fund's outstanding voting securities.
The Fund's Board of Trustees may change non-fundamental investment
policies without shareholder approval.
Risks and Possible Rewards of Investing in Biotechnology Companies
In addition to the risks generally associated with any aggressive
investment strategy, there are several risks particular to concentrating
investments in the biotechnology industry. That industry consists
primarily of small, start-up companies whose fortunes to date have risen
mainly on the strength of expectations about future products, not actual
products. Although numerous biotechnology products are in the research
stage by many companies, only a handful have reached the point of approval
by the U.S. Food & Drug Administration (the "FDA"), the Environmental
Protection Agency ("EPA"), the U.S. Department of Agriculture ("USDA") or
the foreign equivalents thereof, and subsequent commercial production and
distribution. While much public attention has been focused on advances
in the areas of cancer, AIDS and cardiovascular research, product testing
remains in the early stages for many products. It is thus uncertain
whether expected results will be achieved.
Since few investors have the capability to evaluate scientific
research and development, any news about a product under development can
suddenly cause a company's share value to soar or to plunge.
Biotechnology stocks may advance on the strength of new product filings
with governmental authorities and research progress, but may also drop
sharply in the face of news of regulatory and research setbacks. In
addition, public perception of the industry is varied. Although the
industry is subject to the regulatory scrutiny of the FDA, the EPA, the
USDA or their foreign counterparts and state and local governments, some
fear that the industry may unleash potentially harmful organisms and
bacteria into the environment. Ethical questions may be raised by
possible uses of some biotechnology products.
The revenue flow of start-up biotechnology companies may be erratic,
and the companies may suffer continuing losses during a project's
transition from development to production. Patent protection is another
source of uncertainty. The industry is one of intense competition, and
small start-up companies are often burdened with a continuing need to
raise capital. All such factors, when considered in conjunction with the
small size of the majority of biotechnology companies, cause the industry
to be highly volatile.
Foreign Securities
The Fund may purchase "foreign securities" -- securities of companies
organized under the laws of countries other than the United States -- that
are listed on a domestic or foreign securities exchange, traded in the
United States or a foreign over-the-counter market, or represented by
American Depository Receipts listed on a domestic securities exchange, or
quoted on the Automated Quotation System of the National Association of
Securities Dealers, Inc. ("NASDAQ"). Under normal circumstances, as a
matter of fundamental policy, the Fund will invest in biotechnology
companies in at least three foreign countries. The Fund has no
restrictions on the amount of its assets that may be invested in
securities of foreign issuers, and thus the relative amount of such
investments may change from time to time. The Fund presently anticipates
that between 5%-25% of its assets will be invested in securities of
foreign issuers at any one time. In summary, the risks of investing in
foreign securities may include foreign taxation, changes in currency rates
or currency blockage, currency exchange costs, possibilities in some
countries of expropriation or nationalization of assets, political,
financial or social instability or adverse diplomatic developments, and
differences between domestic and foreign legal, auditing, brokerage and
economic standards. See "Investment Objective and Policies" in the
Additional Statement for further discussion as to the possible rewards and
risks of investing in foreign securities.
Temporary Investments
The Fund normally will invest its assets not invested in
biotechnology securities in a manner consistent with its investment
objective of capital appreciation. Such investments may include common
stocks, other equity securities or long-term U.S. Government securities.
To maintain liquidity for investment purposes or to meet redemption and
exchange requests, the Fund may hold cash or cash equivalents (commercial
paper, Treasury bills and U.S. Government securities maturing in one year
or less). Under unusual market or economic conditions (including drastic
market fluctuations), for temporary defensive purposes the Fund may invest
up to 100% of its assets in: (i) obligations issued or guaranteed by the
U.S. Government, its instrumentalities or agencies, (ii) certificates of
deposit, (iii) bankers' acceptances and other bank obligations, (iv)
commercial paper rated in the highest category by an established rating
agency, or (v) short-term debt securities (i.e. those maturing in one year
or less from the date of purchase), including rated or unrated bonds and
debentures, and preferred stocks.
Portfolio Turnover
The Fund will not trade in securities for short-term profits but,
when circumstances warrant, securities may be sold without regard to the
length of time held. The degree of portfolio activity will affect
brokerage costs of the Fund. If the Fund derives 30% or more of its gross
income from the sale of securities held less than three months, the Fund
may fail to qualify under the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code"), as a regulated investment company and
thereupon would lose certain beneficial tax treatment of its income (see
"Dividends, Distributions and Taxes").
Special Investment Methods
The Fund may use the following special investment methods when their
use appears appropriate to the Manager. Since certain of these investment
methods are speculative, they may subject an investment in the Fund to
relatively greater risks and costs than would be the case with an
investment in a fund that does not use such methods.
Small, Unseasoned Companies
The Fund may invest in securities of small, unseasoned companies as
well as in securities of more established companies. In view of the
limited liquidity and volatility of price movements of the former, the
Fund currently intends to invest no more than 10% of its total assets in
securities of small, unseasoned issuers (which, together with any
predecessors, have been in operation for less than three years), while
reserving the right to invest up to 25% of its total assets in such
issuers. For further details, see "Investment Objective and Policies" in
the Additional Statement.
Warrants and Rights
The Fund may invest up to 5% of its total assets in warrants and
rights (other than those that have been acquired in units or attached to
other securities). Of such 5%, no more than 2% of the Fund's total assets
may be invested in warrants and rights which are not listed on either the
New York or American Stock Exchanges. For further details, see
"Investment Objective and Policies" in the Additional Statement.
Restricted and Illiquid Securities
The Fund may buy securities whose disposition would be subject to
legal restrictions ("restricted securities"). The Fund will not purchase
or otherwise acquire any security if, as a result, more than 15% of its
net assets (taken at current value) would be invested in securities that
are illiquid by virtue of the absence of a readily available market or
legal or contractual restrictions on resale; this policy includes
repurchase agreements (discussed below) of more than seven days' maturity,
OTC options held by the Fund, and that portion of assets used to cover
such options. This policy does not limit the acquisition of restricted
securities eligible for resale to qualified institutional purchasers
pursuant to Rule 144A under the Securities Act of 1933 that are determined
to be liquid by the Fund's Board of Trustees, or by the Manager under
Board-approved guidelines. Such guidelines take into account trading
activity for such securities and the availability of reliable pricing
information, among other factors. If there is a lack of trading interest
in particular Rule 144A securities, the Fund's holdings of those
securities may be illiquid. There may be undesirable delays in selling
such securities at a price representing their fair value; see "Restricted
and Illiquid Securities" in the Additional Statement for further details.
The Fund currently intends to invest no more than 10% of its net assets
in illiquid or restricted securities, excluding securities eligible for
resale pursuant to Rule 144A.
Loans of Portfolio Securities
The Fund may lend its portfolio securities to qualified borrowers to
generate income for liquidity purposes if the loan is collateralized in
accordance with applicable regulatory requirements and procedures
established by the Fund's Board of Trustees, and if, after any loan, the
value of securities loaned does not exceed 25% of the value of the Fund's
total assets. The Fund presently does not intend that the value of
securities loaned in the coming year will exceed 5% of the value of the
Fund's net assets. See "Loans of Portfolio Securities"" in the Additional
Statement for further information on securities loans.
Repurchase Agreements
The Fund may acquire securities subject to repurchase agreements to
enhance the liquidity of the Fund's portfolio and to invest idle cash.
The Fund's repurchase agreements will be fully collateralized. However,
if the seller of the securities fails to pay the agreed-upon resale price
on the delivery date, the Fund's risks may include any costs of disposing
of the collateral for the agreement, and any loss resulting from any
delays in foreclosing on the collateral. There is no limit on the amount
of the Fund's assets that may be subject to repurchase agreements having
a maturity of seven days or less. See "Repurchase Agreements" in
"Investment Objective and Policies" in the Additional Statement for more
details.
Short Sales Against-the-Box
The Fund may not sell securities short except in transactions
referred to as "short sales against-the-box." No more than 15% of the
Fund's net assets will be held as collateral for such short sales at any
one time. See "Short Sales Against-the-Box" in "Investment Objective and
Policies" in the Additional Statement for further details.
Special Risk Considerations - Borrowing
From time to time, the Fund may increase its ownership of securities
by borrowing up to 10% of the value of its net assets from banks on an
unsecured basis and investing the borrowed funds (on which the Fund will
pay interest) in compliance with the 300% asset coverage requirement of
the Investment Company Act of 1940 (the "Investment Company Act").
Purchasing securities with borrowed funds is a speculative investment
method known as leverage. The Fund may be subject to relatively greater
risks and costs than a fund that does not use leverage. Interest on money
borrowed is an expense the Fund would not otherwise incur, so that it may
have substantially reduced net income and increased fluctuation in net
asset value per share during periods of substantial borrowings. For a
further discussion of such risks and other details, see "Borrowing" in
"Investment Objective and Policies" in the Additional Statement.
Writing Covered Calls
The Fund may write (i.e., sell) call options ("calls") to generate
additional income or for defensive purposes if: (i) after any sale not
more than 25% of the Fund's total assets are subject to calls; (ii) the
calls are listed on a domestic securities exchange, quoted on the
Automated Quotation System of the National Association of Securities
Dealers, Inc. ("NASDAQ") or traded in the over-the-counter market; and
(iii) the calls are "covered" (i.e., the Fund owns the securities or
Futures subject to the call or other securities acceptable for applicable
escrow arrangements) while the call is outstanding. The Fund may write
calls on securities indices.
Hedging
As noted above, the Fund may write covered calls to enhance income.
For hedging purposes as a temporary defensive maneuver, it may purchase
certain put and call options, Stock Index Futures (described below), and
options on Stock Index Futures and broadly-based stock indices, all of
which are referred to as "Hedging Instruments." In general, the Fund may
use Hedging Instruments (i) to attempt to protect against declines in the
market value of the Fund's portfolio securities and Stock Index Futures,
resulting from downward market trends, or (ii) to establish a position in
the equities markets as a temporary substitute for purchasing particular
equity securities. The Fund will not use Hedging Instruments for
speculation. The Hedging Instruments the Fund may use are described below
and in greater detail in "Covered Calls and Hedging" in the Additional
Statement.
-- Purchasing Puts and Calls. The Fund may purchase put options
("puts") which relate to: (i) securities (whether or not held by it); (ii)
Stock Index Futures, whether or not it holds such Stock Index Futures in
its portfolio; or (iii) broadly-based stock indices. The Fund may
purchase calls as to securities, securities indices or Stock Index
Futures, or to effect a "closing purchase transaction" to terminate its
obligation as to a call it has previously written. A call or put may be
purchased only if, after such purchase, the value of all put and call
options held by the Fund would not exceed 5% of the Fund's total assets.
-- Stock Index Futures. The Fund may buy and sell futures contracts
only if they relate to broadly-based stock indices ("Stock Index
Futures"). A stock index is "broadly-based" if it includes stocks that
are not limited to issuers in any particular industry or group of
industries. Stock Index Futures are settled by payment or acceptance of
cash, not by delivery of the stocks comprising the index. At present, the
Fund does not intend to enter into Stock Index Futures and options on
Futures if, after any such purchase or sale, the sum of margin deposits
on Futures and premiums paid on Futures options exceeds 5% of the value
of the Fund's total assets. The Fund's potential liability generally will
be significantly in excess of such amount.
-- Writing Puts. The Fund may write puts on securities, securities
indices or Futures only if such puts are covered by segregated liquid
assets. The Fund may not write puts if, as a result, more than 50% of the
Fund's net assets would be required to be segregated liquid assets.
-- Foreign Currency Options. 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 market or quoted by major
recognized dealers in such options, for the purpose of protecting against
declines in the dollar value of foreign securities and against increases
in the dollar cost of foreign securities to be acquired. However, in the
event of currency rate fluctuations adverse to the Fund's position, it
would lose the premium it paid and incur transactions costs.
-- 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. 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. The Fund will not speculate in foreign currency
exchange.
-- Interest Rate Swap Transactions. The Fund may enter into interest
rate swaps. In an interest rate swap, the Fund and another party exchange
their respective commitments to pay or receive interest on a security,
(e.g., an exchange of floating rate payments for fixed rate payments).
The Fund will not use interest rate swaps for leverage. Swap transactions
will be entered into only as to security positions held by the Fund. The
Fund may not enter into swap transactions with respect to more than 50%
of its total assets.
The Fund will segregate liquid assets (e.g., cash, U.S. Government
securities or other appropriate high grade debt obligations) equal to the
net excess, if any, of its obligations over its entitlements under the
swap and will mark to market that amount daily. The interest rate risk
of a swap is that the Fund will incur a net payment obligation as a result
of movements in interest rates. The credit risk of an interest rate swap
depends on the counterparty's ability to perform. The value of the swap
may decline if the counterparty's creditworthiness deteriorates. If the
counterparty defaults, the Fund risks the loss of the net amount of
interest payments that it is contractually entitled to receive. The Fund
may be able to reduce or eliminate its exposure to losses under swap
agreements either by assigning them to another party, or by entering into
an offsetting swap agreement with the same counterparty or another
creditworthy counterparty. See "Covered Calls and Hedging" in the
Additional Statement for further details.
-- Risks of Options and Futures Trading. "Covered Calls and Hedging"
in the Additional Statement contains more information about options,
Futures, Forward Contracts, segregation arrangements for Forward Contracts
and the Fund's other limitations on investment in Futures and options
thereon. There are certain risks in writing calls. If a call written by
the Fund is exercised, the Fund foregoes any profit from any increase in
the market price above the call price of the underlying investment on
which the call was written. In addition, the Fund could experience
capital losses which might cause previously distributed short-term capital
gains to be re-characterized as a non-taxable return of capital to
shareholders. In writing puts, there is the risk that the Fund may be
required to buy the underlying security at a disadvantageous price. The
principal risks of Futures trading are: (a) possible imperfect correlation
between the prices of the Futures and the market value of the debt
securities in the Fund's portfolio; (b) possible lack of a liquid
secondary market for closing out a Futures position; (c) the need for
additional skills and techniques beyond those required for normal
portfolio management; and (d) losses on Futures resulting from interest
rate movements not anticipated by the Manager.
Investment Restrictions
The Fund has certain investment restrictions which, together with its
investment objective, are fundamental policies. Under some of those
restrictions, the Fund cannot: (1) invest in securities of any one issuer
(other than the U.S. Government or any of its agencies or
instrumentalities) if immediately thereafter more than 5% of the Fund's
assets would be invested in securities of that issuer; (2) with respect
to 75% of its assets, invest in securities of any one issuer (other than
the U.S. Government or any of its agencies or instrumentalities) if the
Fund would then own more than 10% of the voting securities or 10% of any
class of securities of that issuer (all debt and all preferred stock of
an issuer are respectively considered single classes for this purpose);
(3) borrow money in excess of 10% of the value of its net assets; (4)
invest in other open-end investment companies, except in a merger,
consolidation, reorganization or acquisition of assets, or invest more
than 10% of its assets through open-market purchases in closed-end
investment companies, including small business investment companies, nor
make any such investments at commission rates in excess of normal
brokerage commissions; or (5) deviate from the percentage restrictions
listed under "Borrowing," "Warrants and Rights," "Loans of Portfolio
Securities" and "Short Sales Against-the-Box" or from the restrictions
under "Foreign Securities" as to what foreign securities may be purchased.
The percentage restrictions described above and in the Additional
Statement apply only at the time of investment and require no action by
the Fund as a result of subsequent changes in value of the investment or
the size of the Fund. A supplementary list of investment restrictions is
contained in "Investment Restrictions" in the Additional Statement.
Management Of The Fund
The Fund's Board of Trustees has overall responsibility for the
management of the Fund under the laws of Massachusetts governing the
responsibilities of trustees of business trusts. "Trustees and Officers"
in the Additional Statement identifies the Fund's Trustees and officers
and provides certain information about them. Subject to the authority of
the Fund's Board of Trustees, the Fund's investment adviser, Oppenheimer
Management Corporation (the "Manager"), is responsible for day-to-day
management of the Fund's business, supervises the investment operations
of the Fund and the composition of its portfolio and furnishes the Fund
advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities pursuant to an investment
advisory agreement with the Fund (the "Agreement").
Sandra Panem is a Vice President of the Manager who serves as a
Portfolio Manager and a Vice President of the Fund. Since December, 1992,
she has been the person principally responsible for the day-to-day
management of the Fund's portfolio. During the past five years, she was
previously a Vice President of Solomon Brothers Venture Capital, prior to
which she was a Program Officer of the Alfred P. Sloan Foundation.
The Agreement contains provisions relating to the Fund's portfolio
transactions, including the selection of brokers and dealers when used for
such transactions. Subject to the Agreement, the Manager may consider
sales of shares of the Fund and other funds managed by the Manager or its
affiliates as a factor in the selection of brokers and dealers for the
Fund's portfolio transactions. Under the Agreement, the Fund pays a
monthly management fee to the Manager computed on the net assets of the
Fund at the close of business each day at the following annual rates: 1.0%
of the first $50 million of average annual net assets, 0.75% of the next
$150 million, 0.72% of the next $200 million, 0.69% of the next $200
million, 0.66% of the next $200 million and 0.60% of net assets in excess
of $800 million. That fee rate is higher than that paid by most other
investment companies. Certain funds advised by the Manager have
investment objectives similar to that of the Fund and pay management fees
at lower rates than the Fund. "Investment Management Services" in the
Additional Statement contains more information about the Agreement,
including a description of expense arrangements, exculpation provisions
and brokerage practices of the Fund.
The Manager has operated as an investment adviser since April 30,
1959. The Manager and its affiliates currently advise U.S. investment
companies with assets aggregating over $25 billion as of September 30,
1993, and having more than 1.8 million shareholder accounts. The Manager
is owned by Oppenheimer Acquisition Corp., a holding company owned in part
by senior management of the Manager, and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company that also advises pension plans and investment companies.
How To Buy Shares
The Fund's shares may be purchased through any dealer or broker that
has a sales agreement with the Fund's distributor, Oppenheimer Funds
Distributor, Inc. (the "Distributor"), a subsidiary of the Manager. There
are two ways to make an initial investment: either (1) complete an
OppenheimerFunds New Account Application and mail it with your payment to
the Distributor at P.O. Box 5270, Denver, Colorado 80217 (if no dealer is
named in the Application, the Distributor will act as the dealer), or (2)
order the shares through your dealer or broker.
Minimum Investment
The minimum initial investment is $1,000, except as otherwise
described in this Prospectus. Subsequent purchases must be at least $25
and may be made (1) through authorized dealers or brokers, (2) by
forwarding payment to the Distributor at the above address with the names
of all account owners, the account number and the name of the Fund, (3)
automatically through Asset Builder Plans or (4) by telephone using
AccountLink, described below. Under an Asset Builder Plan, Automatic
Exchange Plan, 403(b)(7) plan or military allotment plan, initial and
subsequent investments must be at least $25. The minimum initial and
subsequent purchase requirements are waived on purchases made by
reinvesting dividends from any of the "Eligible Funds" listed in "Right
of Accumulation," below, or by reinvesting distributions from unit
investment trusts for which reinvestment arrangements have been made with
the Distributor. No share certificates will be issued for shares of the
Fund unless specifically requested in writing by a purchaser or the dealer
or broker.
Shares of the Fund may be purchased in amounts up to $25,000 per
investor per month, including within that limit shares purchased by
exchange from "Eligible Funds" (defined below), lump-sum purchases, and
purchases under an Asset Builder Plan (described below) or by reinvestment
of dividends or distributions from other "Eligible Funds," or under the
"Reinvestment Privilege," described below. The foregoing is subject to
the right of the Fund and the Distributor, in their complete discretion,
to modify or terminate the terms of this offer at any time without prior
notice. The remaining sections of this Prospectus are hereby amended to
conform to the terms of this offer.
Shares are sold at their offering price, which (as used in this
Prospectus and the Additional Statement) is net asset value per share plus
a sales charge, except that for certain purchases described below that are
not subject to a front-end sales charge, the offering price is net asset
value. The offering price (and net asset value) is determined as of 4:00
P.M. (all references to time in this Prospectus mean New York time), each
day the New York Stock Exchange is open ("a regular business day"). Net
asset value per share is determined by dividing the value of the Fund's
net assets by the number of shares outstanding. The Fund's Board of
Trustees has established procedures for valuing the Fund's securities.
In general, those valuations are based in general on market value, with
special provisions for: (i) securities not having readily-available market
quotations; (ii) short-term debt securities; and (iii) Covered Calls and
Hedging Instruments. Further details are in "Purchase, Redemption and
Pricing of Shares" in the Additional Statement.
All purchase orders received by the Distributor at its address in
Denver, Colorado before 4:00 P.M. on a regular business day are processed
at that day's offering price. However, an order received by the
Distributor from a dealer or broker after the offering price is determined
that day will receive such offering price only if the order was received
by the dealer or broker from its customer prior to 4:00 P.M. and was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Purchase orders received on other
than a regular business day will be executed on the next succeeding
regular business day. The Distributor, in its sole discretion, may accept
or reject any order for purchase of the Fund's shares. The sale of shares
will be suspended during any period when the determination of net asset
value of the Fund is suspended and may be suspended by the Board of
Trustees whenever the Board judges it in the best interest of the Fund to
do so.
The table below shows the regular front-end sales charge rates for
a "single purchaser" (defined below), together with the dealer discounts
paid to authorized dealers and the agency commissions paid to authorized
brokers (collectively called the "commission"):
- -------------------------------------------------------------------------
Front End
Front End Sales Charge
Sales Charge as Commission
as Approximate as
Percentage Percentage Percentage
of Offering of Amount of Offering
Amount of Purchase Price Invested Price
- -------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
$1 million or more None* None* None*
- -------------------------------------------------------------------------
*See "Contingent Deferred Sales Charge," below.
Under certain circumstances, commissions up to the amount of the
entire sales charge may be reallowed to dealers or brokers, who might then
be deemed to be "underwriters" under the Securities Act of 1933.
Commission rates may vary among the funds for which the Manager and its
affiliates act as investment advisers.
The Distributor may advance up to 13 months' commissions to dealers
that have entered into special arrangements with the Distributor as to
purchases made by their clients under Oppenheimer Asset Builder Plans.
If a registered representative of a securities dealer sells more than $2.5
million of shares of "Eligible Funds" other than "Money Market
Funds"(defined below) in a calendar year, the dealer firm is eligible to
send such representative, with a guest, to a three-day sales conference
(generally held in a resort), if one is sponsored and held by the
Distributor; or in lieu of sending such representative that firm may, at
its option, receive the equivalent cash value of such award as additional
commission. The Distributor may, from time to time, enter into
arrangements with specific dealers whereby the Distributor may make
additional payments to that dealer based, in part, on that dealer meeting
certain sales criteria. Such additional payments may be based on sales
for a specific period of time, shares of certain or all of the "Eligible
Funds" held by the dealer and/or its customers, or some combination
thereof.
Dealers whose sales of Class A shares of "Eligible Funds" other than
"Money Market Funds" (defined below) under OppenheimerFunds-sponsored
403(b)(7) custodial plans exceed a rate of $5 million per year, calculated
per calendar quarter, will receive monthly one-half of the Distributor's
retained commission on such sales. Dealers whose sales of such plans
exceed a rate of $10 million per year, calculated per calendar quarter,
will receive the Distributor's entire retained commission on such sales.
All purchase orders received by the Distributor at its address in
Denver, Colorado, prior to 4:00 P.M. on a regular business day are
processed at that day's offering price. However, an order received by the
Distributor from a dealer or broker after the offering price is determined
that day will receive such offering price if the order was received by the
dealer or broker from its customer prior to 4:00 P.M. and was transmitted
to and received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Purchase orders received on other than a regular
business day will be executed on the next succeeding regular business day.
The Distributor, in its sole discretion, may accept or reject any order
for the purchase of the Fund's shares. The sale of shares will be
suspended during any period in which the determination of net asset value
is suspended and may be suspended by the Fund's Board of Trustees whenever
the Board judges it in the best interest of the Fund to do so.
Contingent Deferred Sales Charge
On purchases of Class A shares of one or more of the "Eligible Funds"
by a "single purchaser" (defined below in "Right of Accumulation")
aggregating $1 million or more, the Distributor will pay authorized
dealers an amount equal to 1.0% of the first $2.5 million of such
purchases, plus 0.50% of the next $2.5 million, plus 0.25% of such
purchases in excess of $5 million. A contingent deferred sales charge
(the "CDSC") will be deducted from the redemption proceeds of shares as
to whose purchase the Distributor has made such payments to dealers if the
shares are redeemed within 18 months of the end of the calendar month of
their purchase. The CDSC will be in an amount equal to 1% of the lesser
of the aggregate net asset value of the redeemed shares (not including
shares purchased by reinvestment of dividends or capital gains) or the
original cost of such shares. However, the total CDSC paid on such shares
shall not exceed the aggregate commissions paid to dealers on all shares
of "Eligible Funds" purchased subject to a CDSC by that "single
purchaser."
The CDSC does not apply to purchases at net asset value described in
"Other Circumstances" and will be waived in the case of redemptions of
shares made for: (i) retirement distributions (or loans) to participants
or beneficiaries from retirement plans qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code") or from IRAs, 403(b)(7) plans, deferred compensation plans created
under Section 457 of the Code or other employee benefit plans
(collectively, "Retirement Plans"); (ii) returns of excess contributions
to such Retirement Plans; (iii) Automatic Withdrawal Plan payments limited
to no more than 12% of the original account value annually; and (iv)
involuntary redemptions of shares by operation of law or under procedures
set forth in the Fund's Declaration of Trust or as adopted by the Board
of Trustees.
Some or all of the proceeds of redeemed shares on which a CDSC was
paid on redemption and which are subsequently reinvested under the
"Reinvestment Privilege" (described below) may be reinvested within 6
months of redemption without sales charge at net asset value on the
reinvestment date if the investor notifies the Distributor that the
privilege applies. Additionally, no CDSC is charged on exchanges,
pursuant to the Fund's exchange privilege, of shares purchased subject to
a CDSC, except that if the shares acquired by exchange are redeemed within
18 months of the end of the calendar month of the initial purchase of the
exchanged shares, the CDSC will apply. In determining whether a CDSC is
payable, and the amount of any such CDSC, shares not subject to a CDSC are
redeemed first, including shares purchased by reinvestment of dividends
and capital gains distributions, and then other shares are redeemed in the
order of purchase.
Reduced Sales Charges
The sales charge rates in the above table may be reduced as follows:
-- Right of Accumulation. In calculating the sales charge rate
applicable to current purchases of Fund shares, a "single purchaser"
(defined below) is entitled to accumulate current purchases with the
greater of (1) amounts previously paid for or (2) the current value (at
offering price) of shares of the Fund and Class A shares of certain other
"Eligible Funds" if sold subject to an initial sales charge and if the
investment is still held in one of the Eligible Funds. The Eligible Funds
are those for which the Distributor or an affiliate acts as the
distributor and include the following: (i) the Fund, Oppenheimer Discovery
Fund, Oppenheimer Target Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer
California Tax-Exempt Fund, Oppenheimer Pennsylvania Tax-Exempt Fund,
Oppenheimer Florida Tax-Exempt Fund, Oppenheimer High Yield Fund,
Oppenheimer Champion High Yield Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Mortgage Income Fund, Oppenheimer U.S. Government Trust,
Oppenheimer Government Securities Fund, Oppenheimer Insured Tax-Exempt
Bond Fund, Oppenheimer Intermediate Tax-Exempt Bond Fund, Oppenheimer
Global Environment Fund, Oppenheimer Global Growth & Income Fund,
Oppenheimer Investment Grade Bond Fund, Oppenheimer Value Stock Fund,
Oppenheimer Main Street Income & Growth Fund, Oppenheimer Main Street
California Tax-Exempt Fund, Oppenheimer Fund, Oppenheimer Global Fund,
Oppenheimer Time Fund, Oppenheimer Special Fund, Oppenheimer Equity Income
Fund, Oppenheimer Asset Allocation Fund, and Oppenheimer Gold & Special
Minerals Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer Strategic
Income Fund, Oppenheimer Strategic Income & Growth Fund, Oppenheimer
Strategic Investment Grade Bond Fund and Oppenheimer Strategic Short-Term
Income Fund; and (ii) the following "Money Market Funds": Centennial Tax
Exempt Trust, Centennial Money Market Trust, Centennial America Fund,
L.P., Centennial Government Trust, Centennial California Tax Exempt Trust,
Centennial New York Tax Exempt Trust, Oppenheimer Money Market Fund, Inc.,
Daily Cash Accumulation Fund, Inc., Oppenheimer Cash Reserves and
Oppenheimer Tax-Exempt Cash Reserves. There is an initial sales charge
on the purchase of Class A shares of each Eligible Fund except the Money
Market Funds (under certain circumstances described above, redemption
proceeds of Money Market Fund shares may be subject to a CDSC). The
reduced sales charge applies only to current purchases.
The term "single purchaser" refers to (i) an individual, (ii) an
individual and spouse purchasing shares of the Fund for their own account
or for trust or custodial accounts for their minor children, or (iii) a
fiduciary purchasing for any one trust, estate or fiduciary account,
including employee benefit plans created under Sections 401 or 457 of the
Internal Revenue Code, including related plans of the same employer. To
be entitled to a reduced sales charge under the Right of Accumulation, at
the time of purchase the purchaser must ask the Distributor for such
entitlement and provide the account number(s) for shares of Eligible Funds
owned by the "single purchaser," and the age of any minor children and for
whom shares are held.
-- Letter of Intent. By initially investing at least $1,000 and
submitting a Letter of Intent to the Distributor, a "single purchaser" may
purchase shares of the Fund and other Eligible Funds (other than Money
Market Funds) during a 13-month period at the reduced sales charge rates
or at net asset value but subject to the CDSC (described above), if
applicable, applying to the aggregate amount of the intended purchases
stated in the Letter. The Letter may apply to purchases made up to 90
days before the date of the Letter. The Fund and the Distributor reserve
the right to amend, suspend or cease such program at any time without
prior notice. For further details, including escrow requirements, see
"Letters of Intent" in the Additional Statement.
-- Other Circumstances. No sales charge is imposed on shares of the
Fund: (i) sold to the Manager or its affiliates, or to present and former
officers, trustees or directors and employees (and their "immediate
families" as defined in "Reduced Sales Charges" in the Additional
Statement) of the Fund, the Manager and its affiliates and to retirement
plans established by them for employees; (ii) issued in plans of
reorganization, such as mergers, asset acquisitions and exchange offers,
to which the Fund is a party; (iii) sold to registered investment
companies or to separate accounts of insurance companies having an
agreement with the Manager or the Distributor; (iv) sold to dealers or
brokers that have a sales agreement with the Distributor, for their own
account or for retirement plans for their employees, or sold to employees
(and their spouses) of such dealers or brokers, or of banks, savings and
loan associations or credit unions that have entered into a sales
arrangement with such dealer or broker or the Distributor (and are
identified to the Distributor by such dealer or broker); purchasers must
certify to the Distributor at the time of purchase that such purchase is
for their own account (or for the benefit of such employees' spouses or
minor children); (v) sold to dealers, brokers or registered investment
advisers that have entered into an agreement with the Distributor
providing specifically for the use of Fund shares in particular investment
products made available to clients of the dealer, broker or registered
investment adviser; and (vi) purchased by the reinvestment of (a) loan
repayments by a participant in a retirement plan for which the Manager or
its affiliates act as sponsor, or (b) dividends or other distributions
reinvested from the Fund or other "Eligible Funds" (other than the Cash
Reserves Funds) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor. "Purchase, Redemption
and Pricing of Shares - Reduced Sales Charges" in the Additional Statement
discusses this policy.
Purchase Programs for Shares
-- AccountLink. OppenheimerFunds AccountLink is a means to link a
shareholder's Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House ("ACH") member.
AccountLink can be used to transmit funds by electronic funds transfers
for account transactions, including subsequent share purchases. The
minimum investment by AccountLink is $25. Purchases of up to $250,000 may
be made by telephone using AccountLink (the maximum is $100,000 if the
transaction is done by PhoneLink, described below). To speak to service
operators to initiate such purchases, call the Distributor at 1-800-852-
8457. All such calls will be recorded. To initiate such purchases
automatically using PhoneLink, call 1-800-533-3310. Shares will be
purchased on the regular business day the Distributor is instructed to
initiate the ACH transfer to buy the shares. Dividends will begin to
accrue on such shares on the day the Fund receives Federal Funds for such
purchase through the ACH system before 4:00 P.M., which is normally 3 days
after the ACH transfer is initiated. If such Federal Funds are received
after that time, dividends will begin to accrue on the next regular
business day after such Federal Funds are received.
AccountLink may also be used as a means of transmitting redemption
proceeds to a designated bank account (see "How to Redeem Shares") or to
transmit distributions paid by the Fund directly to a bank account (see
"Dividends and Distributions"). AccountLink privileges must be requested
on the application used to buy shares or the dealer settlement
instructions establishing the account, or on subsequent signature-
guaranteed instructions to the Transfer Agent from all shareholders of
record for an account, and such privileges thereupon apply to each
shareholder of record and the dealer representative of record unless and
until the Transfer Agent receives written instructions from a shareholder
of record canceling such privileges. Changes of bank account information
must be made by signature-guaranteed instructions to the Transfer Agent
by all shareholders of record for an account. The Transfer Agent, the
Fund and the Distributor have adopted reasonable procedures to confirm
that telephone instructions under AccountLink (described above) and
"PhoneLink," "Telephone Redemptions" and the "Exchange Privilege"
(described below) are genuine, by requiring callers to provide the tax
identification number(s) and other account data and by recording such
calls and confirming such transactions in writing. If the Transfer Agent
and the Distributor do not use such procedures, they may be liable for
losses due to unauthorized transactions, but otherwise will not be liable
for losses or expenses arising out of telephone instructions reasonably
believed to be genuine. The Fund reserves the right to amend, suspend or
discontinue AccountLink privileges at any time without prior notice.
-- PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system which enables shareholders of the Fund to initiate account
transactions automatically by telephone, including exchanges between
existing accounts (see "Exchange Privilege," below), redemptions (see "How
to Redeem Shares - Telephone Redemptions," below) and purchases (see
"AccountLink," above). PhoneLink transactions may be done automatically
using a touchtone telephone provided that the shareholder uses a Personal
Identification Number ("PIN") which may be obtained through PhoneLink by
calling 1-800-533-3310. If an account has multiple owners, the Transfer
Agent or the Distributor may rely on any instructions initiated through
PhoneLink using a PIN. The Fund reserves the right to amend, suspend or
discontinue PhoneLink privileges at any time without prior notice.
-- Asset Builder Plans. Investors may purchase shares of the Fund
(and up to four other Eligible Funds) automatically under Asset Builder
Plans. With AccountLink, Asset Builder Plans may be used to make regular
monthly investments ($25 minimum) from the investor's account at a bank
or other financial institution. See "AccountLink," above for details.
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
Redeem Shares."
Asset Builder Plans also enable shareholders of Oppenheimer Tax-
Exempt Cash Reserves or Oppenheimer Cash Reserves to use those accounts
for monthly automatic purchases of shares of the Fund and up to four other
Eligible Funds. There is a sales charge on the purchase of certain
Eligible Funds, and an application should be obtained from the Transfer
Agent and completed and a prospectus of the selected fund(s) (available
from the Distributor) should be obtained before initiating payments. The
amount of the Asset Builder investment may be changed or the automatic
investments terminated at any time by writing to the Transfer Agent. A
reasonable period (approximately 15 days) is required after 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.
Service Plan
The Fund has adopted a service plan (the "Plan") under Rule 12b-1 of
the Investment Company Act pursuant to which the Fund will reimburse the
Distributor quarterly for all or a portion of its costs incurred in
connection with the personal service and maintenance of accounts that hold
Fund shares. The Distributor will use such fees received from the Fund
in their entirety: (i) to compensate dealers, brokers, banks, or other
institutions (collectively, "Recipients") each quarter for providing
personal service and maintenance of accounts that hold Fund shares; and
(ii) to reimburse itself (to the extent authorized by the Board of
Trustees) for its other expenditures under the Plan and for its direct
costs for personal service and maintenance of accounts. The Board of
Trustees has not presently authorized any reimbursement payments to the
Distributor under (ii), above. The services to be provided under the Plan
include, but shall not be limited to, the following: answering routine
inquiries from the Recipient's customers concerning the Fund, providing
such customers with information on their investment in Fund shares,
assisting in establishing and maintaining accounts or sub-accounts in the
Fund, making the Fund's investment plans and dividend payment options
available, and providing such other information and customer liaison
services and the maintenance of accounts as the Distributor or the Fund
may reasonably request. The Distributor will be reimbursed only for
quarterly payments made to each Recipient at a rate not to exceed 0.0625%
(0.25% annually) of the average of the aggregate net asset value of Fund
shares owned by the Recipient or its customers. Any unreimbursed expenses
incurred during any quarter by the Distributor may not be recovered in
later periods. The Fund will not be charged for any interest expense,
carrying charges or other financial costs, or allocation of overhead by
the Distributor.
The Plan has the effect of increasing annual Fund expenses by up to
0.25% of its average annual net assets. In addition, the Manager and the
Distributor may, under the Plan, from time to time from their own
resources (which, as to the Manager, may include profits derived from the
advisory fee it receives from the Fund) make similar payments to
Recipients for distribution and administrative services they perform. For
further details, see "Service Plan" in the Additional Statement.
How to Redeem Shares
Regular Redemption Procedures
To redeem some or all shares in an account (whether or not
represented by certificates) under the Fund's regular redemption
procedures, a shareholder must send the following documents to the
Transfer Agent, Oppenheimer Shareholder Services, P.O. Box 5270, Denver,
Colorado 80217 (send courier or Express Mail deliveries to 1200 E. Girard
Avenue, Building D, Denver, CO 80231): (1) a written request for
redemption signed by all registered owners exactly as the shares are
registered, including fiduciary titles, if any, and specifying the account
number and the dollar amount or number of shares to be redeemed; (2) a
guarantee of the signatures of all registered owners on the redemption
request or on the endorsement on the share certificate or accompanying
stock power, by a U.S. bank, trust company, credit union or savings
association, or a foreign bank having a U.S. correspondent bank, or by a
U.S.-registered dealer or broker in securities, municipal securities or
government securities, or by a U.S. national securities exchange,
registered securities association or clearing agency; (3) any share
certificates issued for any of the shares to be redeemed; and (4) any
additional documents which may be required by the Transfer Agent for
redemption by corporations, partnerships or other organizations,
executors, administrators, trustees, custodians, guardians, or from an
OppenheimerFunds-sponsored retirement plan, or if the redemption is
requested by anyone other than the shareholder(s) of record. Transfers
of shares are subject to similar requirements.
A signature guarantee is not required for redemptions of $50,000 or
less, requested by and payable to all shareholders of record, to be sent
to the address of record for that account. To avoid delay in redemption
or transfer, shareholders having questions about these requirements should
contact the Transfer Agent in writing or by calling 1-800-525-7048 before
submitting a request. From time to time, the Transfer Agent in its
discretion, may waive any or certain of the foregoing requirements in
particular cases. Redemption or transfer requests will not be honored
until the Transfer Agent receives all required documents in proper form.
Telephone Redemptions
To redeem shares by telephone through a service representative, call
the Transfer Agent at 1-800-852-8457. To use PhoneLink to redeem shares
automatically, without a service representative, call 1-800-533-3310.
Under either method of telephone redemptions, proceeds may be paid by
check or through AccountLink as described below. The Transfer Agent may
record any calls. Telephone redemptions may not be available if all lines
are busy, and shareholders would have to use the Fund's regular redemption
procedure described above. Requests received by the Transfer Agent prior
to 4:00 P.M. on a regular business day will be processed at the net asset
value per share determined that day. Telephone redemption privileges are
not available for newly purchased (within the prior 15 days) shares, for
OppenheimerFunds-sponsored retirement plans, or for shares represented by
certificates.
Telephone redemption privileges apply automatically to each
shareholder and the dealer representative of record unless the Transfer
Agent receives cancellation instructions from a shareholder of record.
If an account has multiple owners, the Transfer Agent may rely on the
instructions of any one owner. Telephone redemption privileges may be
amended, suspended or discontinued by the Fund at any time without prior
notice.
-- Telephone Redemptions Paid by Check. For redemption proceeds paid
by check, amounts up to $50,000 may be redeemed by telephone, once in
every seven-day period, and the check must be payable to the
shareholder(s) of record and sent to the address of record for the
account. Telephone redemptions paid by check are not available within 30
days of a change of the address of record.
-- Redemptions Paid Through AccountLink. If AccountLink privileges
have been established for an account, any amount may be redeemed by
telephone, wire or written instructions to the Transfer Agent, and the ACH
transfer of the redemption proceeds to the designated bank account
normally will be initiated by the Transfer Agent on the next bank business
day after the redemption. There are no dollar or frequency limitations
on telephone redemptions sent to a designated bank account through
AccountLink. No dividends are paid on the proceeds of redeemed shares
awaiting transmittal by ACH transfer. See "AccountLink" under "How to Buy
Shares" for instructions on establishing this privilege.
Distributions From Retirement Plans
Requests for distributions from OppenheimerFunds-sponsored IRAs,
403(b)(7) custodial plans, or pension or profit-sharing plans for which
the Manager or its affiliates act as sponsors should be addressed to
"First Interstate Bank of Denver, N.A., c/o Oppenheimer Shareholder
Services" at the above address, and 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 redemption requirements, above. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request redemption of their
accounts. The employer or plan administrator must sign the request.
Distributions from such plans are subject to additional 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 Trustee, the Fund, the Manager, the Distributor and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any penalties assessed.
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 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. Because of the sales charge assessed on share
purchases, shareholders should not make regular additional purchases while
participating in an Automatic Withdrawal Plan. The Fund cannot guarantee
receipt of the payment on the date requested and reserves the right to
amend, suspend or discontinue offering such plans at any time without
prior notice. For further details, refer to "Automatic Withdrawal Plan
Provisions" in the Additional Statement.
Shareholders can also authorize the Transfer Agent to exchange a
predetermined amount of shares of the Fund for shares of up to five other
"Eligible Funds" (minimum purchase is $25 per fund account) automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. Exchanges made pursuant to such Plans are otherwise
subject to the terms and conditions applicable to exchanges described in
"Exchange Privilege," below.
Repurchase
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that orders received by the Distributor from dealers or
brokers after 4:00 P.M. on a regular business day will be processed at
that day's net asset value if such orders are received by the dealer or
broker from its customers prior to 4:00 P.M. and are transmitted to and
received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Payment ordinarily will be made within seven days
after the Distributor's receipt of the required documents, with
signature(s) guaranteed as described above.
Reinvestment Privilege
Within six months of a redemption, a shareholder may reinvest all or
part of the redemption proceeds in shares of the Fund or any of the
Eligible Funds into which shares of the Fund are exchangeable as described
below, at the net asset value next computed after receipt by the Transfer
Agent of the reinvestment order. The shareholder must ask the Distributor
for such entitlement at the time of reinvestment. A realized gain on the
redemption is taxable and reinvestment will not alter any capital gains
tax payable on that gain. If there has been a loss on the redemption,
some or all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment in the Fund. 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 shares of another
Eligible Fund) within 90 days of the payment of the sales charge, the
shareholder's basis in the Fund shares redeemed may not include the amount
of the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption. 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.
General Information on Redemptions
The redemption price will be the Fund's net asset value per share
next determined after the Transfer Agent receives redemption instructions
in proper form. The market values of the securities in the Fund's
portfolio are subject to daily fluctuations and the net asset value of the
Fund's shares will fluctuate accordingly. Therefore, the redemption value
may be more or less than the investor's cost. Under certain unusual
circumstances, shares may be redeemed in kind (i.e., by payment in
portfolio securities). The Fund may involuntarily redeem small accounts
(if the account value has fallen below $200 for reasons other than market
value fluctuations) and may redeem shares in amounts sufficient to
compensate the Distributor for any loss due to cancellation of a share
purchase order; for details, see "Purchase, Redemption and Pricing of
Shares" in the Additional Statement. Under the Internal Revenue Code, the
Fund may be required to impose "backup" withholding of Federal income tax
at the rate of 31% from dividends, distributions and redemption proceeds
(including exchanges), if the shareholder has not furnished the Fund a
certified tax identification number or has not complied with the Code's
provisions relating to reporting dividends.
Payment for redeemed shares is made ordinarily in cash and forwarded
within seven days of the Transfer Agent's receipt of redemption
instructions in proper form, except under unusual circumstances as
determined by the SEC. The Transfer Agent may delay forwarding a
redemption check for recently-purchased shares only until the purchase
payment has cleared, which may take up to 15 or more days from the
purchase date. Such delay may be avoided if the shareholder arranges
telephone or written assurance satisfactory to the Transfer Agent from the
bank upon which the purchase payment was drawn. The Fund makes no charge
for redemption. Dealers or brokers may charge a fee for handling
redemption transactions, but such charge can be avoided by requesting the
redemption directly by the Fund through the Transfer Agent. Under certain
circumstances, the CDSC described above under "Contingent Deferred Sales
Charge" may apply to the proceeds of redemptions.
Exchanges of Shares and Retirement Plans
Exchange Privilege
Shares of the Fund and of the other Eligible Funds listed in "Right
of Accumulation" may be exchanged at net asset value per share at the time
of exchange, without sales charge, if all of the following conditions are
met: (1) shares of the fund selected for exchange are available for sale
in the shareholder's state of residence; (2) the respective prospectuses
of the funds whose shares are to be exchanged and acquired offer the
Exchange Privilege to the investor; (3) newly-purchased (by initial or
subsequent investment) shares are held in an account for at least seven
days and all other shares at least one day prior to the exchange; and (4)
the aggregate net asset value of the shares surrendered for exchange is
at least equal to the minimum investment requirements of the fund whose
shares are to be acquired.
In addition to the conditions stated above, shares of a particular
class of an Eligible Fund may be exchanged only for shares of the same
class of another Eligible Fund. If a Fund has only one class of shares
that is not otherwise denominated, its shares shall be considered "Class
A" shares for this purpose. Certain of the Eligible Funds offer Class A,
Class B and/or Class C shares, and a list can be obtained by calling the
Distributor at 1-800-525-7048, or by referring to "Purchase, Redemption
and Pricing of Shares" in the Additional Statement. Funds offering Class
C shares are referred to, as a group, as the "OppenheimerFunds Advisors
Portfolio". In addition, Class A shares of Eligible Funds may be
exchanged for shares of any Money Market Fund; shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
Eligible Funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Eligible
Funds subject to a CDSC); and shares of this Fund acquired by reinvestment
of dividends or distributions from any other Eligible Fund 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
Eligible Fund. No CDSC is imposed on exchanges of shares subject to a
CDSC. However, when Class A shares acquired by exchange from Class A
shares purchased subject to a Class A CDSC are redeemed within 18 months
of the end of the calendar month of the initial purchase of the exchanged
Class A shares, the Class A CDSC is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge," above).
-- How to Exchange Shares. An exchange may be made by either: (1)
submitting an OppenheimerFunds Exchange Authorization Form to the Transfer
Agent, signed by all registered owners, or (2) telephone exchange
instructions to the Transfer Agent by a shareholder or the dealer
representative of record for an account. The Fund may modify, suspend or
discontinue either of these exchange privileges at any time, and will do
so on 60 days' notice, if such notice is required by regulations adopted
under the Investment Company Act. The Fund reserves the right to reject
telephone or written exchange requests submitted in bulk on behalf of 10
or more accounts. Telephone and written exchange requests must be
received by the Transfer Agent by 4:00 P.M. on a regular business day to
be effected that day. The number of shares exchanged may be less than the
number requested if the number requested would include shares subject to
a restriction cited above or shares covered by a certificate that is not
tendered with such request. Only the shares available for exchange
without restriction will be exchanged.
-- Telephone Exchanges. Telephone exchange requests may either be
placed through a service representative by calling the Transfer Agent at
1-800-852-8457 or automatically by PhoneLink, by calling 1-800-533-3310.
If all telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), shareholders might not be
able to request telephone exchanges and would have to submit written
exchange requests. Telephone exchange calls may be recorded by the
Transfer Agent. Telephone exchanges are subject to the rules described
above. By exchanging shares by telephone, the shareholder is
acknowledging receipt of a prospectus of the fund to which the exchange
is made and that for full or partial exchanges, any special account
features such as Asset Builder Plans, Automatic Withdrawal or Exchange
Plans and retirement plan contributions will be switched to the new
account unless the Transfer Agent is otherwise instructed. Telephone
exchange privileges automatically apply to each shareholder of record and
the dealer representative of record unless and until the Transfer Agent
receives written instructions from a shareholder of record canceling such
privileges. If an account has multiple owners, the Transfer Agent may
rely on instructions of any one owner. The Transfer Agent reserves the
right to require shareholders to confirm in writing their election of
telephone exchange privileges for an account. Shares acquired by
telephone exchange must be registered exactly as the account from which
the exchange was made. Certificated shares are not eligible for telephone
exchange.
-- General Information on Exchanges. 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 in its discretion reserves the right to
refuse any exchange request that will disadvantage it, for example, if the
receipt of multiple exchange requests from a dealer might require the
disposition of securities at a time or price disadvantageous to the Fund.
No sales commissions are paid by the Distributor on exchanges of shares
(unless a front-end sales charge is assessed on the exchange).
The Eligible Funds have different investment objectives and policies.
For complete information, including charges and expenses, a prospectus of
the fund into which the exchange is being made should be read prior to an
exchange. A $5 service charge will be deducted from the account to which
the exchange is made to help defray administrative costs. That charge is
waived for telephone exchanges made by PhoneLink between existing
accounts. Dealers or brokers who process exchange orders on behalf of
their customers may charge for their services. Those charges may be
avoided by requesting the Fund directly to exchange shares. For Federal
tax purposes, an exchange is treated as a redemption and purchase of
shares (see "How to Redeem Shares - Reinvestment Privilege," above, for
a discussion of certain tax effects of exchanges).
Retirement Plans
The Distributor has available forms of: (i) pension and profit-
sharing plans for corporations and self-employed individuals, (ii)
Individual Retirement Accounts ("IRAs"), including Simplified Employee
Pension Plans and Rollover IRAs, and (iii) 403(b)(7) custodial plans for
employees of qualified employers. The minimum initial investment for
pension and profit-sharing plans is $250, and is also $250 for IRAs unless
they are purchased under an Asset Builder Plan. When completing a plan
application, include the name(s) of the fund(s) selected for investment
and if selecting more than one fund, the desired allocation. The Fund,
reserves the right to discontinue offering its shares to such plans at any
time without prior notice. For further details, including the
administrative fees, the appropriate retirement plan should be requested
from the Distributor.
Dividends, Distributions And Taxes
This discussion relates solely to Federal tax laws and is not
exhaustive; a qualified tax adviser should be consulted. The Fund's
dividends and distributions may also be subject to state and local
taxation. "Tax Aspects of Covered Calls and Hedging Instruments" and
"Performance, Dividend and Tax Information" in the Additional Statement
contain further discussion of tax matters affecting the Fund and its
distributions.
Dividends and Distributions. The Fund intends to declare dividends
on an annual basis in December each year, on a date set by the Board of
Trustees. As current income is not an objective of the Fund, the amount
of dividends, if any, will likely be small. In addition, distributions
may be made annually in December out of any net short-term or long-term
capital gains realized from the sale of securities, premiums from expired
calls written by the Fund, and net profits from hedging transactions
realized in the twelve months ending on October 31 of that year. The Fund
may make a supplemental distribution of capital gains and ordinary income
following the end of its fiscal year. A shareholder purchasing Fund
shares immediately prior to the declaration of a dividend or capital gain
distribution will receive a distribution subject to income tax, and the
distribution will have the effect of reducing the Fund's net asset value
per share by the amount of the distribution. Any long-term capital gains
distribution will be identified separately when paid and when tax
information is distributed by the Fund. There is no fixed dividend rate
and there can be no assurance as to the payment of any dividends or
distributions or the realization of any capital gains.
All dividends and capital gains distributions are automatically
reinvested in Fund shares at net asset value, as of a date selected by the
Board of Trustees, unless the shareholder asks the Transfer Agent in
writing to pay dividends or capital gains distributions in cash, or to
reinvest them in another Eligible Fund, as described in "Performance,
Dividend and Tax Information" in the Additional Statement. That request
must be received prior to the record date for a dividend to be effective
as to that dividend. Under AccountLink, dividends and distributions may
be automatically transferred to a designated account at a financial
institution. See "AccountLink" in "How to Buy Shares" and the
OppenheimerFunds New Account Application for more details. For existing
accounts, such privileges may be established only by signature-guaranteed
instructions from all shareholders to the Transfer Agent. Dividends,
distributions and the proceeds of redemptions of Fund shares represented
by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be reinvested 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.
Tax Status of the Fund's Dividends and Distributions. Dividends paid
by the Fund derived from net investment income or net short-term capital
gains are taxable to shareholders as ordinary income, whether received in
cash or reinvested. Long-term capital gains distributions, if any, are
taxable as long-term capital gains whether received in cash or reinvested
and regardless of how long Fund shares have been held. An investor
purchasing Fund shares immediately prior to the declaration of a capital
gains distribution will receive a distribution subject to income tax, and
the distribution will have the effect of reducing the Fund's net asset
value per share by the amount of the distribution. For information on
"backup" withholding on dividends, see "How To Redeem Shares," above.
Tax Status Of The Fund And Its Shares. 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 so qualified during its last fiscal year and
intends to qualify in the current and future fiscal years but reserves the
right not to do so. However, the Code contains a number of complex tests
relating to qualification that the Fund might not meet in any particular
fiscal year. For example, if the Fund derives 30% or more of its gross
income (irrespective of losses) from gains realized on the sale or other
disposition of securities held less than three months, it may fail to
qualify (see "Tax Aspects of Covered Calls and Hedging Instruments" in the
Additional Statement). If it did not so qualify, the Fund would be
treated for tax purposes as an ordinary corporation and receive no tax
deduction for dividends and distributions made to shareholders.
Fund Performance Information
Total Return Information. From time to time the "average annual
total return," "total return" and "total return at net asset value" of an
investment in the Fund may be advertised. The Fund's "average annual
total return" for a particular period is computed by determining the
average annual compounded rate of return over the period, using the
initial amount invested at the beginning of the period and the redeemable
value of the investment at the end of the period. The Fund's "total
return" is the change in value of a hypothetical investment in shares of
the Fund over a given period, assuming that all dividends and capital
gains distributions are reinvested. The cumulative total return measures
the change in value over the entire period (for example, ten years). An
"average annual total return" shows the average rate of return for each
year in a period that would produce the cumulative total return over the
entire period. However, average annual total returns do not show the
actual year-to-year performance. When total returns are quoted, they
reflect the payment of the maximum initial sales charge. Total returns
may be quoted at "net asset value," without considering the sales charge,
and those returns would be reduced if sales charges were deducted. All
total returns are based on historical per share earnings and are not
intended to indicate future performance. "Performance, Dividend and Tax
Information" in the Additional Statement contains more detailed
information about calculating the Fund's returns and other performance
information.
Management's Discussion of Performance
During the Fund's fiscal year ended September 30, 1993, the Manager
sought to maintain a balance between established and emerging bio-tech
companies, focusing on diversification and stock selection. With interest
rates abroad declining, the Fund expanded its European holdings. The Fund
also added five equity private placements and two convertible issues to
its portfolio, which the Manager believes tend to resist sharp declines
during market retreats while offering possible strong returns in rising
markets.
Comparison of Change
In Value of $10,000
Hypothetical Investment in
Oppenheimer Global
Bio-Tech Fund and
S&P 500 Index
Average Annual Total Return of the Fund at 9/30/93
1 Year 5 Year Life*
1.59% 14.42% 13.63%
Oppenheimer
Fiscal Year Global $10,000
(Period Ended) Bio-Tech Fund S&P 500 Index Investment
12/30/87 $ 9,425 $10,000
9/30/88 $10,019 13.08% $11,308
9/30/89 $11,542 32.95% $15,034
9/30/90 $11,275 -9.24% $13,645
9/30/91 $25,681 31.09% $17,887
9/30/92 $19,339 11.04% $19,862
9/30/93 $20,846 12.97% $22,438
Past performance is not predictive of future performance.
*The Fund began operations on 12/30/87.
The performance graph set forth above depicts the performance of a
hypothetical investment of $10,000 in shares of the Fund on December 30,
1987 (commencement of operations) at the offering price, including the
sales charge in effect on that date, held through September 30, 1993, with
all dividends and distributions reinvested in additional shares as net
asset value on the reinvestment date, without sales charge. The graph
compares the average annual total return of the Fund's shares over that
period with the performance of the Standard & Poor's ("S&P") 500 Index,
an unmanaged index of common stocks widely used as a measure of general
stock market performance. The performance of the S&P 500 Index includes
a factor for the reinvestment of dividend income but does not reflect
reinvestment of capital gains or take into account sales charges or other
initial or ongoing expenses of such stocks. The Fund's total return
reflects the deduction of the current maximum sales charge of 5.75% and
includes reinvestment of all dividends and capital gains distributions,
but does not consider taxes.
Additional Information
Description of the Fund and its Shares
The Fund's shares are of one class, are transferable without
restriction and have equal rights and privileges. Each shareholder is
entitled to one vote per share held, and a fractional vote for each
fractional share, and to participate pro-rata in dividends and
distributions and in the net distributable assets of the Fund on
liquidation. When issued, such shares are fully-paid and non-assessable
(except as described in "Additional Information" in the Additional
Statement), and have no preemptive, subscription or cumulative voting
rights. The Fund's Board of Trustees is empowered to issue additional
"series" of shares of the Fund, which may have separate assets and
liabilities, and additional "classes" of shares, which would represent
identical interests in the same portfolio of investments but have
different expenses. The Fund does not anticipate holding annual meetings.
Under certain circumstances, shareholders of the Fund have the right to
remove a Trustee, and may be personally liable as "partners" for the
Fund's obligations; however, the risk of a shareholder incurring any
financial loss is limited to the relatively remote circumstances in which
the Fund is unable to meet its obligations. See "Additional Information"
in the Additional Statement for details.
The Custodian and the Transfer Agent
The Custodian of the assets of the Fund is The Bank of New York. The
Manager and its affiliates have banking relationships with the Custodian.
The Fund's cash balances in excess of $100,000 held by the Custodian are
not protected by Federal deposit insurance. Such uninsured balances may
at times be substantial. See "Additional Information" in the Additional
Statement for further information.
Oppenheimer Shareholder Services, a division of the Manager, acts as
transfer agent and shareholder servicing agent on an at-cost basis for the
Fund and certain other open-end funds advised by the Manager. It also
acts as transfer agent for unit investment trusts for the accumulation of
shares of one of such funds. Shareholders should direct any inquiries to
the Transfer Agent at the address or toll-free phone number on the back
cover of this Prospectus.
<PAGE>
Investment Adviser Prospectus and
Oppenheimer Management Corporation New Account Application
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer Agent
Oppenheimer Shareholder Services O P P E N H E I M E R
P.O. Box 5270 Global
Denver, Colorado 80217 Bio-Tech
1-800-525-7048 Fund
Custodian of Portfolio Securities
The Bank Of New York Effective February 1, 1994
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, salesperson or any other person
has been authorized to give any information
or to make any representations other than
those contained in this Prospectus or the
Additional Statement, and if given or made,
such information and representations must
not be relied upon as having been authorized
by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor,
Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy
any of the securities offered hereby in any
state to any person to whom it is unlawful
to make such offer in such state.
OppenheimerFunds
PR750 (2/94) Printed on recycled paper
<PAGE>
Investment Adviser Prospectus
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer Agent
Oppenheimer Shareholder Services O P P E N H E I M E R
P.O. Box 5270 Global
Denver, Colorado 80217 Bio-Tech
1-800-525-7048 Fund
Custodian of Portfolio Securities
The Bank Of New York Effective February 1, 1994
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, salesperson or any other person
has been authorized to give any information
or to make any representations other than
those contained in this Prospectus or the
Additional Statement, and if given or made,
such information and representations must
not be relied upon as having been authorized
by the Fund, Oppenheimer Management
Corporation, Oppenheimer Funds Distributor,
Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy
any of the securities offered hereby in any
state to any person to whom it is unlawful
to make such offer in such state.
OppenheimerFunds
PR751 (2/94) Printed on recycled paper
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
OPPENHEIMER GLOBAL BIO-TECH FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read together
with the Prospectus (the "Prospectus") dated February 1, 1994 of
Oppenheimer Global Bio-Tech Fund (the "Fund") which may be obtained by
written request to Oppenheimer Shareholder Services (the "Transfer
Agent"), P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number listed above.
TABLE OF CONTENTS
Page
Investment Objective and Policies. . . . . . . . . . . . . .2
Special Investment Methods . . . . . . . . . . . . . . . . .3
Investment Restrictions. . . . . . . . . . . . . . . . . . .12
Trustees and Officers. . . . . . . . . . . . . . . . . . . .13
Investment Management Services . . . . . . . . . . . . . . .16
Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . .17
Purchase, Redemption and Pricing of Shares . . . . . . . . .18
Service Plan . . . . . . . . . . . . . . . . . . . . . . . .20
Performance, Dividend and Tax Information. . . . . . . . . .21
Additional Information . . . . . . . . . . . . . . . . . . .24
Automatic Withdrawal Plan Provisions . . . . . . . . . . . .25
Letters of Intent. . . . . . . . . . . . . . . . . . . . . .27
Report of Independent Auditors . . . . . . . . . . . . . . .29
Financial Statements . . . . . . . . . . . . . . . . . . . .30
This Additional Statement is effective February 1, 1994.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are discussed in
the Prospectus. Supplemental information about those policies is set
forth below. Certain capitalized terms used in this Additional Statement
are defined in the Prospectus.
Biotechnology. Industrial and chemical applications of biotechnology are
reflected in compounds artificially produced by or derived from living
cells (e.g., enzymes). Biotechnological applications are distinguished
from common drugs which are inorganic synthetic compounds. Development
of a new biotechnological drug requires years of clinical trials,
estimated in many cases to cost $25-$50 million, before the drug receives
approval of the Food and Drug Administration ("FDA"), resulting in a
highly regulated industry. Because bio-technology companies are usually
small, start-up companies, such companies, as a matter of necessity, have
frequently collaborated in joint ventures with large companies (often drug
companies) on a specific project. Typically, the large company will
provide the research funding for the project, and the start-up
biotechnology company agrees to license any newly developed products to
its corporate partner in return for a fixed royalty.
Although advances in health care and medications have been better
publicized, research in plant genetics and animal genetic engineering is
gaining prominence in the biotechnology industry. It is possible that the
market for genetically-engineered agricultural and veterinary products may
be even greater than that for health products. Furthermore, the area of
industrial and chemical applications of biotechnology, work is being done
to develop hydrocarbons that dissolve oil spills without adverse
environmental consequences or to develop simple hydrocarbons, such as
methane or starches, that could be converted into fibers or plastics.
The securities of small, unseasoned companies may have a limited
trading market, which may adversely affect their disposition and can
result in their being priced lower than might otherwise be the case. If
other investors holding the same securities as the Fund sell them when the
Fund attempts to dispose of its holdings, the Fund might receive lower
prices than might otherwise be obtained.
Foreign Securities. Investments in foreign securities offer potential
benefits not available from investing solely in securities of domestic
issuers, including the opportunity to invest in foreign issuers that
appear to offer growth potential, or in foreign countries with economic
policies or business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. The
political factors that may affect investments in foreign securities have
resulted in increased interest by U.S. investors in foreign securities,
and in investment companies that invest in foreign securities. As of the
date of this Additional Statement, such factors include dramatic political
changes in Eastern Europe and the former Soviet Union, as well as progress
in Western Europe toward a single European Economic Community. The
ultimate outcome of these events and their effect on trade barriers,
competition, and markets for consumer goods and services, is uncertain.
The outstanding publicly issued stock of non-U.S. companies presently
represents approximately 66% of worldwide capital markets (Morgan Stanley
Capital International, November, 1992).
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. If more than 50% of its assets are
invested in foreign securities at the end of any fiscal year, the Fund
intends to elect the application of Section 853 of the Internal Revenue
Code. (See "Total Return, Dividend and Tax Information" below.)
Investments in foreign securities present special additional risks
and considerations not typically associated with investments in domestic
securities: 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; higher brokerage commission fees than in the U.S.; increased
risks of delays in settlement of portfolio transactions or loss of
certificates for portfolio securities because of the lesser speed and
reliability of mail service between the U.S. and foreign countries than
within the U.S.; and differences (which may be favorable or unfavorable)
between the U.S. economy and foreign economies. From time to time, 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 reimposed.
SPECIAL INVESTMENT METHODS
Borrowing. From time to time, the Fund may increase its ownership of
securities by borrowing up to 10% of its net assets from banks on an
unsecured basis at fixed rates of interest 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 only be made 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 so computed 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 such
requirement and may have to sell a portion of its investments at a time
when independent investment judgment would not dictate such sale.
Interest on money borrowed is an expense the Fund would not otherwise
incur, so that it may have little or no net investment income during
periods of substantial borrowings. Borrowing for investment increases both
investment opportunity and risk. Since substantially all of the Fund's
assets fluctuate in value whereas borrowing obligations are fixed, when
the Fund has outstanding borrowings, its net asset value per share will
tend to increase and decrease more when its portfolio assets fluctuate in
value than would otherwise be the case.
Warrants and Rights. The Fund may, to the extent described in the
Prospectus, invest in warrants and rights. Warrants are options to
purchase equity securities at specific prices valid for a specific period
of time. Their prices do not necessarily move parallel to the prices of
the underlying securities. If the warrant is not exercised prior to
expiration, the purchase price will not be able to be recouped by the
Fund. Rights are similar to warrants, but normally have a short duration
and are distributed 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.
Restricted and Illiquid Securities. The expenses of registration of
restricted securities that are illiquid (excluding securities that may be
resold by the Fund pursuant to Rule 144A, as explained in the Prospectus)
may be negotiated at the time such securities are purchased by the Fund.
When registration is required, a considerable period may elapse between
a decision to sell the securities and the time the sale would be
permitted. Thus, the Fund may not be able to obtain as favorable a price
as that prevailing at the time of the decision to sell. The Fund also may
acquire, through private placements, securities having contractual resale
restrictions, which might lower the amount realizable upon the sale of
such securities.
Loans of Portfolio Securities. The Fund may lend its portfolio securities
subject to the restrictions stated in the Prospectus. Under applicable
regulatory requirements (which are subject to change), the loan collateral
must, on each business day, at least equal the market value of the loaned
securities and must consist of cash, bank letters of credit or securities
of the U.S. Government (or its agencies or instrumentalities). To be
acceptable as collateral, letters of credit must obligate the issuing bank
to pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund.
The Fund receives an amount equal to the dividends or interest on loaned
securities and also receives one or more of: (a) negotiated loan fees, (b)
interest on securities used as collateral, and (c) interest on short-term
debt securities purchased with such loan collateral. Either type of
interest may be shared with the borrower. The Fund may also pay
reasonable finder's, custodian and administrative fees. The terms of the
Fund's loans must meet applicable tests under the Internal Revenue Code
and permit the Fund to reacquire loaned securities on five days' notice
or in time to vote on any important matter.
Repurchase Agreements. In a repurchase transaction, the repurchase price
exceeds the purchase price in that it 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, 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.
Short Sales Against-the-Box. In such short sales, while the short
position is open, the Fund must own an equal amount of such securities,
or by virtue of ownership of securities have the right, without payment
of further consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer recognition of
gain or loss for Federal income tax purposes on the sale of securities
"in-the-box," and no income can result and no gain or loss can be realized
from securities sold short "against-the-box" until the short position is
closed out.
Covered Calls and Hedging. As described in the Prospectus, the Fund may
write covered calls or employ one or more types of hedging instruments.
When hedging to attempt to protect against declines in the market value
of the Fund's portfolio, to permit the Fund to retain unrealized gains in
the value of portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) buy puts, or
(ii) write covered calls on securities held by it. When hedging to permit
the Fund to establish a position in the equities markets as a temporary
substitute for purchasing particular equity securities (which the Fund
would normally purchase, and then terminate that hedging position), the
Fund may buy calls. The Fund's strategy of hedging with Futures and
options on Futures will be incidental to the Fund's activities in the
underlying cash market. 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, legally permissible and adequately
disclosed. Additional information about the covered calls and hedging
instruments the Fund may use is provided below.
Writing and Purchasing Calls. When the Fund writes a call, it
receives a premium and agrees to sell the investment underlying the call
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. The Fund has a risk of loss that the
price of the underlying investment may decline during the call period,
although any such decline may be offset to some extent by the premium
received by the Fund.
When the Fund writes an option in the over-the-counter market (an
"OTC option"), it will enter into an arrangement with a primary U.S.
Government securities dealer which establishes a formula price at which
the Fund would have the absolute right to repurchase that OTC option. The
formula price will generally be based on a multiple of the premium
received for the option and the amount by which the option is "in-the-
money." For any OTC option the Fund writes, it will treat as illiquid
(for purposes of the 10% restriction on such securities described in the
Prospectus) an amount of assets equal to the formula price for the
repurchase of the OTC option, less the amount by which the option is "in-
the-money." The SEC is evaluating the general issue of whether OTC
options should be considered to be illiquid securities, and the procedure
described above could be affected by the outcome of that evaluation.
To terminate its obligation on a covered 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 the option transaction costs and the premium
received on the call written is more or less than the price of the call
subsequently purchased. A profit may also be realized if the call expires
unexercised, because the Fund retains the underlying investment and the
premium received. 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 a particular
option. If the Fund could not effect a closing purchase transaction due
to lack of a market, it would have to hold the callable investment until
the call expired or was exercised.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC"), as to the investments on which
the Fund has written calls or as to other acceptable escrow securities,
so that no margin will be required for such transactions. OCC will
release the securities on the expiration of the calls or upon the Fund's
entering into a closing purchase transaction. Call writing affects the
Fund's turnover rate and the brokerage commissions it pays. Commissions
payable on writing or purchasing a call are normally higher on a relative
basis than on general securities transactions.
When the Fund buys a call (other than in a closing purchase
transaction), it pays a premium and has the right to buy the underlying
investment from a seller of a corresponding call on the same investment
during the call period at a fixed exercise price. The Fund benefits only
if 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 plus
the transaction costs and the premium paid for the call 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.
Writing and Purchasing Puts. A put option gives the purchaser the
right to sell, and the writer the obligation to buy, the underlying
security at the exercise price during the option period. Writing a put,
covered by segregated liquid assets equal to the exercise price of the
put, has the same economic effect to the Fund as writing a covered call.
When writing puts, the Manager will make a determination that the
underlying security is (in the Manager's best judgment) a desirable
investment at the exercise price of the put.
When the Fund buys a put, it pays a premium and has the right to sell
the underlying investment to a seller of a put on a corresponding
investment during the put period at a fixed exercise price. Buying a put
on an investment the Fund owns enables the Fund to attempt to protect
itself during the put period against a decline in the value of the
underlying investment below the exercise price by selling the underlying
investment at the exercise price to a seller of a corresponding put.
Thus, in the event of a decline in the market, the Fund could exercise or
sell the put at a profit that would offset some or all of its loss on the
underlying investment. If the Fund exercises a put, the amount the Fund
receives on its sale of the underlying investment is reduced by the amount
of the premium paid by the Fund. 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 on or at its
expiration date and the Fund will lose its premium payment and the right
to sell the underlying investment. The put may, however, be sold prior
to expiration (whether or not at a profit).
The premium the Fund receives from writing a put option will reflect,
among other things, the current market price of the underlying investment,
the relationship of the exercise price to such market price, the
historical price volatility of the underlying investment, the option
period, supply and demand, and interest rates. When the Fund writes a
put, it gains a profit in the form of the premium it receives, as long as
the price of the underlying investment remains equal to or above the
exercise price, however the Fund also has assumed an obligation to
purchase the underlying investment from the buyer of the put option at the
exercise price at any time during the option period, even though the
security may fall below the exercise price. If the put is exercised, the
Fund must purchase the underlying investment at the exercise price, which
will usually exceed the then current market value of the underlying
investment. The Fund may incur a loss equal to the difference between the
exercise price of the option and the sum of the sale price of the
underlying investment plus the premium received from the sale of the put.
When writing put options, to secure its obligation to pay for the
underlying investment, the Fund will deposit in escrow liquid assets with
a value equal to or greater than the exercise price of the underlying
investments. The Fund therefore foregoes the opportunity of investing the
segregated assets. As long as the obligation of the Fund on the put
continues, it may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring the Fund to take delivery of
the underlying investment against payment of the exercise price. The Fund
has no control over when it may be required to purchase the underlying
investment since it may be assigned an exercise notice at any time prior
to the termination of its obligation as the writer of the put. This
obligation terminates upon expiration of the put, or such earlier time at
which the Fund effects a closing purchase transaction by purchasing a put
of the same series as that of the put it sold. Once the Fund has been
assigned an exercise notice, it is thereafter not allowed to effect a
closing purchase transaction. The Fund may effect a closing purchase
transaction to realize a profit on an outstanding put option it has
written or to prevent an underlying security from being put. Furthermore,
effecting such a closing purchase transaction will permit the Fund to
write another put option to the extent that the exercise price is secured
by the escrowed assets, or to utilize the proceeds from the sale of such
assets for other investment purposes. The Fund will realize a profit or
loss from a closing purchase transaction if the cost of the transaction
is less or more than the premium received from writing the option. As
with writing covered calls, any profits from writing puts are considered
short-term capital gains for Federal income tax purposes, and when
distributed by the Fund to shareholders are taxable as ordinary income.
Foreign Currency Options. 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 market or quoted by major recognized dealers
in such options, for the purpose of protecting against declines in the
dollar value of foreign securities and against increases in the dollar
cost of foreign securities to be acquired. If a rise is anticipated 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 incur
transactions costs.
Forward Contracts. A Forward Contract obligates 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. 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. These contracts are
traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate 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. The Fund will not speculate with Forward Contracts or foreign
currency exchange rates.
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. 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 depends 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 will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's portfolio securities denominated in that currency.
The Fund, however, in order to avoid excess transactions and transaction
costs, may maintain a net exposure to Forward Contracts in excess of the
value of the Fund's portfolio securities denominated in that currency
provided the excess amount is "covered" by liquid, high grade debt
securities, denominated in either that foreign currency or U.S. dollars,
at least equal at all times to the amount of such excess. 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 its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the Fund
under a swap agreement will have been greater than those received by it.
Credit risk arises from the possibility that the counterparty will
default. If the counterparty to an interest rate swap defaults, the
Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the
creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements. A master netting agreement provides that all swaps done
between the Fund and that counterparty under the master agreement shall
be regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap transactions,
the net amount payable on that date in that currency shall be paid. In
addition, the master netting agreement may provide that if one party
defaults generally or on one swap, the counterparty may terminate the
swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with
respect to each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then
netted, and the result is the counterparty's gain or loss on termination.
The termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."
Additional Information About Hedging Instruments and Their Use. 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 OCC,
as to the investments on which the Fund has written options traded on
exchanges or as to other acceptable escrow securities, so that no margin
will be required for such transactions. OCC will release the securities
on the expiration of the option or upon the Fund's entering into a closing
transaction. An option position may be closed out only on a market which
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.
When the Fund writes an over-the-counter("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer,
which would establish a formula price at which the Fund would have the
absolute right to repurchase that OTC option. That formula price would
generally be based on a multiple of the premium received for the option,
plus the amount by which the option is exercisable below the market price
of the underlying security (that is, the extent to which the option is
"in-the-money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be invested in
illiquid securities, stated in the Prospectus) an amount of assets used
to cover written OTC options, equal to the formula price for the
repurchase of the OTC option less the amount by which the OTC option is
"in-the-money." The Fund will also treat as illiquid any OTC option held
by it. The Securities and Exchange Commission is evaluating whether OTC
options should be considered liquid securities, and the procedure
described above could be affected by the outcome of that evaluation.
An option position may be closed out only on a market which provides
secondary trading for options of the same series and there is no assurance
that a liquid secondary market will exist for any particular option. The
Fund's option activities may affect its 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
in a manner beyond the Fund's control. The exercise by the Fund of puts
on securities or Futures may cause the sale of related investments, also
increasing portfolio turnover. Although such exercise is within the
Fund's control, holding a put might cause the Fund to sell the related
investments for reasons which would not exist in the absence of the put.
The Fund will pay a brokerage commission each time it buys or sells a put,
a call, or an underlying investment in connection with the exercise of a
put or call. Such commissions may be higher than those which would apply
to direct purchases or sales of the underlying investments. Premiums paid
for options are small in relation to the market value of the related
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.
Regulatory Aspects of Hedging Instruments. The Fund must operate
within certain restrictions as to its long and short positions in Futures
and options thereon under a rule (the "CFTC Rule") adopted by the
Commodity Futures Trading Commission (the "CFTC") under the Commodity
Exchange Act (the "CEA"), which exempts the Fund from registration with
the CFTC as a "commodity pool operator" (as defined in the CEA) if it
complies with the CFTC Rule. Under these restrictions the Fund will not,
as to any positions, whether short, long or a combination thereof, enter
into Futures and options thereon for which the aggregate initial margins
and premiums exceed 5% of the fair market value of its total assets, with
certain exclusions as defined in the CFTC Rule. Under the restrictions,
the Fund also must, as to its short positions, use Futures and options
thereon solely for bona-fide hedging purposes within the meaning and
intent of the applicable provisions under the CEA.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which 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 exchanges or 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 or an affiliated investment adviser. Position
limits also apply to Futures. 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 bank, 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. One of the tests for such qualification is that less than
30% of its gross income (irrespective of losses) must be derived from
gains realized on the sale of securities held for less than three months.
Due to this limitation, the Fund will limit the extent to which it engages
in the following activities, but will not be precluded from them: (i)
selling investments, including Futures, held for less than three months,
whether or not they were purchased on the exercise of a call held by the
Fund; (ii) purchasing calls or puts which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
purchased less than three months previously; (iv) exercising puts or calls
held by the Fund for less than three months; and (v) writing calls on
investments held for less than three months.
Certain foreign currency exchange contracts ("Forward Contracts") in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this mark-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position
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 that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities 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 ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
Possible Risk Factors in Hedging. In addition to the risks with
respect to options discussed in the Prospectus and above, there is a risk
in using short hedging by selling Futures to attempt to protect against
decline in value of the Fund's portfolio securities (due to an increase
in interest rates) that the prices of such Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices of
the Fund's 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 depend 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.
INVESTMENT RESTRICTIONS
The Fund's significant investment restrictions are described in the
Prospectus. The following investment restrictions are also fundamental
policies of the Fund and, together with the fundamental policies and
investment objective described in the Prospectus, cannot be changed
without the vote of a "majority" of the Fund's outstanding voting
securities, as such term is defined in the Investment Company Act. Under
the Investment Company Act, such "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 such 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 of the Fund.
Under these additional restrictions, the Fund cannot: (1) invest in
companies for the primary purpose of acquiring control or management
thereof; (2) invest in commodities or commodity contracts; however, the
Fund may buy and sell any of the Hedging Instruments permitted by any of
its other non-fundamental policies, whether or not any such Hedging
Instrument is considered to be a commodity or a commodity contract; (3)
invest in real estate or in interests in real estate, but may purchase
readily marketable securities of companies holding real estate or
interests therein; (4) purchase securities on margin, except that the Fund
may make margin deposits in connection with any of the Hedging Instruments
permitted by any of its other non-fundamental policies; (5) mortgage or
pledge any of its assets; however, this does not prohibit the escrow
arrangements contemplated in the use of Hedging Instruments; (6)
underwrite securities of any issuer, except insofar as it might be deemed
an underwriter under the Securities Act of 1933 in the resale of any
securities held in its own portfolio; (7) invest or hold securities of
any issuer if those officers and Trustees or directors of the Fund or the
Manager owning individually more than 0.5% of the securities of such
issuer together own more than 5% of the securities of such issuer; (8)
invest in oil or gas exploration or development programs or in mineral-
related programs or leases; or (9) lend money, but the Fund may purchase
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.
TRUSTEES AND OFFICERS
The Trustees and officers of the Fund and their principal occupations
and business affiliations during the past five years are listed below.
The address for each, except as noted, is Two World Trade Center, New
York, New York 10048-0203. Except for Ms. Panem, each serves in similar
capacities with Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer
Global Environment Fund, Oppenheimer Global Growth & Income Fund,
Oppenheimer Special Fund, Oppenheimer Time Fund, Oppenheimer Target Fund,
Oppenheimer California Tax-Exempt Fund, Oppenheimer Tax-Free Bond Fund,
Oppenheimer Gold & Special Minerals Fund, Oppenheimer Asset Allocation
Fund, Oppenheimer Mortgage Income Fund, Oppenheimer Discovery Fund,
Oppenheimer Money Market Fund, Inc., Oppenheimer Multi-Sector Income
Trust, Oppenheimer Multi-Government Trust, Oppenheimer Multi-State Tax-
Exempt Trust and Oppenheimer U.S. Government Trust (collectively, the "New
York-based OppenheimerFunds"). As of December 31, 1993, the Trustees and
officers as a group beneficially owned less than 1% of the outstanding
shares of the Fund.
LEON LEVY, Chairman of the Board of Trustees
General Partner of Odyssey Partners, L.P. (investment partnership);
Chairman of Avatar Holdings, Inc. (real estate development).
LEO CHERNE, Trustee
386 Park Avenue South, New York, New York 10016
Chairman Emeritus of the International Rescue Committee
(philanthropic organization); formerly Executive Director of The
Research Institute of America.
EDMUND T. DELANEY, Trustee
5 Gorham Road, Chester, Connecticut 06412
Attorney-at-Law; formerly a Member of the Connecticut State
Historical Commission and Counsel to Copp, Berall & Hempstead (a law
firm).
BENJAMIN LIPSTEIN, Trustee
591 Breezy Hill Road, Hillside, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
ELIZABETH B. MOYNIHAN, Trustee
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the American Schools
of Oriental Research, the Freer Gallery of Art (Smithsonian
Institution), the Institute of Fine Arts (New York University) and
the Preservation League of New York State; a member of the Indo-U.S.
Sub-Commission on Education and Culture.
KENNETH A. RANDALL, Trustee
6 Whittaker's Mill Road, Williamsburg, Virginia 23185
A Director of Northeast Bancorp, Inc. (bank holding company),
Dominion Resources, Inc. (electric utility holding company), and
Kemper Corporation (insurance and financial services company);
formerly Chairman of the Board of ICL Inc. (information systems).
RUSSELL S. REYNOLDS, JR., Trustee
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Historical Society and Greenwich Hospital.
SIDNEY M. ROBBINS, Trustee
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting Professor
of Finance, University of Hawaii; a director of The Korea Fund, Inc.
and The Malaysia Fund, Inc. (closed-end investment companies); a
member of the Board of Advisors, Olympus Private Placement Fund,
L.P.; Professor Emeritus of Finance, Adelphi University.
DONALD W. SPIRO, President and Trustee*
Chairman Emeritus and a Director of the Manager; formerly Chairman
of the Manager and Oppenheimer Funds Distributor, Inc. (the
"Distributor").
PAULINE TRIGERE, Trustee
550 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
EDWARD V. REGAN, Trustee
40 Park Avenue, New York, New York 10016
President of Jerome Levy Institute, Bard College; Member of the U.S.
Competitiveness Policy Council; formerly New York State Comptroller.
CLAYTON K. YEUTTER, Trustee
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to 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), FMC
Corp. (chemicals and machinery), Lindsay Manufacturing Co. and Texas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Deputy Chairman, Bush/Quayle Presidential
Campaign, 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, Executive
Office of the President.
ROBERT G. GALLI, Trustee*
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC") the Manager's parent holding
company; formerly he held the following positions: a director of the
Manager and the Distributor, Vice President and a director of
HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment
adviser subsidiaries of the Manager, a director of Shareholder
Financial Services, Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the Manager, an officer of
other OppenheimerFunds and Executive Vice President & General Counsel
of the Manager and the Distributor.
SANDRA PANEM, Vice President and Portfolio Manager
Vice President of the Manager; formerly Vice President of Salomon
Brothers Venture Capital, prior to which she was a Program Officer
of the Alfred P. Sloan Foundation.
GEORGE C. BOWEN, Treasurer
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds; formerly Senior Vice
President/Comptroller and Secretary of Oppenheimer Asset Management
Corporation, a former investment advisory subsidiary of the Manager.
ANDREW J. DONOHUE, Secretary
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor, partner in Kraft & McManimon (a law firm), an officer
of First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser),
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
ROBERT G. ZACK, Assistant Secretary
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI, SFSI; an officer of other
OppenheimerFunds.
LYNN M. COLUCCY, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Vice President and Assistant Treasurer of the Manager; an officer of
other OppenheimerFunds; formerly Vice President/Director of Internal
Audit of the Manager.
[FN]
__________
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Remuneration of Trustees. The officers of the Fund (including Mr. Spiro),
are affiliated with the Manager and receive no salary or fee from the
Fund. During the Fund's fiscal year ended September 30, 1993,
remuneration (including expense reimbursements) paid to all Trustees of
the Fund (excluding Mr. Spiro) as a group, and as members of one or more
committees of the Board of Trustees, totalled $80,788. 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
OppenheimerFunds for at least 15 years to be eligible for the maximum
payment. No Trustee has retired since the adoption of the plan and no
payments have been made by the Fund under the plan. In the fiscal year
ended September 30, 1993, the Fund accrued $44,988 for its benefit
obligations under the plan.
Major Shareholders. As of December 31, 1993, the only person that owned
of record or was known by the Fund to be the beneficial owner of 5% or
more of the outstanding shares of the Fund was Merrill Lynch, Pierce,
Fenner & Smith ("Merrill Lynch"), P.O. Box 30561, New Brunswick, New
Jersey 08989, which owned 718,393.376 shares (approximately 7.75% of
outstanding shares). The Fund is advised that Merrill Lynch held Fund
shares for its brokerage clients.
INVESTMENT MANAGEMENT SERVICES
The Manager is wholly-owned by Oppenheimer Acquisition Corp., 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 may also serve as officers of the Fund, and two of
whom (Messrs. Spiro and Galli) serve as Trustees of the Fund.
The management fee is payable monthly to the Manager under the terms
of an investment advisory agreement between the Manager and the Fund (the
"Agreement"), and is computed on the aggregate net assets of the Fund as
of the close of business each day. The 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
administration for the Fund, including the compilation and maintenance of
records with respect to its operations, the preparation and filing of
specified reports, and the composition of proxy materials and registration
statements for continuous public sale of shares of the Fund. Expenses not
expressly assumed by the Manager under the Agreement or by the Distributor
are paid by the Fund. The Agreement lists examples of expenses paid by
the Fund, the major categories of which relate to interest, taxes,
brokerage fees, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs, and non-recurring expenses, including
litigation. During the Fund's fiscal years ended September 30, 1991, 1992
and 1993, the management fees paid by the Fund to the Manager were
$477,289, $1,371,488, and $1,580,012, respectively.
The Agreement contains no expense limitation. However, independently
of the Agreement, the Manager has undertaken that the total expenses of
the Fund in any fiscal year (including the management fee but excluding
taxes, interest, brokerage commissions, distribution assistance payments
and extraordinary expenses such as litigation costs and the component of
its custodial expenses that reflect the increased cost of custodianship
of foreign securities held in its portfolio) shall not exceed (and the
Manager undertakes to reduce the Fund's management fee in the amount by
which such expenses shall exceed) the most stringent state regulatory
limitation on fund expenses applicable to the Fund. The payment of the
management fee at the end of any month will be reduced or eliminated so
that there will not be any accrued but unpaid liability under the above
expense limitation. The Manager reserves the right to terminate or amend
this undertaking at any time. Any assumption of the Fund's expenses under
this undertaking would lower the Fund's overall expense ratio and increase
its total return during any period in which expenses are limited.
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 thereunder, the Manager shall not be liable
for any loss resulting from 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 its other
activities. 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.
BROKERAGE
Provisions of the Investment Advisory Agreement. One of the duties of the
Manager under the Agreement is to arrange the portfolio transactions of
the Fund. In doing so, the Manager is authorized by the Agreement to
employ broker-dealers ("brokers"), 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
or base its selection on "posted" rates, but is expected to be aware of
the current rates of eligible brokers and to minimize the commissions paid
to the extent consistent with the provisions of the Agreement and the
interests and policies of the Fund as established by its Board of
Trustees.
Under the 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 funds managed by the Manager and its affiliates as a factor in
the selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices. Subject to the provisions of the
Agreement, allocations of the Fund's brokerage are made by portfolio
managers of the Manager 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. In connection with transactions on foreign exchanges, the
Fund may be required to pay fixed brokerage commissions and thereby forego
the benefit of negotiated commissions available in U.S. markets.
Brokerage commissions are paid primarily for effecting transactions in
listed securities, and otherwise 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 transactions 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
it affiliates are combined. 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 that would apply to direct
purchases and sales of 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 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 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, annually
reviews information furnished by the Manager as to the commissions paid
to brokers furnishing such services in an effort to ascertain that the
amount of such commissions was reasonably related to the value or the
benefit of such services.
During the Fund's fiscal years ended September 30, 1991, 1992, and
1993 total brokerage commissions paid by the Fund (not including spreads
or concessions on principal transactions on a net trade basis) were
$15,139, $19,803, and $414,002, respectively. During the fiscal year
ended September 30, 1993, $36,731 was paid to brokers as commissions in
return for research services (including special research, statistical
information and execution); the aggregate dollar amount of those
transactions was $19,817,816. The transactions giving rise to those
commissions were allocated in accordance with the internal allocation
procedures described above. 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.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Net Asset Value Per Share. The net asset value per share
of the Fund is determined each day the New York Stock Exchange (the
"NYSE") is open as of 4:00 P.M. (all references to time herein mean New
York time), that day by dividing the value of the Fund's net assets by the
total number of shares outstanding. The NYSE's most recent annual holiday
schedule (which is subject to change) states that it will close on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day; it may also close on other
days. The Fund may invest a substantial portion of its assets in foreign
securities primarily listed on foreign exchanges which trade on Saturdays
or other customary U.S. business holidays on which the NYSE is closed.
Because the Fund's offering price and net asset value will not be
calculated on those days, if foreign securities held in the Fund's
portfolio are traded on those days, the Fund's net asset value per share
may be significantly affected at times when shareholders may not purchase
or redeem shares. Trading in securities on European and Asian exchanges
and over-the-counter markets is normally completed before the close of the
NYSE. Events affecting the values of foreign securities traded in such
markets that occur between the time their prices are determined and the
close of the NYSE will not be reflected in the Fund's calculation of its
net asset value unless the Fund's Board of Trustees, or the Manager under
procedures established by the Board, determines that the particular event
would materially affect the Fund's net asset value, in which case an
adjustment would be made.
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 securities exchange or on NASDAQ are valued at the
last reported sale prices on their primary exchange or NASDAQ that day
(or, in the absence of sales that day, at values based on the last sale
prices of the preceding trading day, or closing bid and asked prices);
(ii) NASDAQ and other unlisted equity securities for which last sale
prices are not regularly reported but for which over-the-counter market
quotations are readily available are valued at the highest closing bid
price at the time of valuation, or, if no closing bid price is reported,
on the basis of a closing bid price obtained from a dealer maintaining an
active market in that security; (iii) debt securities having a maturity
in excess of 60 days are valued at the mean between the bid and asked
prices determined by a portfolio pricing service approved by the Board or
obtained from an active market maker in the security; (iv) securities
(including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures; (v)
short-term (having a remaining maturity of 60 days or less) debt
securities are valued at cost, adjusted for amortization of premiums and
accretion of discounts; (vi) securities traded on foreign exchanges or in
foreign over-the-counter markets are valued as determined by a portfolio
pricing service approved by the Board, based upon last sale prices
reported on a principal exchange or the mean between closing bid and asked
prices and reflecting prevailing rates of exchange to convert their values
to U.S. dollars. The value of securities denominated in foreign currency
will be converted to U.S. dollars at the prevailing rates of exchange at
the time of valuation. In the case of U.S. Government securities,
corporate bonds, and all mortgage-backed securities, where last sale
information is not generally available, such pricing procedures may
include "matrix" comparisons to the prices for comparable instruments on
the basis of quality, yield, maturity and other special factors involved.
The Fund's Board of Trustees has authorized the Manager to employ a
pricing service to price U.S. Government securities, mortgage-backed
securities and corporate bonds. The Trustees will monitor the accuracy
of pricing services by comparing prices used for portfolio evaluation to
actual sales prices of selected securities.
Puts and calls are valued at the last sale prices on the principal
exchange on which they are traded or on NASDAQ, as applicable, or, if
there are no sales, in accordance with (i) above. When the Fund writes
a put or call, an amount equal to the premium received by the Fund is
included in the Fund's Statement of Assets and Liabilities as an asset,
and an equivalent deferred credit is included in the liability section.
The deferred credit is "marked-to-market" to reflect the current market
value of the option. 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
realize a gain or loss depending on whether the premium received was more
or less than the cost of the closing transaction. If a put held by the
Fund is exercised by it, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of the premium paid by the
Fund.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained 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 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, parents, grandparents, sons- and daughters-in-law, parents-
in-law, siblings, a sibling's spouse and a spouse's siblings.
Redemptions. Information on how to redeem shares of the Fund is stated
in the Prospectus. 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 such shares is less than $200 or such lesser
amount as the Board may decide. The Board of Trustees will not cause the
involuntary redemption of shares held in any account if the aggregate net
asset value of such shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board of Trustees elect to
exercise the right to redeem small accounts, 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 may set requirements for permission to increase the investment
and such other terms and conditions so that the shares are not
involuntarily redeemed.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a check to purchase shares 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 difference in net asset value times 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
loss by redeeming shares from any account registered in that investor's
name, or by seeking other redress.
SERVICE PLAN
The Fund has adopted a Service Plan (the "Plan") under Rule 12b-1 of
the Investment Company Act, as described in the Prospectus. The Plan
provides that the Fund will reimburse the Distributor for a portion of its
costs incurred in the servicing of the Fund's shares. The Plan has been
approved by a vote of (i) the Board of Trustees of the Fund, including a
majority of the "Independent Trustees" (trustees 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 Plan or in any
agreements relating to the Plan), cast in person at a meeting called for
the purpose of voting on the Plan, and (ii) the holders of a "majority"
(as defined in the Investment Company Act) of the Fund's shares. All of
the fees the Distributor receives under the Plan will be used to reimburse
itself for the direct distribution costs of the type approved by the Board
incurred in connection with the distribution of shares including, but not
limited to, compensating brokers, dealers, banks or other institutions
("Recipients") for distribution assistance and administrative support
services in connection with the distribution of Fund shares to customers
of the Recipient who may from time to time own shares of the Fund.
Under the Plan, no payment will be made by the Distributor to any
Recipient if the aggregate net asset value of the Fund shares held by it
or its customers at the end of a calendar quarter is less than the minimum
amount, if any, set from time to time by Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund and have
no direct or indirect financial interest in the operation of the Plan or
in any agreements related to the Plan ("Independent Trustees").
Currently, no minimum asset requirement has been fixed by the Fund's Board
of Trustees. For the fiscal year ended September 30, 1993, reimbursement
payments under the Plan by the Fund to the Distributor totaled $464,072
for Plan payments by the Distributor to Recipients, including $16,371 to
an affiliate of the Distributor, as reimbursement for service-related
expenses.
Unless terminated as described below, the Plan will continue in
effect from year to year but only so long as such 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. The 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 Fund's outstanding voting shares. The Plan may not
be amended without shareholder approval as set forth above, to increase
materially the amount of payments to be made, and all other material
amendments must be approved in the same manner. The Plan will have the
effect of increasing the Fund's expenses from what they would otherwise
be, but by no more than 0.25% of average annual net assets.
While the Plan is in effect, the Treasurer of the Fund shall provide
a written report to the Fund's Board of Trustees at least quarterly on the
amount of all payments made pursuant to the Plan, the identity of each
Recipient that received any such payment, and the purposes for which
payments were made. The 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 of any such selection
or nomination is approved by a majority of such Independent Trustees.
The Glass-Steagall Act and other applicable laws and regulations,
among other things, generally prohibit Federally-chartered or supervised
banks from engaging in the business of underwriting, selling or
distributing securities as principals. Accordingly, the Distributor may
pay such banks only for sales made on an agency basis or for the
performance of administrative and shareholder servicing functions. While
the matter is not free from doubt, it is the understanding of the Manager
and the Distributor that the Glass-Steagall Act and other applicable laws
and regulations do not prohibit banks and other financial institutions
from providing the services described above. The Fund's Board of Trustees
will consider appropriate modifications to the Fund's operations,
including discontinuance of payments under the Plan to such institutions,
in the event of any future change in such laws or regulations which may
adversely affect the ability of such institutions to provide those
services. Judicial or administrative decisions or interpretations of such
laws, as well as changes in either Federal or state statutes or
regulations relating to the permissible activities of banks or their
subsidiaries or affiliates, could prevent certain banks from continuing
to perform all or a part of their selling or servicing activities. If a
bank were so prohibited, shareholders of the Fund who were clients of such
bank would be permitted to remain as shareholders, and if a bank could no
longer provide those service functions, alternate means for continuing the
servicing of such shareholders would be sought. In such event,
shareholders serviced by such bank might no longer be able to avail
themselves of any automatic investment or other services then being
provided by such bank. It is not expected that shareholders would suffer
any adverse financial consequences as a result of any of those
occurrences.
PERFORMANCE, DIVIDEND AND TAX INFORMATION
Total Return Information. As described in the Prospectus, from time to
time the "average annual total return," "total return" and "total return
at net asset value" of an investment in the Fund may be advertised. An
explanation of how average annual total return and total return are
calculated and the components of those calculations are set forth below.
The Fund's "average annual total return" is an average annual
compounded rate of return. It is the rate of return based on factors
which include a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") with an Ending Redeemable
Value ("ERV") of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
The "total return" calculation uses some of the same factors as
"average annual total return," but does not average the rate of return on
an annual basis. Total return measures the cumulative (rather than the
average) change in value of a hypothetical investment over the stated
period. Total return is determined as follows:
ERV - P
------- = Total Return
P
Both formulas assume the payment of the Fund's maximum sales charge
of 5.75% (as a percentage of the offering price) on the initial investment
("P"). They also assume that all dividends and capital gains
distributions during the period are reinvested 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 the Fund (using the
method described above) for the one and five year periods ended
September 30, 1993, and for the period from December 30, 1987
(commencement of operations) to September 30, 1993, were 1.59%, 14.42% and
13.63%, respectively. The "total return" for the period from December 30,
1987 to September 30, 1993, was 108.46%.
From time to time the Fund may also quote a "total return at net
asset value" to describe the rate of return on an investment in the Fund.
It is based on the difference in net asset value per share at the
beginning and the end of the period (without considering sales charge) and
takes into consideration the reinvestment of dividends and capital gains
(as with total return, described above). The Fund's total return at net
asset value for the one-year period ended September 30, 1993, was 7.79%.
Total return information may be useful to investors in reviewing the
Fund's performance. However, certain factors should be considered before
using this information as a basis for comparison with alternative
investments. No adjustment is made for taxes payable on distributions.
The total return for any given past period is not an indication or
representation by the Fund of future rates of return on its shares. When
comparing the Fund's total return and risk to capital with that of other
investments, investors should understand that the Fund is an aggressive
equity fund seeking capital appreciation and its shares are subject to
greater market risks than shares of funds having other investment
objectives. Investors should consider such factors when comparing the
Fund's return to a return on investments which remains relatively constant
over time, including insured 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, as well as annuities issued by insurance
companies and various money market instruments such as Treasury bills and
commercial paper. The Fund's total return may also be compared with
changes for the same period in gross national product and consumer prices
of foreign countries, and in the movements of the currencies of such
countries against the U.S. dollar. The current price per share is listed
daily in newspaper financial sections.
The total return on an investment made in shares of the Fund may be
compared with performance for the same period of the Dow Jones Industrial
Average ("Dow"), the Standard & Poor's 500 Index ("S&P 500") and the
NASDAQ Composite Index, which are widely recognized indices of stock
market performance. These indices consist of unmanaged groups of common
stocks; the Dow consists of thirty such issues. The performance of both
indices includes a factor for the reinvestment of income dividends.
Neither index reflects reinvestment of capital gains or take sales charges
into consideration as these items are not applicable to indices.
From time to time the Fund may publish the ranking of its performance
by Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent service, 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 is ranked against (i) all other funds, and (ii)
all other health/bio-technology funds. The Lipper performance analysis
includes the reinvestment of capital gains distributions and income
dividends but does not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of its performance
by Morningstar, Inc., an independent mutual fund monitoring service, ranks
mutual funds, including the Fund, by a quantitative system based upon the
fund's three, five and ten-year average annual total returns (when
available) and a risk factor that reflects fund performance relative to
three-month U.S. Treasury bill monthly returns. Such returns are adjusted
for fees and sales loads. There are five ranking categories with a
corresponding number of stars: highest (5), above average (4), neutral
(3), below average (2) and lowest (1). Morningstar ranks the Fund's
performance against all other specialty-health funds.
Tax Status of the Fund's Dividends and Distributions. The Federal income
tax treatment of the Fund's dividends and distributions is explained in
the Prospectus under the caption "Dividends, Distributions and Taxes."
Special provisions of the Internal Revenue Code apply to the eligibility
of the Fund's dividends for the 70% dividends-received deduction (the
"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 that may qualify for the deduction is
limited to the aggregate amount of qualifying dividends (generally
dividends from domestic corporations) that the Fund derives from its
portfolio investments held for a minimum period, usually 46 days. A
corporate shareholder will not be eligible for the deduction on dividends
paid on shares held by the shareholder for 45 days or less. To the extent
the Fund's gross income is derived from dividends from non-U.S. issuers,
option premiums, interest income or short-term gains from the sale of
securities, a substantial portion of its 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 that
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 and the Manager may determine in a
particular year that it would be in the best interest of the Fund not to
make such distributions at the required levels and to pay the excise tax,
which would reduce the amount available for distribution to shareholders.
If the Fund has more than 50% of its assets invested in securities
of foreign issuers 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 a deduction) for foreign taxes paid by
the Fund. Under Section 853, shareholders would include in gross income
both cash dividends received from the Fund and the income taxes paid by
the Fund with respect to, or withheld from, interest and dividends paid
to the Fund from its foreign investments. Shareholders would generally
be entitled to treat the foreign taxes withheld as a credit on their
Federal income taxes. In effect, a portion of the shareholder's Federal
income taxes would be paid to other governments. 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 income taxes on the income received.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or capital gains distributions in shares of
any of the funds listed in the Prospectus as "Eligible Funds" at net asset
value without sales charge. To elect this option, a shareholder must
notify the Transfer Agent in writing and either have an existing account
in the fund selected for reinvestment or must obtain a prospectus for that
fund and an application from the Transfer Agent 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 capital gain distributions paid by certain Eligible Funds
may be reinvested in shares of this Fund on the same basis.
ADDITIONAL INFORMATION
Description of the Fund. The Fund's Declaration of Trust contains an
express disclaimer of shareholder or Trustee liability for the Fund's acts
and 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 a 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 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 circumstance in which the Fund would be unable to meet its
obligations. 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.
It is not contemplated that regular annual meetings of shareholders
will be held. 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 1% or more of the Fund's outstanding shares,
whichever is less, 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 the
applicants' communication to all other shareholders at the applicants'
expense, or the Trustees may take such other actions as set forth in
Section 16(c) of the Investment Company Act.
The Custodian and the Transfer Agent. The Custodian's responsibilities
include safeguarding and controlling the Fund's portfolio securities and
cash, 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 its banking relationships with 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 or its
affiliates.
Oppenheimer Shareholder Services, as Transfer Agent, is responsible
for maintaining the Fund's shareholder registry and shareholder accounting
records, and for shareholder servicing and administrative functions.
General Distributor's Agreement. Under the Distribution Agreement between
the Fund and the Distributor, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's shares but is
not obligated to sell a specific number of shares. Expenses normally
attributable to sales (other than those paid under the Plan of
Distribution), 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, 1991, 1992, and 1993, the aggregate amount of sales charges
on sales of the Fund's shares was $1,519,470, $3,810,637, and $4,353,366,
respectively, of which the Distributor (and an affiliated broker-dealer)
retained in the aggregate $322,104, $999,505, and $960,768 in those
respective years.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also serve as auditors for certain other funds advised by the
Manager.
AUTOMATIC WITHDRAWAL PLAN PROVISIONS
As discussed in the Prospectus, a shareholder who owns shares of the
Fund valued at $5,000 or more at the current offering price may establish
an Automatic Withdrawal Plan to receive a monthly or quarterly check in
a requested amount of not less than $50. Shares will be redeemed three
business days prior to the date requested for receipt of the check (which
is an approximate date).
Fund shares will be redeemed as necessary to meet withdrawal
payments. Shares acquired without a sales charge will be redeemed first
and thereafter shares acquired with reinvested dividends and distributions
followed by shares acquired with a sales charge will be redeemed to the
extent necessary to meet withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made to
shareholders under such plans should not be considered a yield or income
on an investment. Purchases of additional shares concurrently with
withdrawals are undesirable because of sales charges on purchases.
Accordingly, a shareholder may not maintain an Automatic Withdrawal Plan
while simultaneously making regular purchases. The Fund reserves the
right to amend, suspend or cease offering such plans at any time without
prior notice.
By requesting an Automatic Withdrawal Plan, the applicant agrees to
the terms and conditions applicable to such plans, as stated below and
elsewhere in the Application for such Plans, the Prospectus and this
Additional Statement as they may be amended from time to time by the Fund
and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
1. The Transfer Agent of the Fund will administer the Automatic
Withdrawal Plan (the "Plan") as agent for the person (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent.
2. 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 Planholder on the records of the Fund. Any share
certificates now held by the 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. Those shares
will be carried on the Planholder's Plan Statement.
3. 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 may be paid in cash or reinvested.
4. Redemptions of shares in connection with disbursement payments
will be made at the net asset value per share in effect on the redemption
date.
5. Checks or ACH payments will be transmitted three business days
prior to the date selected for receipt of the monthly or quarterly payment
(the date of receipt is approximate), according to the choice specified
in writing by the Planholder.
6. The amount and the interval of disbursement payments and the
address to which checks are to be mailed may be changed at any time by the
Planholder on written notification to the Transfer Agent. The Planholder
should allow at least two weeks' time in mailing such notification before
the requested change can be put in effect.
7. 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 such 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 of such redemption to the Planholder.
8. The Plan may, at any time, be terminated by the Planholder on
written notice to the Transfer Agent, or by the Transfer Agent upon
receiving directions to that effect from the Fund. The Transfer Agent
will also terminate the Plan upon receipt of evidence satisfactory to it
of the death or legal incapacity of the Planholder. Upon termination of
the Plan by the Transfer Agent or the Fund, shares remaining unredeemed
will be held in an uncertificated account 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, his executor or guardian, or as otherwise appropriate.
9. For purposes of using shares held under the Plan as collateral,
the Planholder may request issuance of a portion of his shares in
certificated form. Upon written request from the Planholder, the Transfer
Agent will determine the number of shares as to which a certificate may
be issued, so as not to cause the withdrawal checks to stop because of
exhaustion of uncertificated shares needed to continue payments. Should
such uncertificated shares become exhausted, Plan withdrawals will
terminate.
10. The Transfer Agent shall incur no liability to the Planholder
for any action taken or omitted by the Transfer Agent in good faith.
11. In the event that the Transfer Agent shall cease to act as
transfer agent for the Fund, the Planholder will be deemed to have
appointed any successor transfer agent to act as his agent in
administering the Plan.
LETTERS OF INTENT
In submitting a Letter of Intent to purchase shares of the Fund and
Class A shares of other Oppenheimer funds at a reduced sales charge, the
investor agrees to the terms of the Prospectus, the Application used to
buy such shares and the language of this Additional Statement as to
Letters of Intent, as they may be amended from time to time by the Fund.
Such amendments will apply automatically to existing Letters of Intent.
A Letter of Intent ("Letter") is the investor's statement of
intention to purchase shares of the Fund (and Class A shares of other
eligible Oppenheimer funds sold with a sales charge) during the 13-month
period from the investor's first purchase pursuant to the Letter (the
"Letter of Intent period"), which may, at the investor's request, include
purchases made up to 90 days prior to the date of the Letter. The
investor states the intention to make the aggregate amount of purchases
(excluding any reinvestments of dividends or distributions or purchases
made at net asset value without sales charge), which together with the
investor's holdings of such funds (calculated at their respective public
offering prices calculated on the date of the Letter) will equal or exceed
the amount specified in the Letter to obtain the reduced sales charge rate
(as set forth in "How To Buy Shares" in the Prospectus) applicable to
purchases of shares in that amount (the "intended amount"). Each purchase
under the Letter will be made at the public offering price applicable to
a single lump-sum purchase of shares in the intended amount, as described
in the applicable 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 such fund shares on the last day of that period,
do not equal or exceed the intended 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 amount will be held in escrow by the Fund's transfer agent
subject to the Terms of Escrow.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during
the Letter of Intent period exceed the intended 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 refer to 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
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 amount specified in the Letter shall be held in
escrow by the Fund's transfer agent. For example, if the minimum amount
specified under the Letter is $50,000, the escrow shall be shares valued
in the amount of $2,500 (computed at the public offering price adjusted
for a $50,000 purchase). Any dividends and capital gains distributions
on the escrowed shares will be credited to the investor's account.
2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period, the
total purchases pursuant to the Letter are less than the intended 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 of the Fund as attorney-in-fact to surrender
for redemption any or all escrowed shares.
5. The funds whose shares are eligible for purchase under the Letter
(or the holding of which may be counted toward completion of the Letter)
do not include any fund whose shares are sold without a front-end sales
charge or shares subject to a contingent deferred sales charge unless (for
the purpose of determining completion of the obligation to purchase shares
under the Letter) the shares were acquired in exchange for shares of a
fund (described as a "Eligible Fund" in the Prospectus) whose shares were
acquired by payment of a 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 "Exchange Privilege," and the
escrow will be transferred to that other fund.
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders of Oppenheimer Global Bio-Tech
Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Global Bio-Tech Fund as of September 30, 1993,
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 and the period from December 30, 1987
(commencement of operations) to September 30, 1988. 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 and financial highlights. Our
procedures included confirmation of securities owned as of September 30,
1993, 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 Bio-Tech Fund as of September 30, 1993, 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 and
the period from December 30, 1987 (commencement of operations) to
September 30, 1988, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick
- ---------------------
KPMG Peat Marwick
Denver, Colorado
October 21, 1993
<PAGE>
Statement of Investments September 30, 1993
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <S> <C> <C>
Repurchase Agreements -- 6.2%
Repurchase agreement with Morgan
Guaranty Trust Co., 3.25%, dated 9/30/93
and maturing 10/1/93, collateralized by
U.S. Treasury Bills, 3.27%, 6/30/94,
with a value of $12,665,137 (Cost
$12,400,000) $12,400,000 $12,400,000
Corporate Bonds and Notes -- 1.7%
Elan International Finance Ltd., 0% Sub.
Liq.Yld. Opt. Nts., 10/16/12 3,800,000 1,529,500
Glycomed, Inc., 7.50% Cv. Sub. Debs.,
1/1/03 2,000,000 1,735,000
Total Corporate Bonds and Notes (Cost
$3,461,730) 3,264,500
Units
Rights and Warrants -- .8%
Biota Holdings Ltd. Wts., Exp. 9/94 225,000 755,082
Genzyme Corp. Wts.:
Exp. 12/94 20,000 305,000
Exp. 12/96 50,000 500,000
Protein Polymer Technologies, Inc. Wts.,
Exp.1/97 100,000 25,000
Xoma Corp. Wts., Exp. 6/95 7,706 3,853
Total Rights and Warrants (Cost
$1,310,470) 1,588,935
Shares
Preferred Stocks -- 2.2%
Cambridge Antibody Technology Ltd., Cv.*
(2) 100,000 2,866,283
Synaptic Pharmaceutical Corp., Cv.
Series 3* (2) 500,000 1,609,253
Total Preferred Stocks (Cost $5,300,000) 4,475,536
Common Stocks -- 88.7%
Consumer Non-Cyclicals -- 87.0%
Agriculture
Biotechnology -- 6.2%
biosys* 140,000 945,000
Calgene, Inc.* 100,000 1,387,500
DNA Plant Technology Corp.* 150,000 843,750
EcoScience Corp.* 175,000 1,771,875
Mogen International* 150,000 580,334
Pioneer Hi-Bred International, Inc. 60,000 1,995,000
Plant Genetics Systems International NV*
(2) 213,944 3,472,187
Syntro Corp.* 400,000 1,300,000
12,295,646
Anti-sense/
Nucleic Acids -- 4.9%
Genetics Institute, Inc.* 100,000 4,125,000
Genzyme Transgenics Corp.* 75,000 525,000
Gilead Sciences, Inc.* 205,000 2,972,500
Isis Pharmaceuticals, Inc.* 350,000 2,187,500
9,810,000
Cardiovascular/Blood --3.9%
Aramed, Inc., Units* 110,000 4,152,500
COR Therapeutics, Inc.* 123,500 1,698,125
Corvas International, Inc.* 135,000 556,875
Gensia Pharmaceuticals, Inc.* 50,000 1,325,000
Protein Polymer Technologies, Inc.* 100,000 68,750
7,801,250
<PAGE>
Market Value
Shares See Note 1
Common Stocks (continued)
Consumer Non-Cyclicals (continued)
Chemicals/Industrial Biotechnology -- 2.9%
Celgene Corp.* 240,000 $ 2,280,000
PerSeptive Biosystems, Inc.* 100,000 2,200,000
PerSeptive Technology Corp., Units* (2) 1,000 1,218,100
5,698,100
Drugs -- 7.1%
Allergan, Inc. 50,000 1,100,000
Astra AB, Series A Free Shares 105,000 2,161,667
Elan Corp. PLC, Units* 13,108 304,761
Merck & Co., Inc. 50,000 1,537,500
Roche Holdings AG 600 2,250,103
Sandoz AG 1,200 2,711,878
Takeda Chemical Industries 132,000 1,704,630
Telor Ophthalmic Pharmaceuticals, Inc.* 148,000 777,000
Zeneca GR 150,000 1,607,241
14,154,780
Drug Delivery -- 3.3%
Cygnus Therapeutic Systems* 150,000 918,750
Elan Corp. PLC, ADR* 50,000 1,537,500
Liposome Technology, Inc.* 225,000 2,306,250
Matrix Pharmaceutical, Inc.* 187,000 1,776,500
6,539,000
Drug Design -- 5.4%
Biota Holdings Ltd. 400,000 2,194,282
Protein Design Labs, Inc.* 300,000 4,237,500
Vertex Pharmaceuticals. Inc.* 350,000 4,462,500
10,894,282
Endocrine/
Metabolism -- 1.2%
Amylin Pharmaceuticals, Inc.* 200,000 2,400,000
Gene Therapy -- 6.0%
CellPro, Inc.* 225,300 5,350,875
Genetic Therapy, Inc.* 300,500 5,484,125
Somatix Therapy Corp.* 90,000 675,000
Vical, Inc. 60,000 510,000
12,020,000
Healthcare-
Diversified -- 2.5%
American Cyanamid Co. 25,000 1,378,125
Johnson & Johnson 30,000 1,177,500
Schering AG 4,000 2,416,572
4,972,197
Healthcare -
Miscellaneous -- 6.0%
Biochem Pharmaceuticals, Inc.* 100,000 987,500
Magainin Pharmaceuticals, Inc.* 400,000 4,600,000
Medco Containment Services, Inc. 45,000 1,603,125
Peptide Technology Ltd. (1) 2,829,280 3,743,202
Quintiles Transnational Corp. (2) 28,950 519,653
Skandigen AB 125,700 612,090
12,065,570
<PAGE>
Market Value
Shares See Note 1
Statement of Investments (continued)
Common Stocks (continued)
Consumer Non-Cyclicals (continued)
Imaging -- .8%
Molecular Biosystems, Inc.* 60,000 $ 1,545,000
Immunology -- 5.4%
AutoImmune, Inc.* 113,000 1,017,000
Cantab Pharmaceuticals PLC, Sponsored
ADR* 99,000 717,750
CytoRad, Inc./Cytogen Corp., Units* 150,000 806,250
ImmuLogic Pharmaceutical Corp.* 147,500 1,438,125
ImmunoGen, Inc.* 100,000 750,000
Immunomedics, Inc.* 105,000 695,625
Medimmune, Inc.* 146,000 3,212,000
T Cell Sciences, Inc.* 223,000 1,421,625
Univax Biologics, Inc.* 103,000 811,125
10,869,500
Inflammation -- 3.2%
Alpha Beta Technology, Inc.* 145,000 3,915,000
Cortech, Inc.* 64,000 1,008,000
Glycomed, Inc.* 114,000 969,000
ICOS Corp.* 100,000 550,000
6,442,000
Labs/Diagnostics -- 2.0%
Agen Ltd. 1,415,000 429,208
DNX Corp. 100,000 500,000
Genelabs Technologies, Inc.* 75,000 318,750
IG Laboratories, Inc.* 322,500 2,660,625
3,908,583
Major Biotechnology -- 18.3%
ALZA Corp., Cl. A* 125,001 2,765,646
Amgen, Inc.* 150,000 5,793,750
Biogen, Inc.* 100,000 3,687,500
Chiron Corp.* (3) 100,500 7,524,938
Genentech, Inc.* 193,400 8,292,025
Genzyme Corp.* 200,435 6,714,572
Immunex Corp.* 50,000 925,000
Neozyme Corp. 20,000 300,000
Neozyme II Corp., Units* 20,000 520,000
Therapeutic Discovery Corp., Units* 10,000 51,250
36,574,681
Medical Products -- 2.5%
Applied Immune Sciences, Inc.* 232,000 3,248,000
Molecular Dynamics, Inc.* 102,500 1,806,562
5,054,562
Neuroscience -- 2.4%
Athena Neurosciences, Inc.* 200,000 1,500,000
Cambridge Neuroscience, Inc.* 100,000 937,500
Cephalon, Inc.* 115,000 1,725,000
CoCensys, Inc.* 100,000 725,000
4,887,500
<PAGE>
Market Value
Shares See Note 1
Common Stocks (continued)
Consumer Non-Cyclicals (continued)
Wound Healing -- 3.0%
Advanced Tissue Sciences, Inc., Cl. A* 355,000 $ 3,061,875
BioSurface Technology, Inc.* 73,000 310,250
Celtrix Pharmaceuticals, Inc.* 350,000 2,525,938
5,898,063
Technology -- 1.7%
Electronics- IDEXX Laboratories, Inc.* 50,000 2,450,000
Instrumentation
-- 1.7% Oxford GlycoSystems Group PLC* (2) 515,132 911,679
3,361,679
Total Common Stocks (Cost $166,413,122) 177,192,393
Total Investments, at Value (Cost $188,885,322) 99.6% 198,921,364
Other Assets Net of Liabilities .4% 775,253
Net Assets 100.0% $199,696,617
</TABLE>
* Non-Income producing security
(1)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 year ended September 30,
1993. Transactions during the period in which the issuer was an affiliate
are as follows:
<TABLE>
<CAPTION>
Balance Balance
September 30, 1992 Gross Additions Gross Reductions September 30, 1993
Shares Cost Shares Cost Shares Cost Shares Cost
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peptide Technology Ltd.+ 6,581,080 $ 3,965,009 -- $ --- 3,751,800 $1,994,973 2,829,280 $1,970,036
Univax Biologics, Inc.+ 43,000 516,000 60,000 680,615 -- -- 103,000 1,196,615
$4,481,009 $680,615 $1,994,973 $3,166,651
</TABLE>
+ Not an affiliate as of September 30, 1993.
(2) Restricted security-See Note 6 of notes to financial statements.
(3) Securities with an aggregate market value of $3,743,750 are held in
escrow to cover outstanding call options, as follows:
<TABLE>
<CAPTION>
Shares Subject Expiration Exercise Premium Market Value
to Call Date Price Received See Note 1
<S> <C> <C> <C> <C> <C>
Chiron Corp. 50,000 1/94 $65.00 $232,867 $643,750
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Assets and Liabilities September 30, 1993
<TABLE>
<S> <C> <C>
Assets Investments, at value (cost $188,885,322) - see accompanying statement $198,921,364
Cash 49,947
Receivables:
Investments sold 2,477,499
Shares of beneficial interest sold 728,878
Dividends and interest 103,439
Other 19,540
Total assets 202,300,667
Liabilities Options written, at value (premiums received $232,867) -
see accompanying statement - Note 4 643,750
Payables and other liabilities:
Shares of beneficial interest redeemed 918,958
Investments purchased 754,200
Distribution assistance - Note 5 119,097
Other 168,045
Total liabilities 2,604,050
Net Assets $199,696,617
Composition of Net Paid-in capital $195,369,199
Assets
Accumulated net investment loss (2,926,679)
Distributions in excess of net realized gain from investment
and written option transactions (2,370,466)
Net unrealized appreciation on investments, options written and
translation of assets and liabilities in foreign currencies - Note 3 9,624,563
Net Assets -- Applicable to 9,226,406 shares of beneficial interest outstanding $199,696,617
Net Asset Value and Redemption Price Per Share $21.64
Maximum Offering Price Per Share (net asset value plus sales charge of 5.75% of offering price) $22.96
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Operations For the Year Ended September 30, 1993
<TABLE>
<S> <C> <C>
Investment Income Interest $ 861,045
Dividends (including $103,372 from foreign securities less $15,506 of foreign 665,624
tax withheld at source)
Total income 1,526,669
Expenses Management fees - Note 5 1,580,012
Transfer and shareholder servicing agent fees - Note 5 650,147
Distribution assistance - Note 5 464,072
Shareholder reports 136,817
Trustees' fees and expenses 80,788
Custodian fees and expenses 62,985
Legal and auditing fees 35,054
Registration and filing fees 34,838
Other 20,609
Total expenses 3,065,322
Net Investment Loss (1,538,653)
Realized and Net realized gain (loss) on investments:
Unrealized Gain (Loss) Unaffiliated companies (6,594,919)
on Investments, Affiliated companies 6,019,697
Options Written and Net realized loss on investments (575,222)
Translation of Assets Net realized loss on closing of option contracts written - Note 4 (105,457)
and Liabilities in Net realized loss (680,679)
Foreign Currencies Net change in unrealized appreciation (depreciation) on investments,
options written and translation of assets and liabilities in foreign currencies:
Beginning of year (3,823,657)
End of year - Note 3 9,624,563
Net change 13,448,220
Net Realized and Unrealized Gain on Investments, Options Written and
Translation of Assets and Liabilities in Foreign Currencies 12,767,541
Net Increase in Net Assets Resulting from Operations $11,228,888
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992
<S> <C> <C> <C>
Operations Net investment loss $ (1,538,653) $ (1,181,561)
Net realized gain (loss) on investments and options written (680,679) 590,388
Net change in unrealized appreciation or depreciation
on investments, options written and translation of assets
and liabilities in foreign currencies 13,448,220 (44,464,262)
Net increase (decrease) in net assets resulting from 11,228,888 (45,055,435)
operations
Dividends and Dividends from net investment income ($.01 per share) -- (64,575)
Distributions to Distributions from net realized gain on investments
Shareholders ($.202 per share) (1,873,746) --
Beneficial Interest Net increase in net assets resulting from beneficial
Transactions interest
transactions - Note 2 60,707,523 71,401,564
Net Assets Total increase 70,062,665 26,281,554
Beginning of year 129,633,952 103,352,398
End of year (including accumulated net investment losses
of $2,926,679 and $1,388,026, respectively) $199,696,617 $129,633,952
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992 1991+ 1990 1989 1988++
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 20.25 $ 26.90 $ 11.81 $ 12.09 $ 10.63 $ 10.00
Income (loss) from investment operations:
Net investment income (loss) (.10) (.17) (.03) (.02) (.10) .14
Net realized and unrealized gain (loss)
on investments, options written
and translation of assets and
liabilities in foreign currencies 1.69 (6.47) 15.12 (.26) 1.69 .49
Total income (loss) from
investment operations 1.59 (6.64) 15.09 (.28) 1.59 .63
Dividends and distributions to shareholders:
Dividends from net investment income -- (.01) -- -- (.10) --
Distributions from net realized
gain on investments (.20) -- -- -- (.03) --
Total dividends and
distributions to shareholders (.20) (.01) -- -- (.13) --
Net asset value, end of period $ 21.64 $ 20.25 $ 26.90 $ 11.81 $ 12.09 $ 10.63
Total Return,
at Net Asset Value** 7.79% (24.70)% 127.78% (2.32)% 15.21% 6.30%
Ratios/Supplemental Data:
Net assets, end of
period (in thousands) $199,697 $129,634 $103,352 $16,217 $3,872 $1,921
Average net assets
(in thousands) $194,184 $166,144 $ 50,989 $ 8,716 $2,343 $1,394
Number of shares outstanding
at end of period (in thousands) 9,226 6,400 3,841 1,373 320 181
Ratios to average net assets:
Net investment income (loss) (.80)% (.71)% (.18)% (.37)% (.70)% 1.41%*
Expenses 1.59% 1.39% 1.50% 1.78% 2.40% 2.06%*
Portfolio turnover rate*** 41.0% 2.6% 11.2% 16.6% 17.1% 1.7%
</TABLE>
* Annualized.
** Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
*** 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 year ended September 30, 1993 were
$119,628,848 and $70,050,079, respectively.
+ Per share amounts calculated based on the weighted average number of
shares outstanding during the period.
++ For the period from December 30, 1987 (commencement of operations) to
September 30, 1988. Per share amounts calculated based on the weighted
average number of shares outstanding during the period.
See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Oppenheimer Global Bio-Tech 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 adviser is
Oppenheimer Management Corporation (the Manager). The following is a
summary of significant accounting policies consistently followed by the
Fund.
Investment Valuation -- Portfolio securities are valued at 4:00 p.m. (New
York time) on each trading day. Listed and unlisted securities for which
such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid
or asked price or the last sale price on the prior trading day. Long-term
debt securities are valued by a portfolio pricing service approved by the
Board of Trustees. Long-term debt securities which cannot be valued by the
approved portfolio pricing service are valued by averaging the mean
between the bid and asked prices obtained from two active market makers
in such securities. Short-term 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.
Securities for which market quotes are not readily available are valued
under procedures established by the Board of Trustees to determine fair
value in good faith. A call option is valued based upon the last sales
price on the principal exchange on which the option is traded or, in the
absence of any transactions that day, the value is based upon the last
sale on the prior trading date if it is within the spread between the
closing bid and asked prices. If the last sale price is outside the
spread, the closing bid or asked price closest to the last reported sale
price is used.
Foreign Currency Translation -- The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in non-U.S.
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on
the respective dates of such transactions.
The Fund generally enters into forward currency exchange contracts as a
hedge, upon the purchase or sale of a security denominated in a foreign
currency. Risks may arise from the potential inability of the counterparty
to meet the terms of the contract and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar.
The effect of changes in foreign currency exchange rates is not separately
identified in the Fund's results of operations. Gains and losses on
foreign currency transactions are accounted for with the transactions that
gave rise to the exchange gain or loss.
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. 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.
Call Options Written -- The Fund may write covered call options. When an
option is written, the Fund receives a premium and becomes obligated to
sell the underlying security at a fixed price, upon exercise of the
option. In writing an option, the Fund bears the market risk of an
unfavorable change in the price of the security underlying the written
option. Exercise of an option written by the Fund could result in the Fund
selling a security at a price different from the current market value. All
securities covering call options written are held in escrow by the
custodian bank.
<PAGE>
Federal Income 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 tax provision is required.
Trustees' Fees and Expenses -- The Fund has adopted a nonfunded
retirementplan 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, 1993, a provision of $44,988
was made for the Fund's projected benefit obligations, resulting in an
accumulated liability of $63,821 at September 30, 1993. No payments have
been made under the plan.
Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date.
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. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. 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.
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1993 Year Ended September 30, 1992
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Sold 5,810,447 $123,150,808 4,540,515 $124,706,623
Dividends and distributions reinvested 72,297 1,686,679 2,049 58,089
Redeemed (3,056,478) (64,129,964) (1,983,809) (53,363,148)
Net increase 2,826,266 $ 60,707,523 2,558,755 $ 71,401,564
</TABLE>
3. Unrealized Gains and Losses on Investments and Options Written
At September 30, 1993, net unrealized appreciation of investments and
options written of $9,625,159 was composed of gross appreciation of
$31,347,803, and gross depreciation of $21,722,644.
4. Call Option Activity
Call option activity for the year ended September 30, 1993 was as follows:
<TABLE>
<CAPTION>
Number of Amount of
Options Premiums
<S> <C> <C>
Options outstanding at September 30, 1992 -- $ --
Options written 1,455 528,994
Options cancelled in closing purchase transactions (955) (296,127)
Options outstanding at September 30, 1993 500 $ 232,867
</TABLE>
The cost of cancelling options in closing purchase transactions was
$401,584, resulting in a net short-term capital loss of $105,457.
<PAGE>
Notes to Financial Statements (continued)
5. 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 an annual fee of 1%
on the first $50 million of net assets, .75% on the next $150 million with
a reduction of .03% on each $200 million thereafter to $800 million, and
.60% on net assets in excess of $800 million. The Manager has agreed to
reimburse the Fund if aggregate expenses (with specified exceptions)
exceed the most stringent applicable regulatory limit on Fund expenses.
For the year ended September 30, 1993, commissions (sales charges paid by
investors) on sales of Fund shares totaled $4,353,366, of which $960,768
was retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary
of the Manager, as general distributor, and by an affiliated
broker-dealer.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such
services are allocated ratably to these companies.
Under an approved plan of distribution, the Fund may expend up to .25%
ofits net assets annually to reimburse OFDI for costs incurred in
distributing shares of the Fund, including amounts paid to brokers,
dealers, banks and other financial institutions. During the year ended
September 30, 1993, OFDI paid $16,371 to an affiliated broker-dealer as
reimbursement for distribution-related expenses.
6. Restricted Securities
The Fund owns securities purchased in private placement transactions,
without registration under the Securities Act of 1933 (the Act). The
securities are valued under methods approved by the Board of Trustees as
reflecting fair value. The Fund intends to invest no more than 10% of its
net assets (determined at the time of purchase) in restricted and illiquid
securities, excluding securities eligible for resale pursuant to Rule 144A
of the Act that are determined to be liquid by the Board of Trustees or
by the Manager under Board-approved guidelines. Restricted and illiquid
securities amount to $9,685,475, or 4.9% of the Fund's net assets, at
September 30, 1993.
<TABLE>
<CAPTION>
Valuation
Per Share as of
Security Acquisition Date Cost Per Unit September 30, 1993
<S> <C> <C> <C>
Cambridge Antibody Technology
Ltd., Cv. 2/5/93 $ 33.00 $ 28.66
Oxford GlycoSystems Group PLC+ 5/21/93 $ 1.94 $ 1.77
PerSeptive Technology Corp. 12/16/92 $ 1,000.00 $ 1,218.10
Plant Genetics Systems
International NV 5/27/92 $ 11.18 $ 16.23
Quintiles Transnational Corp. 8/2/93 $ 17.27 $ 17.95
Synaptic Pharmaceutical
Corp., Cv. Series 3 1/20/93 $ 4.00 $ 3.22
</TABLE>
+ Transferable under Rule 144A of the Act.
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian
The Bank Of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
