OPPENHEIMER GLOBAL EMERGING GROWTH FUND
Supplement dated January 13, 1997 to the
Prospectus dated January 13, 1997
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying
Class A Shares" on page 27, (2) sales of Class B shares described
in the fifth paragraph in "Distribution and Service Plans for Class
B Shares" on page 34, and (3) sales of Class C shares described in
the fifth paragraph in "Distribution and Service Plans for Class C
Shares" on page 34, the Distributor will pay additional commission
to each broker, dealer and financial institution that has a sales
agreement with the Distributor and agrees to accept that additional
commission (these are referred to as "participating firms") for
Class A, Class B and Class C shares of the Fund sold in "qualifying
transactions" (the "promotion"). The additional commission will be
1.00% of the offering price of shares of the Fund sold by a
registered representative or sales representative of a
participating firm during the promotion. If the additional
commission is paid on the sale of Class A shares of $500,000 or
more or the sale of Class A shares to a SEP IRA with 100 or more
eligible participants and those shares are redeemed within 13
months from the end of the month in which they were purchased, the
participating firm will be required to return the additional
commission.
"Qualifying transactions" are aggregate sales of $150,000 or
more of Class A, Class B and/or Class C shares of any one or more
of the Oppenheimer funds (except money market funds and municipal
bond funds) for rollovers or trustee-to-trustee transfers from
another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an
account or investment in the Oppenheimer funds to (1) IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs, using the
OppenheimerFunds, Inc. prototype IRA agreement, if the rollover
contribution is received during the period from January 1, 1997
through April 15, 1997 (the "promotion period"), or the acceptance
of a direct rollover or trustee-to-trustee transfer is acknowledged
by the trustee of the OppenheimerFunds prototype IRA during the
promotion period, and (2) IRAs, rollover IRAs, SEP IRAs and SAR-
SEP IRAs using the A.G. Edwards & Sons, Inc. prototype IRA
agreement, if the rollover contribution or trustee-to-trustee
payment is received during the promotion period. "Qualifying
transactions" do not include (1) purchases of Class A shares
intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the
redemption proceeds from an existing Oppenheimer funds account.
January 13, 1997 PS0750.011
<PAGE>
OPPENHEIMER
Global Emerging Growth Fund
Prospectus dated January 13, 1997
Oppenheimer Global Emerging Growth Fund is a mutual fund that
aggressively seeks capital appreciation as its investment
objective. Current income is not an objective of the Fund.
In seeking its objective, the Fund emphasizes investments in
emerging growth companies in the U.S. and foreign countries that
offer the potential for growth of earnings or capital. In an
uncertain investment environment, the Fund may stress defensive
investment methods. The Fund may also use "hedging" instruments.
As a "global" fund, the Fund normally invests in the U.S. and at
least three foreign countries and may have a substantial portion of
its assets invested in foreign securities.
Some investment techniques the Fund uses may be considered to
be speculative investment methods that may increase the risks of
investing in the Fund and may also increase the Fund's operating
costs. You should carefully review the risks associated with an
investment in the Fund. The Fund is designed for investors who are
willing to accept greater risks of loss in the hopes of greater
gains. Please refer to "Investment Policies and Strategies" for
more information about the types of securities the Fund invests in,
its investment methods and the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the January 13, 1997, Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
3 Expenses
5 A Brief Overview of the Fund
7 Financial Highlights
10 Investment Objective and Policies
17 How the Fund is Managed
19 Performance of the Fund
ABOUT YOUR ACCOUNT
22 How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
35 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
37 How to Sell Shares
By Mail
By Telephone
38 How to Exchange Shares
40 Shareholder Account Rules and Policies
42 Dividends, Capital Gains and Taxes
A-1 Appendix: Special Sales Charge Arrangements
A B O U T T H E F U N D
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All shareholders
therefore pay those expenses indirectly. Shareholders pay other
expenses directly, such as sales charges and account transaction
charges. The following tables are provided to help you understand
your direct expenses of investing in the Fund and your share of the
Fund's business operating expenses that you will bear indirectly.
The numbers below are based on the Fund's expenses during its last
fiscal year ended September 30, 1996.
Shareholder Transaction Expenses are charges you pay when
you buy or sell shares of the Fund. Please refer to "About Your
Account," starting on page ___ for an explanation of how and when
these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
- ------------------------------------------------------------------
Maximum Sales Charge 5.75% None None
on Purchases (as a %
of offering price)
- ------------------------------------------------------------------
Maximum Deferred Sales None(1) 5% in the first 1% if shares are
Charge (as a % of the year, declining redeemed within
lower of the original to 1% in the 12 months of
purchase price or sixth year and purchase(2)
redemption proceeds) eliminated
thereafter(2)
- -------------------------------------------------------------------------
Maximum Sales Charge on None None None
Reinvested Dividends
- -------------------------------------------------------------------------
Exchange Fee None None None
- -------------------------------------------------------------------------
Redemption Fee None None None
</TABLE>
(1) If you invest $1 million or more ($500,000 or more for
purchases by "Retirement Plans," as defined in "Class A Contingent
Deferred Sales Charge" on page ___) in Class A shares, you may have
to pay a sales charge of up to 1.0% if you sell your shares within
18 calendar months from the end of the calendar month during which
you purchased those shares. See "How to Buy Shares - Class A
Shares," below.
(2) See "How to Buy Shares - Class B Shares" and "How to Buy Shares
- - Class C Shares," below for more information on contingent
deferred sales charges.
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
advisor, OppenheimerFunds, Inc. (referred to in this Prospectus as
the "Manager"). The rates of the Manager's fees are set forth in
"How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees
paid to the bank that holds its portfolio securities, audit fees
and legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
Annual Fund Operating Expenses
(as a Percentage of Average Net Assets)
Class A Class B Class C
Shares Shares Shares
- -------------------------------------------------------------------
Management Fees 0.83% 0.83% 0.83%
- -------------------------------------------------------------------
12b-1 Distribution 0.24% 1.00% 1.00%
Plan Fees
- -------------------------------------------------------------------
Other Expenses 0.80% 0.73% 0.71%
- -------------------------------------------------------------------
Total Fund 1.87% 2.56% 2.54%
Operating Expenses
The numbers for Class A, Class B and Class C shares in the
table above are based on the Fund's expenses in its last fiscal
year. These amounts are shown as a percentage of the average net
assets of each class of the Fund's shares for that year. Class B
and Class C shares were not publicly offered before November 1,
1995. Therefore, the Annual Fund Operating Expenses shown for
Class B and Class C are based on expenses for the period from
November 1, 1995 until September 30, 1996. The actual expenses
for each class of shares in future years may be more or less than
the numbers in the table, depending on a number of factors,
including the actual value of the Fund's assets represented by each
class of shares.
The "12b-1 Distribution Plan Fees" for Class A Shares are
Service Plan Fees (the maximum fee is 0.25% of average annual net
assets of that class). For Class B and Class C shares, the
Distribution and Service Plan Fees are service fees (the fee is
0.25% of average annual net assets of that class) and the asset-
based sales charge of 0.75%. These Plans are described in greater
detail in "How to Buy Shares."
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each class
of shares of the Fund, that the Fund's annual return is 5%, and
that its operating expenses for each class are the ones shown in
the Annual Fund Operating Expenses chart above. If you were to
redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of 1, 3,
5 and 10 years:
1 year 3 years 5 years 10 years*
- -------------------------------------------------------------------
Class A Shares $75 $113 $153 $264
Class B Shares $76 $110 $156 $257
Class C Shares $36 $ 79 $135 $288
If you did not redeem your investment, it would incur the
following expenses:
1 year 3 years 5 years 10 years*
- -------------------------------------------------------------------
Class A Shares $75 $113 $153 $264
Class B Shares $26 $ 80 $136 $257
Class C Shares $26 $ 79 $135 $288
*In the first example, expenses include the Class A initial sales
charge and the applicable Class B or Class C contingent deferred
sales charge. In the second example, Class A expenses include the
initial sales charge, but Class B and Class C expenses do not
include contingent deferred sales charges. The Class B expenses in
years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into
Class A shares after 6 years. Because of the effect of the asset-
based sales charge and contingent deferred sales charge, long-term
Class B and Class C shareholders could pay the economic equivalent
of an amount greater than the maximum front-end sales charge
allowed under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares to Class A shares is
designed to minimize the likelihood that this will occur. Please
refer to "How to Buy Shares - Buying Class B Shares" and "How to
Buy Shares - Buying Class C Shares" beginning on pages __ and __,
respectively, for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than the amounts shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What Is The Fund's Investment Objective? The Fund's
investment objective is to aggressively seek capital appreciation
(that is, growth in the value of its shares). It does not invest
to earn current income to pay to shareholders.
What Does the Fund Invest In? The Fund emphasizes
investment in common stocks or other equity securities, including
convertible securities, of emerging growth companies located in the
United States and foreign countries. The Fund may have a
substantial amount of its investments in foreign securities. The
Fund may hold warrants and rights. The Fund may also use hedging
instruments and some derivative investments to try to manage
investment risks. These investments are more fully explained in
"Investment Objective and Policies," starting on page 10.
Who Manages the Fund? The Fund's investment advisor (the
"Manager") is OppenheimerFunds, Inc. The Manager (including a
subsidiary) manages investment company portfolios having over $62
billion in assets at December 31, 1996. The Manager is paid an
advisory fee by the Fund, based on its net assets. The Fund's
portfolio managers, who are employed by the Manager and are
primarily responsible for the selection of the Fund's securities,
are George Evans and Jay W. Tracey, III. The Fund's Board of
Trustees, elected by shareholders, oversees the investment advisor
and the portfolio managers. Please refer to "How the Fund is
Managed," starting on page ___ for more information about the
Manager and its fees.
How Risky is the Fund? All investments carry risks to some
degree. It is important to remember that the Fund is an aggressive
growth fund designed for long-term investing and is not designed
for investors seeking income or conservation of capital. The
Fund's investments in stocks are subject to changes in their value
from a number of factors such as changes in general bond and stock
market movements, or the change in value of particular stocks
because of an event affecting the issuer.
The Fund's investments in foreign securities are subject to
additional risks associated with investing abroad, such as the
effect of currency rate changes on stock values. These changes
affect the value of the Fund's investments and its price per share.
In the Oppenheimer funds spectrum, the Fund is generally
expected to be more volatile than the other stock funds, the income
and growth funds, and the more conservative income funds. While
the Manager tries to reduce risks by diversifying investments, by
carefully researching securities before they are purchased for the
portfolio, and in some cases by using hedging techniques, there is
no guarantee of success in achieving the Fund's objective and your
shares may be worth more or less than their original cost when you
redeem them. Please refer to "Investment Objective and Policies"
starting on page __ for a more complete discussion of the Fund's
investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to "How to Buy Shares" starting on page ___ for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
the individual investor three classes of shares. All classes have
the same investment portfolio but different expenses. Class A
shares are offered with a front-end sales charge, starting at 5.75%
and reduced for larger purchases. Class B and Class C shares are
offered without a front-end sales charge, but may be subject to a
contingent deferred sales charge if redeemed within 6 years or 12
months of purchase, respectively. There is also an annual asset-
based sales charge on Class B and Class C shares. Please review
"How to Buy Shares" starting on page ___ for more details,
including a discussion about factors you and your financial advisor
should consider in determining which class may be appropriate for
you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by a telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How to Sell Shares" on page
____. The Fund also offers exchange privileges to other
Oppenheimer funds, described in "How to Exchange Shares" on page
___.
How Has the Fund Performed? The Fund measures its
performance by quoting its average annual total return and
cumulative total return, which measure historical performance.
Those returns can be compared to the returns (over similar periods)
of other funds. Of course, other funds may have different
objectives, investments, and levels of risk. The Fund's
performance can also be compared to a broad-based market index,
which we have done on pages ____ and ____. Please remember that
past performance does not guarantee future results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense
ratios and other data based on the Fund's average net assets. This
information has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, whose report on the Fund's financial
statements for the fiscal year ended September 30, 1996, is
included in the Statement of Additional Information.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A
- ----------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
1996 1995 1994 1993 1992
1991(3)
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 18.03 $ 19.35 $ 21.64 $ 20.25 $ 26.90
$ 11.81
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Income (loss) from investment operations:
Net investment income (loss) (.03) .01 (.01) (.10) (.17)
(.03)
Net realized and unrealized gain (loss) 2.96 (1.33) (2.11) 1.69 (6.47)
15.12
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Total income (loss) from investment
operations 2.93 (1.32) (2.12) 1.59 (6.64)
15.09
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- -- -- -- (.01)
--
Distributions from net realized gain -- -- (.17) (.20) --
--
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Total dividends and distributions
to shareholders -- -- (.17) (.20) (.01)
--
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Net asset value, end of period $ 20.96 $ 18.03 $ 19.35 $ 21.64 $ 20.25
$ 26.90
====================================================================================
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TOTAL RETURN, AT NET ASSET VALUE(4) 16.25% (6.82)% (9.91)% 7.79% (24.70)%
127.78%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 154,082 $ 139,823 $ 163,295 $ 199,697 $ 129,634
$ 103,352
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Average net assets (in thousands) $ 142,045 $ 148,378 $ 190,984 $ 194,184 $ 166,144
$ 50,989
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Ratios to average net assets:
Net investment income (loss) (0.15)% 0.07% (1.05)% (0.80)% (0.71)%
(0.18)%
Expenses 1.87% 1.76% 1.77% 1.59% 1.39%
1.50%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Portfolio turnover rate(6) 125.9% 160.3% 54.7% 41.0% 2.6%
11.2%
Average brokerage commission rate(7) $ 0.0030 -- -- -- --
--
<CAPTION>
CLASS A CLASS B CLASS
C
------------------------------------ --------------
- ---------------
PERIOD ENDED PERIOD
ENDED
SEPTEMBER 30, SEPTEMBER
30
1990 1989 1988(2) 1996(1)
1996(1)
- ----------------------------------------------------------------------------------------------------------------
- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $ 12.09 $ 10.63 $ 10.00 $ 17.43 $
17.43
- ----------------------------------------------------------------------------------------------------------------
- ----------
Income (loss) from investment operations:
Net investment income (loss) (.02) (.10) .14 (.01)
(.01)
Net realized and unrealized gain (loss) (.26) 1.69 .49 3.36
3.37
- ----------------------------------------------------------------------------------------------------------------
- ----------
Total income (loss) from investment
operations (.28) 1.59 .63 3.35
3.36
- ----------------------------------------------------------------------------------------------------------------
- ----------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.10) -- --
- --
Distributions from net realized gain -- (.03) -- --
- --
- ----------------------------------------------------------------------------------------------------------------
- ----------
Total dividends and distributions
to shareholders -- (.13) -- --
- --
- ----------------------------------------------------------------------------------------------------------------
- ----------
Net asset value, end of period $ 11.81 $ 12.09 $ 10.63 20.78
20.79
============================================================================
- ----------------------------------------------------------------------------------------------------------------
- ----------
TOTAL RETURN, AT NET ASSET VALUE(4) (2.32)% 15.21% 6.30% 19.22%
19.28%
- ----------------------------------------------------------------------------------------------------------------
- ----------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 16,217 $ 3,872 $ 1,921 $ 10,855 $
3,269
- ----------------------------------------------------------------------------------------------------------------
- ----------
Average net assets (in thousands) $ 8,716 $ 2,343 $ 1,394 $ 4,675 $
1,599
- ----------------------------------------------------------------------------------------------------------------
- ----------
Ratios to average net assets:
Net investment income (loss) (0.37)% (0.70)% 1.41%(5) (0.42)%(5)
(0.45)%(5)
Expenses 1.78% 2.40% 2.06%(5) 2.56%(5)
2.54%(5)
- ----------------------------------------------------------------------------------------------------------------
- ----------
Portfolio turnover rate(6) 16.6% 17.1% 1.7% 125.9%
125.9%
Average brokerage commission rate(7) -- -- -- $ 0.0030 $
0.0030
</TABLE>
1. For the period from November 1, 1995 (inception of offering) to
September 30, 1996.
2. 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.
3. Per share amounts calculated based on the weighted average number of
shares outstanding during the period.
4. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on
the last business day of the fiscal period. Sales charges are not
reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of investment
securities (excluding short-term securities) for the period ended
September 30, 1996 were $182,488,843 and $175,044,184, respectively.
7. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of
related shares purchased and sold.
Investment Objective and Policies
Objective. The Fund invests its assets to aggressively seek capital
appreciation.
Investment Policies and Strategies. The Fund seeks its investment
objective by emphasizing investment in common stocks or other
equity securities, including securities that are convertible into
common stock. The Fund may hold warrants and rights. These
securities may be traded on securities exchanges or in over-the-
counter markets.
Under normal market conditions, the Fund invests at least 65%
of its total assets in securities of emerging growth companies
located in the United States and at least three foreign countries.
The Fund may invest a substantial amount of its assets in foreign
securities, discussed below. There is also an explanation of
"emerging growth" companies below.
The Fund's portfolio managers currently use an investment
strategy in selecting foreign and domestic securities that examines
the effects of worldwide trends on the growth of various business
sectors. These trends, or "global themes," currently include
telecommunications expansion, emerging consumer markets,
infrastructure development, natural resource use and development,
corporate restructuring, capital market development in foreign
countries, healthcare expansion and global integration. These
trends, which may affect the growth of companies having businesses
in these sectors or that are affected by their development, may
suggest opportunities for investing the Fund's assets. The Manager
does not invest a fixed amount of the Fund's assets in any one
sector, and these themes and this approach may change over time.
When investing the Fund's assets, the Manager considers many
factors, including general economic conditions abroad relative to
those in the U.S. and the trends in foreign and domestic stock
markets. The Fund may try to hedge against losses in the value of
its portfolio of securities by using hedging strategies or
derivative investments, described below.
The Fund may also seek to take advantage of changes in the
business cycle by investing in companies that are sensitive to
those changes, if the Manager believes they present opportunities
for growth. For example, when the economy of a country is
expanding, companies in the financial services and consumer
products industries may be in a position to benefit from changes in
the business cycle and may present long-term growth opportunities.
When market or economic conditions are unstable, the Fund may
invest substantial amounts of its assets in debt securities, such
as money market instruments or government securities, for temporary
defensive purposes, as described below. The Fund's portfolio
managers may employ special investment techniques in selecting
securities for the Fund. These are also described below.
Additional information may be found about them under the same
headings in the Statement of Additional Information.
Because of the types of companies in which the Fund invests
and the investment techniques the Fund uses, some of which may be
speculative, the Fund is designed for investors who are investing
for the long-term and who are willing to accept greater risks of
loss of their capital in the hope of achieving greater capital
appreciation. Investing for capital appreciation entails the risk
of loss of all or part of your investment.
What Are "Emerging Growth" Companies? The Fund emphasizes
investments in companies that offer the potential for accelerated
earnings or revenues growth. These are "emerging growth companies,"
which tend to be newer, smaller companies that are developing new
products or services or that are expanding into new markets for
their products. However, emerging growth companies can be any size
and can be in any industry, and may include established companies
entering a new growth cycle. Emerging growth companies normally
retain a large part of their earnings for research, development and
investment in capital assets. Therefore, they tend not to emphasize
the payment of dividends.
Can the Fund's Investment Objective and Policies Change?
The Fund has an investment objective, described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and
strategies in carrying out those investment policies. The Fund's
investment policies and techniques are not "fundamental" unless
this Prospectus or the Statement of Additional Information says
that a particular policy is "fundamental." The Fund's investment
objective is a fundamental policy.
Fundamental policies are those that cannot be changed without
the approval of a "majority" of the Fund's outstanding voting
shares. The term "majority" is defined in the Investment Company
Act to be a particular percentage of outstanding voting shares (and
this term is explained in the Statement of Additional Information).
The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
Stock Investment Risks. Because the Fund may invest a
substantial portion of its assets in stocks, the value of the
Fund's portfolio will be affected by changes in the stock markets.
At times, the stock markets can be volatile, and stock prices can
change substantially. This market risk will affect the Fund's net
asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change
uniformly or at the same time, not all stock markets move in the
same direction at the same time, and other factors can affect a
particular stock's prices (for example, poor earnings reports by an
issuer, loss of major customers, major litigation against an
issuer, and changes in government regulations affecting an
industry). Not all of these factors can be predicted.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of the
stock of any one company and by not investing too great a
percentage of the Fund's assets in any one company. Expanding the
Fund's investment policies to emphasize investments in emerging
growth companies worldwide serves to diversify the Fund's
investments across a number of sectors. Because changes in market
prices can occur at any time, there is no assurance that the Fund
will achieve its investment objective, and when you redeem your
shares, they may be worth more or less than what you paid for them.
Foreign Securities. The Fund may invest a substantial amount
of its assets in foreign securities. The Fund may purchase
securities issued or guaranteed by foreign companies or foreign
governments, including foreign government agencies. The Fund may
buy securities of companies in any country, developed or
underdeveloped. Other than the requirement that the Fund will
normally invest at least 65% of its total assets in emerging growth
companies located in the U.S. and at least three foreign countries,
there is no limit on the amount of the Fund's assets that may be
invested in foreign securities. The Fund will hold foreign currency
only in connection with the purchase or sale of foreign securities.
Foreign securities have special risks. There are special
risks in investing in foreign securities. Because the Fund may buy
securities denominated in foreign currencies or traded primarily in
foreign markets, a change in the value of a foreign currency
against the U.S. dollar will result in a change in the U.S. dollar
value of securities denominated in that foreign currency.
Investments in securities of issuers in non-industrialized
countries generally involve more risk and may be considered to be
highly speculative. Foreign issuers are not subject to the same
accounting and disclosure requirements that U.S. companies are
subject to. The value of foreign investments may be affected by
other factors, including exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or
other political and economic factors.
In addition, it is generally more difficult to obtain court
judgments outside the U.S. if the Fund were to sue a foreign issuer
or broker. Additional costs may be incurred because foreign
brokerage commissions are generally higher than U.S. rates, and
there are additional custodial costs associated with holding
securities abroad. More information about the risks and potential
rewards of investing in foreign securities is contained in the
Statement of Additional Information.
Warrants and Rights. Warrants basically are options to
purchase stock at set prices that are valid for a limited period of
time. Rights are options to purchase securities, normally granted
to current stockholders by the issuer. The Fund may invest up to
5% of its net assets in warrants or rights. That 5% does not apply
to warrants or rights the Fund has acquired as part of units with
other securities or that were attached to other securities. No
more than 2% of the Fund's net assets may be invested in warrants
that are not listed on either the New York or American Stock
Exchanges. For further details about these investments, please
refer to "Warrants and Rights" in the Statement of Additional
Information.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund ordinarily does not
engage in short-term trading to try to achieve its objective. The
"Financial Highlights," above, show the Fund's portfolio turnover
rate during past fiscal years. High turnover and short-term
trading may cause the Fund to have relatively larger commission
expenses and transaction costs than funds that do not engage in
short-term trading. Additionally, high portfolio turnover may
affect the ability of the Fund to qualify as a "regulated
investment company" under the Internal Revenue Code for tax
deductions for dividends and capital gain distributions the Fund
pays to shareholders. The Fund qualified in its last fiscal year
and intends to do so in the coming year, although it reserves the
right not to qualify.
Other Investment Techniques and Strategies. The Fund may also use
the investment techniques and strategies described below. These
techniques involve certain risks. The Statement of Additional
Information contains more information about these practices,
including limitations on their use that are designed to reduce some
of the risks.
Borrowing for Leverage. The Fund may borrow up to 10% of
the value of its net assets from banks on an unsecured basis to buy
securities. This is a speculative investment method known as
"leverage." This technique may subject the Fund to greater risks
and costs than funds that do not borrow. These risks may include
the possibility that the Fund's net asset value per share will
fluctuate more than funds that don't borrow. Borrowing is subject
to regulatory limits under the Investment Company Act.
Investing in Small, Unseasoned Companies. The Fund may
invest in securities of small, unseasoned companies. These are
companies that have been in operation for less than three years,
counting the operations of any predecessors. Securities of these
companies may have limited liquidity (which means that the Fund may
have difficulty selling them at an acceptable price when it wants
to) and the prices of these securities may be volatile. The Fund
currently intends to invest no more than 10% of its total assets in
securities of small, unseasoned issuers, while reserving the right
to invest up to 25% of its total assets in these issuers.
Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, forward
contracts, and options on futures and broadly-based stock indices.
These are all referred to as "hedging instruments." The Fund does
not use hedging instruments for speculative purposes, and has
limits on the use of them, described below. The hedging
instruments the Fund may use are described below and in greater
detail in "Other Investment Techniques and Strategies" in the
Statement of Additional Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing
individual securities. It may do so to try to manage its exposure
to changing interest rates. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the
Fund's portfolio against price fluctuations. Other hedging
strategies, such as buying futures and call options, tend to
increase the Fund's exposure to the securities market.
Forward contracts are used to try to manage foreign currency
risks on the Fund's foreign investments. Foreign currency options
are used to try to protect against declines in the dollar value of
foreign securities the Fund owns, or to protect against an increase
in the dollar cost of buying foreign securities. Writing covered
call options may also provide income to the Fund for liquidity
purposes or to raise cash to distribute to shareholders.
Futures. The Fund may buy and sell futures contracts that
relate to broadly-based stock indices (these are referred to as
Stock Index Futures) or foreign currencies (these are called
Forward Contracts and are discussed below).
Put and Call Options. The Fund may buy and sell certain
kinds of put options (puts) and call options (calls). Calls the
Fund buys or sells must be listed on a securities or commodities
exchange, or quoted on the Automated Quotation System ("NASDAQ") of
The Nasdaq Stock Market, Inc., or traded in the over-the-counter
market. In the case of puts and calls on a foreign currency, they
must be traded on a securities or commodities exchange or in the
over-the-counter market, or must be quoted by recognized dealers in
those options. A call or put option may not be purchased by the
Fund if the value of all of the Fund's put and call options would
exceed 5% of the Fund's total assets.
The Fund may buy calls only on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures. The Fund may
buy calls to terminate its obligation on a call the Fund previously
wrote.
The Fund may write (that is, sell) covered call options. Each
call the Fund writes must be "covered" while it is outstanding.
That means the Fund must own the investment on which the call was
written while the call is outstanding or the Fund owns and
segregates liquid assets to satisfy its obligations if the call is
exercised. The Fund may write calls on Futures contracts it owns,
but these calls must be covered by securities or other liquid
assets the Fund owns and segregated to enable it to satisfy its
obligations if the call is exercised. After the Fund writes a
call, not more than 25% of the Fund's assets may be subject to
calls. When the Fund writes a call, it receives cash (called a
premium). The call gives the buyer the ability to buy the
investment on which the call was written from the Fund at the call
price during the period in which the call may be exercised. If the
value of the investment does not rise above the call price, it is
likely that the call will lapse without being exercised, while the
Fund keeps the cash premium (and the investment).
The Fund may purchase and sell put options. Buying a put on
an investment gives the Fund the right to sell the investment at a
set price to a seller of a put on that investment. The Fund can
buy only those puts that relate to securities that the Fund owns,
broadly-based stock indices, foreign currencies or Stock Index
Futures. The Fund can buy a put on a Stock Index Future whether or
not the Fund owns the particular Stock Index Future in its
portfolio.
The Fund may write puts on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures, but only if
those puts are covered by segregated liquid assets. The Fund will
not write a put if it will require more than 25% of the Fund's
total assets to be segregated.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency
for future delivery at a fixed price. The Fund uses them to try to
"lock in" the U.S. dollar price of a security denominated in a
foreign currency that the Fund has bought or sold, or to protect
against possible losses from changes in the relative values of the
U.S. dollar and foreign currency. The Fund limits its exposure in
foreign currency exchange contracts in a particular foreign
currency to the amount of its assets denominated in that currency
or in a closely-correlated currency.
Hedging instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different from what is required for normal portfolio management.
If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may reduce
the Fund's return. The Fund could also experience losses if the
prices of its futures and options positions were not correlated
with its other investments or if it could not close out a position
because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. If a covered call written by the
Fund is exercised on an investment that has increased in value, the
Fund will be required to sell the investment at the call price and
will not be able to realize any profit if the investment has
increased in value above the call price. In writing a put, there
is a risk that the Fund may be required to buy the underlying
security at a disadvantageous price. The use of forward contracts
may reduce the gain that would otherwise result from a change in
the relationship between the U.S. dollar and a foreign currency.
These risks are described in greater detail in the Statement of
Additional Information.
Derivative Investments. In general, a "derivative
investment" is a specially-designed investment. Its performance is
linked to the performance of another investment or security such as
an option, future, index or currency. The Fund can invest in a
number of different kinds of "derivative investments." They are
used in some cases for hedging purposes, and in others because they
offer the potential for increased income and principal value. In
the broadest sense, exchange-traded options and futures contracts
(please refer to "Hedging," above) may be considered "derivative"
investments.
There are special risks in investing in derivative
investments. The company issuing the investment might not pay the
amount due on the maturity of the instrument. Also, the underlying
investment or security on which the derivative is based might not
perform the way the Manager expected it to perform. These risks
mean that the Fund can lose part of the value of its investments,
which will affect the Fund's share price. Certain derivative
investments held by the Fund may trade in the over-the-counter
markets and may be "illiquid." If that is the case, the Fund's
investment in them will be limited, as discussed in "Illiquid and
Restricted Securities," below.
Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active
trading market, making it difficult to value them or dispose of
them promptly at an acceptable price. A restricted security is one
that has a contractual restriction on its resale or which cannot be
sold publicly until it is registered under the Securities Act of
1933.
The Fund will not invest more than 10% of its net assets in
illiquid or restricted securities (the Board may increase that
limit to 15%). The Fund's percentage limitation on these
investments does not apply to certain restricted securities that
are eligible for resale to qualified institutional purchasers. The
Manager monitors holdings of illiquid securities on an ongoing
basis and at times the Fund may be required to sell some holdings
to maintain adequate liquidity.
Loans of Portfolio Investments. To raise cash for liquidity
purposes, the Fund may lend its portfolio investments to brokers,
dealers and other financial institutions. The Fund must receive
collateral for such loans. As a fundamental policy, these loans are
limited to not more than 25% of the value of the Fund's total
assets and are subject to other conditions described in the
Statement of Additional Information. The Fund presently does not
intend to lend its portfolio securities, but if it does, the value
of securities loaned is not expected to exceed 5% of the value of
the Fund's total assets in the current year.
Repurchase Agreements. The Fund may enter into repurchase
agreements. They are used primarily for liquidity purposes. In a
repurchase transaction, the Fund buys a security and simultaneously
sells it to the vendor for delivery at a future date.
Repurchase agreements must be fully collateralized. However,
if the vendor fails to pay the resale price on the delivery date,
the Fund may incur costs in disposing of the collateral and may
experience losses if there is any delay in its ability to do so.
The Fund will not enter into a repurchase agreement that causes
more than 10% of its net assets to be subject to repurchase
agreements having a maturity beyond seven days. There is no limit
on the amount of the Fund's net assets that may be subject to
repurchase agreements of seven days or less.
Short Sales "Against-the-Box." In a short sale, the seller
does not own the security that is sold, but normally borrows the
security to fulfill its delivery obligation. The seller later buys
the security to repay the loan, in the expectation that the price
of the security will be lower when the purchase is made, resulting
in a gain. The Fund may not sell securities short except in
collateralized transactions referred to as short sales "against-
the-box," where the Fund owns an equivalent amount of the
securities sold short. This technique is primarily used for tax
purposes. No more than 15% of the Fund's net assets will be held
as collateral for such short sales at any one time.
Temporary Defensive Investments. When stock market prices
are falling, or in other unusual economic, political or business
circumstances, the Fund may invest all or a portion of its assets
in defensive securities. Securities selected for defensive purposes
may include debt securities. These may be rated or unrated bonds
and debentures, preferred stocks, cash or cash equivalents (such as
U.S. Treasury bills and other short-term obligations of the U.S.
Government, its agencies or instrumentalities) or commercial paper
rated "A-1" or better by Standard & Poor's Corporation or "P-1" or
better by Moody's Investors Service, Inc. Generally, short-term
debt securities (which are securities maturing in one year or less
from the date of purchase) will be emphasized for defensive
purposes.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these
fundamental policies, the Fund cannot do any of the following:
Invest in securities of any one issuer (other than the U.S.
Government or its agencies or instrumentalities) if immediately
thereafter more than 5% of the Fund's assets would be invested in
securities of that issuer.
With respect to 75% of its assets, invest in securities of
any one issuer (other than the U.S. Government or 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.
Borrow money in excess of 10% of the value of its net
assets.
Deviate from the percentage restrictions listed under
"Borrowing for Leverage", "Warrants and Rights," "Loans of
Portfolio Investments" and "Short Sales Against-the-Box" or from
the restrictions under "Foreign Securities" as to what foreign
securities may be purchased.
Unless the Prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1987 as a
Massachusetts business trust. The Fund is an open-end, diversified
management investment company, with an unlimited number of
authorized shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is
responsible, under Massachusetts law, for protecting the interests
of shareholders. The Trustees periodically meet throughout the year
to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and officers of the Fund and provides more information about them.
Although the Fund will not normally hold annual meetings of its
shareholders, it may hold shareholder meetings from time to time on
important matters, and shareholders have the right to call a
meeting to remove a Trustee or to take other action described in
the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has three
classes of shares, Class A, Class B and Class C. All three classes
invest in the same investment portfolio. Each class has its own
dividends and distributions and pays certain expenses which may be
different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally. Only
shares of a particular class vote as a class on matters that affect
that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the
Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an Investment Advisory Agreement
which states the Manager's responsibilities. The Agreement
establishes the fees paid by the Fund to the Manager, and describes
the expenses that the Fund pays to conduct its business.
The Manager has operated as an investment advisor since 1959.
The Manager (and its affiliates) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $62 billion as of December 31, 1996, and with more than 3
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
Portfolio Managers. The Portfolio Managers of the Fund are
George Evans and Jay W. Tracey, III. Mr. Evans and Mr. Tracey are
both a Vice President of the Manager. They have been the
individuals principally responsible for the day-to-day management
of the Fund's portfolio since December 4, 1995. During the past
five years, Mr. Evans has also served as an officer and portfolio
manager for other Oppenheimer funds and formerly served as an
international securities portfolio manager/analyst with Brown
Brothers Harriman & Co. Inc. In his most recent previous position,
Mr. Tracey was a managing director of Buckingham Capital
Management. Prior to initially joining the Manager, he was a
Senior Vice President of Founders Asset Management, Inc. (a mutual
fund advisor), prior to which he was a securities analyst and
portfolio manager for Berger Associates, Inc. (investment advisor).
During the past five years, Mr. Tracey has also served as an
officer and portfolio manager for other Oppenheimer funds.
Fees and Expenses. Under the investment advisory agreement,
the Fund pays the Manager the following annual fees, which decline
on additional assets as the Fund grows: 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 average
annual net assets in excess of $800 million. The Fund's management
fee for its last fiscal year ended September 30, 1996 was 0.83% of
average annual net assets for Class A shares and for Class B and
Class C shares (on an annualized basis).
The Fund pays expenses related to its daily operations, such
as custodian fees, Trustees' fees, transfer agency fees, legal fees
and auditing costs. Those expenses are paid out of the Fund's
assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are
indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreement and the other
expenses paid by the Fund is contained in the Statement of
Additional Information.
There is also information about the Fund's brokerage policies
and practices in "Brokerage Policies of the Fund" in the Statement
of Additional Information. That section discusses how brokers and
dealers are selected for the Fund's portfolio transactions. When
deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves
as investment advisor.
The Distributor. The Fund's shares are sold through
dealers, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of the other Oppenheimer funds and is
sub-distributor for funds managed by a subsidiary of the Manager.
The Transfer Agent. The Fund's transfer agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder serving agent for the other
Oppenheimer funds. Shareholders should direct inquiries about
their accounts to the Transfer Agent at the address and toll-free
number shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class will usually be
different as a result of the different kinds of expenses each class
bears. These returns measure the performance of a hypothetical
account in the Fund over various periods, and do not show the
performance of each shareholder's account (which will vary if any
dividends are received in cash or shares are sold or purchased).
This performance information may be useful to help you see how your
investment has done and to compare it to other funds or to a market
index, as we have done below.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. This performance
data is described below, but more detailed information about how
total returns are calculated is contained in the Statement of
Additional Information, which also contains information about other
ways to measure and compare the Fund's performance. The Fund's
investment performance will vary over time, depending on market
conditions, the composition of the portfolio and expenses and which
class of shares you purchase.
Total Returns. There are different types of total returns
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However, total
returns may also be quoted "at net asset value," without
considering the effect of the sales charge, and those returns would
be less if sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its fiscal year ended September 30,
1996, followed by a graphical comparison of the Fund's performance
to an appropriate broad-based market index.
Management's Discussion of Performance. During the Fund's
fiscal year ended September 30, 1996, the U.S. stock market
outperformed the major foreign stock markets, and in the U.S. stock
market, exchange-listed issues performed better than NASDAQ-listed
issues overall. The Manager utilized the following global theme
areas in selecting stocks for the Fund's portfolio: technology,
banking, insurance and financial services and the emerging consumer
market sector. Securities within these sectors were selected that
might capitalize on the growing need for efficiency-advancing
technology and in the anticipated increase in spending power of
consumers in developing countries, and a growing demand for natural
resources.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
Class A, Class B and Class C shares of the Fund held at September
30, 1996. In the case of Class A shares, performance is measured
from the inception of the Class on December 30, 1987. In the case
of Class B and Class C shares, performance is measured since the
inception of both Classes on November 1, 1995.
Because of the Fund's global investment focus, the Fund's
performance is compared to the performance of the Morgan Stanley
Capital International World Index, an unmanaged index of issuers
listed on the stock exchanges of 20 foreign countries and the
United States. It is widely recognized as a measure of global
stock market performance. Index performance reflects the
reinvestment of dividends but does not consider the effect of
capital gains or transaction costs, and none of the data below
shows the effect of taxes. Also, the Fund's performance reflects
the effect of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not
limited to the securities in any one index and that index data does
not reflect any assessment of the risk of the investments included
in the index.
Comparison of a Change in Value of $10,000 Hypothetical Investments
in:
Oppenheimer Global Emerging Growth Fund (Class A) and Morgan
Stanley Capital International World Index
[GRAPH]
Average Annual Total Returns of Class A Shares of the Fund at
9/30/96
1-Year 5-Year Life1
- ---------------------------------------------
9.57% (5.68)% 8.45%
[GRAPH]
Cumulative Total Return of Class B Shares of the Fund at 9/30/96
Life (2)
----------------------
14.22%
[GRAPH]
Cumulative Total Return of Class C Shares of the Fund at 9/30/96
Life (3)
----------------------
18.28%
______________
Total returns and the ending account value in the graph show change
in share value and include reinvestment of all dividends and
capital gains distributions.
1Class A returns are shown net of the applicable 5.75% maximum
initial sales charge. The inception date of the Fund (Class A
shares) was 12/30/87. The performance information in the graph for
the Morgan Stanley Capital International World Index begins on
12/31/87.
2Class B shares of the Fund were first publicly offered on 11/1/95.
The Life-of-Class return is shown net of the applicable 5%
contingent deferred sales charge. The performance information in
the graph for the Morgan Stanley Capital International World Index
begins on 10/1/95.
3Class C shares of the Fund were first publicly offered on 11/1/95.
The Life-of-Class return is shown net of the applicable 1%
contingent deferred sales charge.
Past performance is not predicative of future performance.
Graphs may not be drawn to same scale.
A B O U T Y O U R A C C O U N T
How to Buy Shares
Classes of Shares. The Fund offers investors three different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices.
Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by "Retirement Plans," as defined in "Class
A Contingent Deferred Sales Charge" on page ___. If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 18 months of buying them, you
may pay a contingent deferred sales charge. Sales charge rates are
described in "Buying Class A Shares," below.
Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
six years of buying them, you will normally pay a contingent
deferred sales charge. That sales charge varies depending on how
long you own your shares, as described in "Buying Class B Shares"
below.
Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%, as discussed in "Buying Class C
Shares" below.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over
time and you plan to purchase additional shares, you should re-
evaluate those factors to see if you should consider another class
of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We used the sales charge rates that apply to each class, and
considered the effect of the annual asset-based sales charge on
Class B and Class C expenses (which, like all expenses, will affect
your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the investment
each year. Of course, the actual performance of your investment
cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class
of shares, and which class you invest in. The factors discussed
below are not intended to be investment advice or recommendations,
because each investor's financial considerations are different.
The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one
class of shares and not a combination of shares of different
classes.
How Long Do You Expect to Hold Your Investment? The Fund is
designed for long-term investment. While future financial needs
cannot be predicted with certainty, knowing how long you expect to
hold your investment will assist you in selecting the appropriate
class of shares. The effect of the sales charge over time, using
our assumptions, will generally depend on the amount invested.
Because of the effect of class-based expenses, your choice will
also depend on how much you plan to invest. For example, the
reduced sales charges available for larger purchases of Class A
shares may, over time, offset the effect of paying an initial sales
charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account) compared to
the effect over time of higher class-based expenses on Class B or
Class C shares, for which no initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than 7 years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short-term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-
based sales charge on Class C shares will have a greater economic
impact on your account over the longer term than the reduced front-
end sales charge available for larger purchases of Class A shares.
For example, Class A might be more advantageous than Class C (as
well as Class B) for investments of more than $100,000 expected to
be held for 5 or 6 years (or more). For investments over $250,000
expected to be held 4 to 6 years (or more), Class A shares may
become more advantageous than Class C (and B). If investing
$500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how
long you intend to hold your shares. For that reason, the
Distributor normally will not accept purchase orders of $500,000 or
more of Class B shares or $1 million or more of Class C shares from
a single investor.
Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be
an appropriate consideration, if you plan to invest less than
$100,000. If you plan to invest more than $100,000 over the long
term, Class A shares will likely be more advantageous than Class B
shares or C shares, as discussed above, because of the effect of
the expected lower expenses for Class A shares and the reduced
initial sales charge available for larger investments in Class A
shares under the Fund's Right of Accumulation.
Of course, these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumptions stated above and
therefore, you should analyze your options carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of
the contingent deferred sales charge) for Class B or Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares to buy.
For example, share certificates are not available for Class B or
Class C shares, and if you are considering using your shares as
collateral for a loan, that may be a factor to consider.
Additionally, the dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne
solely by those classes, such as the asset-based sales charge to
which Class B and Class C shares are subject, as described below
and in the Statement of Additional Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class rather than another class. It
is important that investors understand that the purpose of the
contingent deferred sales charges and asset-based sales charges for
Class B and Class C shares are the same as the purpose of the
front-end sales charge on sales of Class A shares: that is, to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans.
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25.
Subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing plans and 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer
Agent), or by reinvesting distributions from unit investment trusts
that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, or directly through the
Distributor, or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase (and redemption) orders.
When you buy shares, be sure to specify Class A, Class B or Class
C shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, it is recommended that you discuss your
investment first with a financial advisor, to be sure it is
appropriate for you.
Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing
House (ACH) member. You can then transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions.
Shares are purchased for your account on AccountLink on the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are on the
Application and in the Statement of Additional Information.
At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver, Colorado. In most cases, to
enable you to receive that day's offering price, the Distributor or
its designated agent must receive your order by the time of day The
New York Stock Exchange closes, which is normally 4:00 P.M., but
may be earlier on some days (all references to time in this
Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day the New York
Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the close of The New York Stock Exchange on a regular
business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which
is normally 5:00 P.M. The Distributor, in its sole discretion, may
reject any purchase order for the Fund's shares.
Special Sales Charge Arrangements for Certain Persons. The
Appendix to this Prospectus sets forth conditions for the waiver
of, or exemption from, sales charges or the special sales charge
rates that apply to purchases of shares of the Fund (including
purchases by exchange) by a person who was a shareholder of one of
the Former Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
<TABLE>
<CAPTION>
Front-End Front-End
Sales Charge Sales Charge Commission
As Percentage As Percentage As Percentage
of Offering of Amount of Offering
Amount of Purchase Price Invested Price
<S> <C> <C> <C>
- ----------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
- ----------------------------------------------------------------------
$25,000 or more 5.50% 5.82% 4.75%
but less than $50,000
- ----------------------------------------------------------------------
$50,000 or more 4.75% 4.99% 4.00%
but less than $100,000
- ----------------------------------------------------------------------
$100,000 or more 3.75% 3.90% 3.00%
but less than $250,000
- ----------------------------------------------------------------------
$250,000 or more 2.50% 2.56% 2.00%
but less than $500,000
- ----------------------------------------------------------------------
$500,000 or more 2.00% 2.04% 1.60%
but less than $1 million
</TABLE>
The Distributor reserves the right to reallow the entire
commission to dealers. If that occurs, the dealer may be
considered an "underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more;
Purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more;
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that: (1) buys
shares costing $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more; or
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment advisor that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (i) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on
those purchases that were not previously subject to a front-end
sales charge and dealer commission. No sales commission will be
paid to the dealer, broker or financial institution on sales of
Class A shares purchased with the redemption proceeds of shares of
a mutual fund offered as an investment option in a Retirement Plan
in which Oppenheimer funds are also offered as investment options
under a special arrangement with the Distributor if the purchase
occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.
If you redeem any of those shares within 18 months of the end
of the calendar month of their purchase, a contingent deferred
sales charge (called the "Class A contingent deferred sales
charge") will be deducted from the redemption proceeds. That sales
charge may be equal to 1.0% of the lesser of (1) the aggregate net
asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital gain distributions), or (2)
the original offering price (which is the original net asset value)
of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the
commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class
A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's exchange privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase
of the exchanged shares, the sales charge will apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares of the Fund at reduced sales charge
rates in one or more of the following ways:
Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and
your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also include Class A and Class B shares of
other Oppenheimer funds you previously purchased subject to an
initial or contingent deferred sales charge to reduce the sales
charge rate for current purchases of Class A shares, provided that
you still hold your investment in one of the Oppenheimer funds. The
value of those shares will be based on the greater of the amount
you paid for the shares or their current value (at offering price).
The Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine the reduced sales charge rate for the
Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers or registered investment advisors that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or advisor
for the purchase or sale of Fund);
(1) investment advisors and financial planners who
charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients,
(2) Retirement Plans and deferred compensation plans and trusts
used to fund those Plans (including, for example, plans qualified
or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares).
directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
advisor (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest
for Value Advisors) whose Class B or Class C shares of a Former
Quest for Value Fund were exchanged for Class A shares of that Fund
due to the termination of the Class B and C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the
former Quest for Value Advisors to purchase shares of any of the
Former Quest for Value Funds at net asset value, with such shares
to be held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the prior 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver.
shares purchased with the proceeds of maturing principal
of units of any Qualified Unit Investment Liquid Trust Series;
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time a purchase order is placed for Class A
shares that would otherwise be subject to the Class A contingent
deferred sales charge, the dealer agrees in writing to accept the
dealer's portion of the commission payable on the sale in
installments of 1/18th of the commission per month ( and no further
commission will be payable if the shares are redeemed within 18
months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program.
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA.
Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal
service and maintenance of shareholder accounts that hold Class A
shares of the Fund. Reimbursement is made quarterly at an annual
rate that may not exceed 0.25% of the average annual net assets of
Class A shares of the Fund. The Distributor uses all of those fees
to compensate dealers, brokers, banks and other financial
institutions quarterly for providing personal service and
maintenance of accounts of their customers that hold Class A shares
and to reimburse itself for its other expenditures under the Plan
(if the Fund's Board of Trustees authorizes such reimbursements,
which it has not yet done) for its other expenditures under the
Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the service
providers or their customers. The payments under the Plan increase
the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B
shares are redeemed within 6 years of their purchase, a contingent
deferred sales charge will be deducted from the redemption
proceeds. That sales charge will not apply to shares purchased by
the reinvestment of dividends or capital gains distributions. The
contingent deferred sales charge will be based on the lesser of the
net asset value of the shares at the time of redemption or the
original offering price (which is the original net asset value).
The contingent deferred sales charge is not imposed on the amount
of your account value represented by the increase in net asset
value over the initial purchase price. The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of on Redemptions in that Year
Month In Which Purchase (As % of Amount Subject
Order Was Accepted to Charge)
0 - 1 5.0%
- ------------------------------------------------------------------
1 - 2 4.0%
- ------------------------------------------------------------------
2 - 3 3.0%
- ------------------------------------------------------------------
3 - 4 3.0%
- -------------------------------------------------------------------
4 - 5 2.0%
- -------------------------------------------------------------------
5 - 6 1.0%
- -------------------------------------------------------------------
6 and following None
- -------------------------------------------------------------------
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B, and Class C
Shares" in the Statement of Additional Information.
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original purchase price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C Shares. The
Fund has adopted Distribution and Service Plans for Class B and
Class C shares to compensate the Distributor for its costs in
distributing Class B and Class C shares and servicing accounts.
Under the Plans, the Fund pays the Distributor an annual
"asset-based sales charge" of 0.75% per year on Class B shares that
are outstanding for six years or less and on Class C shares. The
Distributor also receives a service fee of 0.25% per year under
each Plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays the
0.25% service fees to dealers in advance for the first year after
Class B or Class C shares have been sold by the dealer and retains
the service fee paid by the Fund in that year. After the shares
have been held for a year, the Distributor pays the service fees to
dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares. Those
payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the service
fee, the total amount paid by the Distributor to the dealer at the
time of sale of Class B shares is therefore 4.00% of the purchase
price. The Distributor retains the Class B asset-based sales
charge.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the service
fee, the total amount paid by the Distributor to the dealer at the
time of sale of Class C shares is therefore 1.00% of the purchase
price. The Distributor plans to pay the asset-based sales charge as
an ongoing commission to the dealer on Class C shares that have
been outstanding for a year or more.
The Distributor's actual expenses in selling Class B and C
shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and C
shares. Therefore, those expenses may be carried over and paid in
future years. At September 30, 1996, the end of the Class B and
Class C Plan year, the Distributor had incurred unreimbursed
expenses under the Plan of $284,933 for Class B shares and $48,241
for Class C shares, equal to 2.65% and 1.49% of the Fund's assets
represented by Class B shares and Class C shares, respectively, on
that date, which have been carried over into the present Plan year.
If the Fund terminates either Plan, the Board of Directors may
allow the Fund to continue payments of the asset-based sales charge
to the Distributor for distributing shares before the Plan was
terminated.
Waivers of Class B and Class C Sales Charges. The Class B and Class
C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to
Class B and Class C shares redeemed in certain circumstances as
described below. The reasons for this policy are in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers for Redemptions in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases, if the Transfer Agent
is notified that these conditions apply to the redemption:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary (the
death or disability must have occurred after the account was
established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving shareholder
including a trustee of a "grantor" trust or revocable living trust
for which the trustee is also the sole beneficiary (the death or
disability must have occurred after the account was established,
and for disability you must provide evidence of a determination of
disability by the Social Security Administration);
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below; or
distributions from OppenheimerFunds prototype 401(k) plans
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies
or separate accounts of insurance companies having an agreement
with the Manager or the Distributor for that purpose; and
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account
to your account at your bank or other financial institution to
enable you to send money electronically between those accounts to
perform a number of types of account transactions. These include
purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please refer to the Application for details or
call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application
you use to buy shares, or on your dealer's settlement instructions
if you buy your shares through your dealer. After your account is
established, you can request AccountLink privileges by sending
signature-guaranteed instructions to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer
representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-
guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds exchange
privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer fund account
you have already established by calling the special PhoneLink
number. Please refer to "How to Exchange Shares," below, for
details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer fund account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is worth
$5,000 or more, you can establish an Automatic Withdrawal Plan to
receive payments of at least $50 on a monthly, quarterly, semi-
annual or annual basis. Automatic withdrawal Plans are not
advisable for Class B and Class C shares subject to a contingent
deferred sales charge ("CDSC") unless waivers of the CDSC apply.
The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of
withdrawals of up to $1,500 per month by telephone. You should
consult the Application and Statement of Additional Information for
more details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to exchange automatically an amount you establish in advance
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer funds account is
$25. These exchanges are subject to the terms of the exchange
privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies only to Class A shares that you purchased
subject to an initial sales charge and to Class A or Class B shares
on which you paid a contingent deferred sales charge when you
redeemed them. It does not apply to Class C shares. You must be
sure to ask the Distributor for this privilege when you send your
payment. Please consult the Statement of Additional Information for
more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment,
including SARSEP-IRAs
Pension and Profit-Sharing Plans for self-employed persons
and other employers
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares.
Your shares will be sold at the next net asset value calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares, in
writing or by telephone. You can also set up an Automatic
Withdrawal Plan to redeem shares on a regular basis, as described
above. If you have questions about any of these procedures, and
especially if you are redeeming shares in a special situation, such
as due to the death of the owner, or from a retirement plan, please
call the Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing on behalf of
a corporation, partnership or other business, or as a fiduciary,
you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. You may not redeem shares held in an
OppenheimerFunds retirement plan or under a share certificate by
telephone.
To redeem shares through a service representative, call
1-800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink. There are no
dollar limits on telephone redemption proceeds sent to a bank
account designated when you establish AccountLink. Normally the ACH
wire to your bank is initiated on the business day after the
redemption. You do not receive dividends on the proceeds of the
shares you redeemed while they are waiting to be wired.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please call your dealer for more information about this
procedure. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc. offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at one of the addresses listed in "How to
Sell Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-
8457 or by using PhoneLink for automated exchanges, by calling 1-
800-533-3310. Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. The
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to seven days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the disposition of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about taxes affecting exchanges, please refer to
"How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange, which is
normally 4:00 P.M., but may be earlier on some days, on each day
the Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the
dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner
of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither it nor the Fund will be liable for losses or
expenses arising out of telephone instructions reasonably believed
to be genuine. If you are unable to reach the Transfer Agent
during periods of unusual market activity, you may not be able to
complete a telephone transaction and should consider placing your
order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio
fluctuate and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker/dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind," which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from dividends, distributions and redemption
proceeds (including exchanges) if you fail to furnish the Fund a
certified Social Security or Employer Identification Number when
you sign your application, or if you violate Internal Revenue
Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How to Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B and Class C shares from net investment income on an annual
basis and normally pays those dividends to shareholders in
December, but the Board of Trustees can change that date. The
Board may also cause the Fund to declare dividends after the close
of the Fund's fiscal year (which ends September 30th). Because the
Fund does not have an objective of seeking current income, the
amounts of dividends it pays, if any, will likely be small.
Dividends paid with respect to Class A shares will generally be
higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher
than for Class A shares. There is no fixed dividend rate and there
can be no assurance as to the payment of any dividends.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains and the Fund
may make supplemental distributions of capital gains following the
end of its fiscal year. Short-term capital gains are treated as
dividends for tax purposes. Long-term capital gains will be
separately identified in the tax information the Fund sends you
after the end of the year. There can be no assurance that the Fund
will pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you have held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
When more than 50% of its assets are invested in foreign
securities at the end of any fiscal year, the Fund may elect that
Section 853 of the Internal Revenue Code will apply to it to permit
shareholders to take a credit (or a deduction) on their own federal
income tax returns for foreign income taxes paid by the Fund. The
Statement of Additional Information contains further discussion of
this tax provision.
"Buying a Dividend". When a fund goes ex-dividend, its
share price is reduced by the amount of the distribution. If you
buy shares on or just before the ex-dividend date, or just before
the Fund declares a capital gains distribution, you will pay the
full price for the shares and then receive a portion of the price
back as a taxable dividend or capital gain.
Taxes on Transactions. Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking, a capital gain or loss is the difference
between the price you paid for the shares and the price you
received when you sold them.
Returns of Capital. In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax advisor about the effect of an
investment in the Fund on your particular tax situation.
APPENDIX
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for
Class A, Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those
shareholders of (i) Quest for Value Fund, Inc., Quest for Value
Growth and Income Fund, Quest for Value Opportunity Fund, Quest for
Value Small Capitalization Fund and Quest for Value Global Equity
Fund, Inc. on November 24, 1995, when OppenheimerFunds, Inc. became
the investment advisor to those funds, and (ii) Quest for Value
U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for Value Global Income Fund, Quest for Value
New York Tax-Exempt Fund, Quest for Value National Tax-Exempt Fund
and Quest for Value California Tax-Exempt Fund when those funds
merged into various Oppenheimer funds on November 24, 1995. The
funds listed above are referred to in this Prospectus as the
"Former Quest for Value Funds." The waivers of initial and
contingent deferred sales charges described in this Appendix apply
to shares of the Fund (i) acquired by such shareholder pursuant to
an exchange of shares of one of the Oppenheimer funds that was one
of the Former Quest for Value Funds or (ii) received by such
shareholder pursuant to the merger of any of the Former Quest for
Value Funds into an Oppenheimer fund on November 24, 1995.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain
Former Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
<TABLE>
<CAPTION>
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages 26 to 28 of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rates in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund issued in the reorganization on November
24, 1995 for shares of Quest For Value Investment Quality Income
Fund that were subject to a contingent deferred sales charge, will
be subject to a contingent deferred sales charge at the following
rates: if they are redeemed within 18 months of the end of the
calendar month in which they were purchased, at a rate equal to
1.0% if the redemption occurs within 12 months of their initial
purchase and at a rate of 0.50 of 1.0% if the redemption occurs in
the subsequent six months. This contingent deferred sales charge
rate also applies to shares of the Fund purchased by exchange of
shares of other Oppenheimer funds that were acquired as a result of
the merger of Former Quest for Value Funds into those Oppenheimer
funds, and which shares were subject to a Class A contingent
deferred sales charge prior to November 24, 1995. Class A shares
of any of the Former Quest Fund for Value Funds purchased without
an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are
not subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in
Certain Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the
following investors who were shareholders of any Former Quest for
Value Fund:
Investors who purchased Class A shares from a dealer that is
or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest For Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March
6, 1995
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest for
Value Fund or into which such fund merged, if those shares were
purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After
March 6, 1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will
be waived for redemptions of Class A, B or C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund
or by exchange from an Oppenheimer fund that was a Former Quest For
Value Fund or into which such fund merged, if those shares were
purchased on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from
Individual Retirement Accounts under Section 408(a) of the Internal
Revenue Code or retirement plans under Section 401(a), 401(k),
403(b) and 457 of the Code, if those distributions are made either
(a) to an individual participant as a result of separation from
service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than
from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value
of the account; and (5) liquidation of a shareholder's account if
the aggregate net asset value of shares held in the account is less
than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales
charge paid on the redemption of any Class A, B or C shares of the
Fund described in this section if within 90 days after that
redemption, the proceeds are invested in the same Class of shares
in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and (i) the shares held by those
plans were exchanged for Class A shares, or (ii) the plan assets
were transferred to an OppenheimerFunds prototype 401(k) plan,
shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
APPENDIX B TO PROSPECTUS OF
OPPENHEIMER GLOBAL EMERGING GROWTH FUND
Graphic material included in Prospectus of Oppenheimer Global
Emerging Growth Fund: "Comparison of Total Return of Oppenheimer
Global Emerging Growth Fund with the Morgan Stanley World Index -
Change in Value of a $10,000 Hypothetical Investment."
Linear graphs will be included in the Prospectus of
Oppenheimer Global Emerging Growth Fund (the "Fund") depicting the
initial account value and subsequent account value of a
hypothetical $10,000 investment in each class of shares of the
Fund. In the case of Class A shares that graph will cover the
period from 12/30/87 (inception of the Fund) through 9/30/96. In
the case of Class B shares that graph will cover the period from
11/1/95 (inception of the class) through 9/30/96. In the case of
Class C shares that graph will cover the period from 11/1/95
(inception of the class) through 9/30/96. The graphs will compare
such values with a hypothetical $10,000 investment over the same
time periods in the Morgan Stanley World Index. Set forth below
are the relevant data points that will appear on each linear graph.
Additional information with respect to the foregoing, including a
description of the Morgan Stanley World Index, is set forth in the
Prospectus under "Performance of the Fund - Comparing the Fund's
Performance to the Market."
Oppenheimer Morgan
Fiscal Year Global Emerging Stanley
(Period Ended) Growth Fund: World Index
Class A
12/30/87 $ 9,425 $10,000
09/30/88 $10,019 $11,124
09/30/89 $11,542 $13,994
09/30/90 $11,275 $11,039
09/30/91 $25,681 $13,829
09/30/92 $19,340 $13,770
09/30/93 $20,846 $16,647
09/30/94 $18,780 $17,991
09/30/95 $17,499 $20,684
09/30/96 $20,343 $23,621
Class B
11/01/95 $10,000 $10,000
09/30/96 $11,422 $11,600
Class C
11/01/95 $10,000 $10,000
09/30/96 $11,828 $11,600
<PAGE>
Oppenheimer Global Emerging Growth Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information and, if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc., OppenheimerFunds Distributor,
Inc. or any affiliate thereof. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any state to any person to whom it is
unlawful to make such an offer in such state.
PR0750.001.0197 Printed on recycled paper
<PAGE>
Oppenheimer Global Emerging Growth Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated January 13, 1997
This Statement of Additional Information of Oppenheimer Global
Emerging Growth Fund is not a Prospectus. This document contains
additional information about the Fund and supplements information
in the Prospectus dated January 13, 1997. It should be read
together with the Prospectus, which may be obtained by writing to
the Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box
5270, Denver, Colorado 80217 or by calling the Transfer Agent at
the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . . . . . . . . . .
Investment Policies and Strategies. . . . . . . . . . . . . . . . . .
Other Investment Techniques and Strategies. . . . . . . . . . . . . .
Other Investment Restrictions . . . . . . . . . . . . . . . . . . . .
How the Fund is Managed. . . . . . . . . . . . . . . . . . . . . . . . . .
Organization and History. . . . . . . . . . . . . . . . . . . . . . .
Trustees and Officers of the Fund . . . . . . . . . . . . . . . . . .
The Manager and Its Affiliates. . . . . . . . . . . . . . . . . . . .
Brokerage Policies of the Fund . . . . . . . . . . . . . . . . . . . . . .
Performance of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution and Service Plans . . . . . . . . . . . . . . . . . . . . . .
About Your Account
How To Buy Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How To Sell Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How To Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes . . . . . . . . . . . . . . . . . . . .
Additional Information About the Fund. . . . . . . . . . . . . . . . . . .
Financial Information About the Fund
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix A: Industry Classifications . . . . . . . . . . . . . . . . . .A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund may invest, as well as the
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meaning as those terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment advisor, OppenheimerFunds, Inc. (the "Manager"),
evaluates the merits of securities primarily through the exercise
of its own investment analysis. This may include, among other
things, evaluation of the history of the issuer's operations,
prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product
developments and developments by competitors, the effect of general
market and economic conditions on the issuer's business, and
legislative proposals or new laws that might affect the issuer.
Current income is not a consideration in the selection of portfolio
securities for the Fund, whether for appreciation, defensive or
liquidity purposes. The fact that a security has a low yield or
does not pay current income will not be an adverse factor in
selecting securities to try to achieve the Fund's investment
objective of capital appreciation unless the Manager believes that
the lack of yield might adversely affect appreciation
possibilities.
The portion of the Fund's assets allocated to securities
selected for capital appreciation and the investment techniques
used will depend upon the judgment of the Fund's Manager as to the
future movement of the equity securities markets. If the Manager
believes that economic conditions favor a rising market, the Fund
will emphasize securities and investment methods selected for high
capital growth. If the Manager believes that a market decline is
likely, defensive securities and investment methods may be
emphasized (See "Temporary Defensive Investments," below).
Emerging Growth Companies. The Manager uses a global "theme
oriented approach" in managing the Fund. This "theme oriented
approach" seeks to capitalize on important global trends that the
Manager believes offers the most promising areas for long-term
growth. Examples currently include, among others,
telecommunications, developing capital markets, emerging consumer
markets, the environment and biotechnology. These sectors may
change from time to time as the Manager reviews important global
trends. The Manager also considers performance and growth rates of
foreign companies relative to domestic companies in selecting
investments for the Fund's portfolio.
Warrants and Rights. The prices of warrants do not
necessarily move in a manner parallel to the prices of the
underlying securities. The price the Fund pays for a warrant will
be lost unless the warrant is exercised prior to its expiration.
Rights are similar to warrants, but normally have a short duration
and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.
Investing in Small, Unseasoned Companies. The securities of
small, unseasoned companies may have a limited trading market,
which may adversely affect the Fund's ability to sell them and can
reduce the price the Fund might be able to obtain for them. If
other investment companies and investors trade the same securities
when the Fund attempts to dispose of its holdings, the Fund may
receive lower prices than might otherwise be obtained, because of
the thinner market for such securities.
Foreign Securities. "Foreign securities" include equity and
debt securities of companies organized under the laws of countries
other than the United States and debt securities of foreign
governments that are traded on foreign securities exchanges or in
the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American Depository Receipts or
that are listed on a U.S. securities exchange or traded in the U.S.
over-the-counter markets are not considered "foreign securities"
for the purpose of the Fund's investment allocations, because they
are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held
abroad.
Investing in foreign securities 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. If the Fund's portfolio securities are held abroad, the
sub-custodians or depositaries holding them must be approved by the
Fund's Board of Trustees to the extent that approval is required
under applicable rules of the Securities and Exchange Commission.
Risks of Foreign Investing. 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 on 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 rates than in the U.S.;
increased risks of delays in settlement of portfolio transactions
or loss of certificates for portfolio securities; possibilities in
some countries of expropriation, confiscatory taxation, political,
financial or social instability or adverse diplomatic developments;
and unfavorable differences between the U.S. economy and foreign
economies. In the past, U.S. Government policies have discouraged
certain investments abroad by U.S. investors, through taxation or
other restrictions, and it is possible that such restrictions could
be re-imposed.
Temporary Defensive Investments. When the equity markets in
general are declining, the Fund may commit an increasing portion of
its assets to defensive securities. These may include the types of
securities described in the Prospectus. When investing for
defensive purposes, the Fund will normally emphasize investment in
short-term debt securities (that is, securities maturing in one
year or less from the date of purchase), since those types of
securities are generally more liquid and usually may be disposed of
quickly without significant gains or losses so that the Manager may
have liquid assets when it wishes to make investments in securities
for appreciation possibilities.
Other Investment Techniques and Strategies
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Trustees of the Fund or by the Manager under Board-
approved guidelines. Those guidelines take into account the trading
activity for such securities and the availability of reliable
pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's
holding of that security may be deemed to be illiquid.
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
be at least equal to the value of the loaned securities and must
consist of cash, bank letters of credit, securities of the U.S.
Government or its agencies or instrumentalities or other cash
equivalents in which the Fund is permitted to invest. To be
acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of
the letter. Such terms and the issuing bank must be satisfactory
to the Fund. In a securities lending transaction, the Fund
receives from the borrower an amount equal to the interest paid or
the dividends declared on the loaned securities during the term of
the loan as well as the interest on the collateral securities less
any finders', administrative or other fees the Fund pays in
connection with the loan. In connection with securities lending,
the Fund might experience risks or delay in receiving additional
collateral, or risks of delay in recovery of securities, or loss of
rights in the collateral should the borrower fail financially. The
terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
Repurchase Agreements. The Fund may acquire securities
subject to repurchase agreements for liquidity purposes to meet
anticipated redemptions, or pending the investment of the proceeds
from sales of Fund shares, or pending the settlement of purchases
of portfolio securities.
In a repurchase transaction, the Fund acquires a security
from, and simultaneously resells it to, an approved vendor (a U.S.
commercial bank, the U.S. branch of a foreign bank or a broker-
dealer which has been designated a primary dealer in government
securities, which must meet the credit requirements set by the
Fund's Board of Trustees from time to time), for delivery on an
agreed upon future date. The resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate
effective for the period during which the repurchase agreement is
in effect. The majority of these transactions run from day to day,
and delivery pursuant to 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
collateral's value 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.
When-Issued and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or
sell such securities on a "delayed delivery" basis. Although the
Fund will enter into such transactions for the purpose of acquiring
securities for its portfolio or for delivery pursuant to options
contracts it has entered into, the Fund may dispose of a commitment
prior to settlement. "When-issued" or "delayed delivery" refers to
securities whose terms and indenture are available and for which a
market exists, but which are not available for immediate delivery.
When such transactions are negotiated, the price (which is
generally expressed in yield terms) is fixed at the time the
commitment is made, but delivery and payment for the securities
take place at a later date. The Fund does not intend to make such
purchases for speculative purposes. The commitment to purchase a
security for which payment will be made on a future date may be
deemed a separate security and involve a risk of loss if the value
of the security declines prior to the settlement date. During the
period between commitment by the Fund and settlement (generally
within two months but not to exceed 120 days), no payment is made
for the securities purchased by the purchaser, and no interest
accrues to the purchaser from the transaction. Such securities are
subject to market fluctuation; the value at delivery may be less
than the purchase price. The Fund's Custodian will identify and
segregate liquid assets of the Fund having a value at least equal
to the value of purchase commitments until payment is made.
The Fund will engage in when-issued transactions in order to
secure what is considered to be an advantageous price and yield at
the time of entering into the obligation. When the Fund engages in
when-issued or delayed delivery transaction, it relies on the buyer
or seller, as the case may be, to consummate the transaction.
Failure of the buyer or seller to do so may result in the Fund
losing the opportunity to obtain a price and yield considered to be
advantageous. At the time the Fund makes a commitment to purchase
or sell a security on a when-issued or forward commitment basis, it
records the transaction and reflects the value of the security
purchased, or if sale, the proceeds to be received, in determining
its net asset value. If the Fund chooses to (i) dispose of the
right to acquire a when-issued security prior to its acquisition or
(ii) dispose of its right to deliver or receive against a forward
commitment, it may incur a gain or loss.
To the extent the Fund engages in when-issued and delayed
delivery transactions, it will do so for the purpose of acquiring
or selling securities consistent with its investment objective and
policies and not for the purposes of investment leverage. The Fund
enters into such transactions only with the intention of actually
receiving a delivering the securities, although (as noted above),
when-issued securities and forward commitments may be sold prior to
settlement date. In addition, changes in interest rates before
settlement in a direction other than that expected by the Manager
will affect the value of such securities and may cause a loss to
the Fund.
When-issued transactions and forward commitments can be used
by the Fund as a defensive technique to use against anticipated
changes in interest rates and prices. For instance, in periods of
rising interest rates and falling prices, the Fund might sell
securities in its portfolio on a forward commitment basis to
attempt to limit its exposure to anticipated falling prices. In
periods of falling interest rates and rising prices, the Fund might
sell portfolio securities and purchase the same or similar
securities on a when-issued or forward commitment basis, thereby
obtaining the benefit of currently higher cash yields.
Hedging With Options and Futures Contracts. The Fund may
employ one or more types of Hedging Instruments for the purposes
described in the Prospectus. When hedging to attempt to protect
against declines in the market value of the Fund's portfolio, or to
permit the Fund to retain unrealized gains in the value of
portfolio securities which have appreciated, or to facilitate
selling securities for investment reasons, the Fund may: (i) sell
Stock Index Futures, (ii) buy puts, or (iii) write covered calls on
securities held by it or on Stock Index Futures (as described in
the Prospectus). When hedging to establish a position in the
equity securities markets as a temporary substitute for the
purchase of individual equity securities the Fund may: (i) buy
Stock Index Futures, or (ii) buy calls on Stock Index Futures or
securities. Normally, the Fund would then purchase the equity
securities and terminate the hedging portion.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's investment activities in
the underlying cash market. In the future, the Fund may employ
hedging instruments and strategies that are not presently
contemplated but which may be subsequently developed, to the extent
such investment methods are consistent with the Fund's investment
objective, and are legally permissible and disclosed in the
Prospectus. Additional information about the hedging instruments
the Fund may use is provided below.
Stock Index Futures and Financial Futures. The Fund may
buy and sell futures contracts relating to a securities index
("Financial Futures"), including "Stock Index Futures," a type of
Financial Future for which the index used as the basis for trading
is a broadly-based stock index (including stocks that are not
limited to issuers in a particular industry or group of
industries). A stock index assigns relative values to the common
stocks included in the index and fluctuates with the changes in the
market value of those stocks. Stock indices cannot be purchased or
sold directly. Financial Futures are contracts based on the future
value of the basket of securities that comprise the underlying
index. The contracts obligate the seller to deliver, and the
purchaser to take, cash to settle the futures transaction or to
enter into an offsetting contract. No physical delivery of the
securities underlying the index is made on settling the futures
obligation. No monetary amount is paid or received by the Fund on
the purchase or sale of a Financial Future or Stock Index Future.
Upon entering into a Futures transaction, the Fund will be
required to deposit an initial margin payment, in cash or U.S.
Treasury bills, with the futures commission merchant (the "futures
broker"). Initial margin payments will be deposited with the
Fund's Custodian in an account registered in the futures broker's
name; however, the futures broker can gain access to that account
only under certain specified conditions. As the Future is marked
to market (that is, its value on the Fund's books is changed) to
reflect changes in its market value, subsequent margin payments,
called variation margin, will be paid to or by the futures broker
on a daily basis.
At any time prior to the expiration of the Future, the Fund
may elect to close out its position by taking an opposite position,
at which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
Any gain or loss is then realized by the Fund on the Future for tax
purposes. Although Financial Futures and Stock Index Futures by
their terms call for settlement by the delivery of cash, and
Interest Rate Futures call for the delivery of a specific debt
security, in most cases the settlement obligation is fulfilled
without such delivery by entering into an offsetting transaction.
All Futures transactions are effected through a clearinghouse
associated with the exchange on which the contracts are traded.
Writing Covered Calls. As described in the Prospectus, the
Fund may write covered calls. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying
investment) regardless of market price changes during the call
period. To terminate its obligation on a call it has written, the
Fund may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the
premium received on the call the Fund has written is more or less
than the price of the call the Fund subsequently purchased. A
profit may also be realized if the call lapses unexercised because
the Fund retains the underlying investment and the premium
received. Those profits are considered short-term capital gains
for Federal income tax purposes, as are premiums on lapsed calls,
and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to
the lack of a market, it would have to hold the callable investment
until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by segregating
in escrow an equivalent dollar value of deliverable securities or
liquid assets. The Fund will segregate additional liquid assets if
the value of the escrowed assets drops below 100% of the current
value of the Future. In no circumstances would an exercise notice
as to a Future put the Fund in a short futures position.
The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options that are traded
on exchanges, or as to other acceptable escrow securities, so that
no margin will be required from the Fund for such option
transactions. OCC will release the securities covering a call on
the expiration of the call or when the Fund enters into a closing
purchase transaction. Call writing affects the Fund's turnover
rate and the brokerage commissions it pays. Commissions, normally
higher than on general securities transactions, are payable on
writing or purchasing a call.
Writing Put Options. A put option on securities gives the
purchaser the right to sell, and the writer the obligation to buy,
the underlying investment at the exercise price during the option
period. 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. The premium the Fund receives from
writing a put option represents a profit, as long as the price of
the underlying investment remains above the exercise price.
However, the Fund has also assumed the obligation during the option
period to buy the underlying investment from the buyer of the put
at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the
Fund (as the writer of the put) realizes a gain in the amount of
the premium less transaction costs. If the put is exercised, the
Fund must fulfill its obligation to purchase the underlying
investment at the exercise price, which will usually exceed the
market value of the investment at that time. In that case, the
Fund may incur a loss, equal to the sum of the sale price of the
underlying investment and the premium received minus the sum of the
exercise price and any transaction costs incurred.
When writing put options on securities or on foreign
currencies, to secure its obligation to pay for the underlying
security, the Fund will deposit in escrow liquid assets with a
value equal to or greater than the exercise price of the underlying
securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those
assets. As long as the obligation of the Fund as the put writer
continues, it may be assigned an exercise notice by the exchange or
broker-dealer through whom such option was sold, requiring the Fund
to exchange currency at the specified rate of exchange or to take
delivery of the underlying security against payment of the exercise
price. The Fund may have no control over when it may be required
to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its
obligation as the writer of the put. 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 previously 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 thereof is
secured by the deposited assets, or to utilize the proceeds from
the sale of such assets for other investments by the Fund. 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 above for writing
covered calls, any and all such profits described herein from
writing puts are considered short-term capital gains for Federal
tax purposes, and when distributed by the Fund, are taxable as
ordinary income.
The Trustees have adopted a non-fundamental policy that the
Fund may write covered call options or write covered put options
with respect to not more than 5% of the value of its net assets.
Similarly, the Fund may only purchase call options and put options
with a value of up to 5% of its net assets.
Purchasing Puts and Calls. The Fund may purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When
the Fund purchases a call (other than in a closing purchase
transaction), it pays a premium and, except as to calls on stock
indices, has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the
call period at a fixed exercise price. In purchasing a call, the
Fund benefits only if the call is sold at a profit or if, during
the call period, the market price of the underlying investment is
above the sum of the exercise price, transaction costs, and the
premium paid, and the call is exercised. If the call is not
exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment. When
the Fund purchases a call on a stock index, it pays a premium, but
settlement is in cash rather than by delivery of the underlying
investment to the Fund.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise
price to a seller of a corresponding put. If the market price of
the underlying investment is equal to or above the exercise price
and as a result the put is not exercised or resold, the put will
become worthless at its expiration and the Fund will lose the
premium payment and the right to sell the underlying investment.
However, the put may be sold prior to expiration (whether or not at
a profit).
Puts and calls on broadly-based stock indices or Stock Index
Futures are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price
movements in the stock market generally) rather than on price
movements of individual securities or futures contracts. When the
Fund buys a call on a stock index or Stock Index Future, it pays a
premium. If the Fund exercises the call during the call period, a
seller of a corresponding call on the same investment will pay the
Fund an amount of cash to settle the call if the closing level of
the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to
the difference between the closing price of the call and the
exercise price of the call times a specified multiple (the
"multiplier") which determines the total dollar value for each
point of difference. When the Fund buys a put on a stock index or
Stock Index Future, it pays a premium and has the right during the
put period to require a seller of a corresponding put, upon the
Fund's exercise of its put, to deliver cash to the Fund to settle
the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price
of the put. That cash payment is determined by the multiplier, in
the same manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock
Index Future not owned by it, the put protects the Fund to the
extent that the index moves in a similar pattern to the securities
the Fund holds. The Fund can either resell the put or, in the case
of a put on a Stock Index Future, buy the underlying investment and
sell it at the exercise price. The resale price of the put will
vary inversely with the price of the underlying investment. If the
market price of the underlying investment is above the exercise
price, and as a result the put is not exercised, the put will
become worthless on the expiration date. In the event of a decline
in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its
loss on its portfolio securities.
The Fund's option activities may affect its portfolio turnover
rate and brokerage commissions. The exercise of calls written by
the Fund may cause the Fund to sell related portfolio securities,
thus increasing its turnover rate. The exercise by the Fund of
puts on securities will cause the sale of underlying investments,
increasing portfolio turnover. Although the decision whether to
exercise a put it holds is within the Fund's control, holding a put
might cause the Fund to sell the related investments for reasons
that would not exist in the absence of the put. The Fund will pay
a brokerage commission each time it buys or sells a call, put or an
underlying investment in connection with the exercise of a put or
call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market
value of the underlying investments and, consequently, put and call
options offer large amounts of leverage. The leverage offered by
trading in options could result in the Fund's net asset value being
more sensitive to changes in the value of the underlying
investments.
Options on Foreign Currencies. The Fund intends to write
and purchase puts and calls on foreign currencies that are traded
on a securities or commodities exchange or over-the-counter markets
or are quoted by major recognized dealers in such options. It does
so to protect against declines in the dollar value of foreign
securities and against increases in the dollar cost of foreign
securities to be acquired. If 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 transactions costs.
A call written on a foreign currency by the Fund is covered if
the Fund owns the underlying foreign currency covered by the call
or has an absolute and immediate right to acquire that foreign
currency without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign currency held in its
portfolio. A call may be written by the Fund on a foreign currency
to provide a hedge against a decline due to an expected adverse
change in the exchange rate in the U.S. dollar value of a security
which the Fund owns or has the right to acquire and which is
denominated in the currency underlying the option. This is a
cross-hedging strategy. In such circumstances, the Fund
collateralizes the option by maintaining in a segregated account
with the Fund's custodian, cash or U.S. Government Securities in an
amount not less than the value of the underlying foreign currency
in U.S. dollars marked-to-market daily.
Forward Contracts. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number
of days from the date of the contract agreed upon by the parties),
at a price set at the time the contract is entered into. These
contracts are generally traded in the interbank market conducted
directly between currency traders (usually large commercial banks)
and their customers. Some forward contracts are standardized
foreign currency futures contracts that are traded on exchanges and
are subject to procedures and regulations applicable to other
Futures.
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. To attempt to limit its exposure to loss under forward
contracts in a particular foreign currency, the Fund's assets
denominated in that currency or denominated in a closely-
denominated foreign currency will at least equal the difference
between the market value and the cost of the forward contracts in
that particular foreign currency.
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 (this is called a "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 (a "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 each
foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in that foreign currency,
or when the Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a
fixed dollar amount. In this situation the Fund may, in the
alternative, also enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount where the Fund
believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which portfolio
securities of the Fund are denominated (this is known as a "cross-
hedge"). The Fund will not enter into a "cross-hedge" unless it is
denominated in a currency or currencies that the Manager believes
will have price movements that tend to correlate closely with the
currency in which the investment being hedged is denominated. 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-hedge.
The Fund will not enter into Forward Contracts or maintain a
net exposure in such contracts to the extent that the Fund would be
obligated to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities denominated in that
currency or another currency that is also the subject of the hedge,
unless such net exposure is covered by segregated liquid assets.
The Fund's custodian will place cash or U.S. Government securities
or other liquid high-quality debt securities in a separate account
having a value equal to the net exposure. If the value of the
securities placed in the separate account declines, additional cash
or securities will be placed in the account on a daily basis so
that the account value will equal the Fund's net exposure. As an
alternative, the Fund may purchase a call option permitting the
Fund to purchase the amount of foreign currency being hedged by a
forward sale contract at a price no higher than the Forward
Contract price, 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.
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.
Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of futures and options thereon as established by
the Commodities Futures Trading Commission ("CFTC"). In
particular, the Fund is excluded from registration as a "commodity
pool operator" if it complies with the requirements of Rule 4.5
adopted by the CFTC. The Rule does not limit the percentage of the
Fund's assets that may be used for Futures margin and related
options premium for a bona fide hedging position. However, under
the Rule the Fund must limit its aggregate initial futures margin
and related option premiums to no more than 5% of the Fund's total
assets for hedging strategies that are not considered bona fide
hedging strategies under the Rule. Under the Rule, the Fund also
must use short Futures and options on Futures positions solely for
"bona fide hedging purposes" within the meaning and intent of the
applicable provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of
options that may be written or held by a single investor or group
of investors acting in concert, regardless of whether the options
were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different
exchanges or through one or more brokers. Thus the number of
options which the Fund may write or hold may be affected by options
written or held by other entities, including other investment
companies having the same adviser as the Fund (or an adviser that
is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Stock Index Future, the Fund will maintain, in a
segregated account or accounts with its custodian, cash or readily-
marketable, short-term (maturing in one year or less) debt
instruments in an amount equal to the market value of the
securities underlying such Future, less the margin deposit
applicable to it.
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 Options Clearing Corporation ("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 option the Fund writes an OTC option, it will treat
as illiquid (for purposes of the limit on its assets that may be
invested in the illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it. The Securities
and Exchange Commission ("SEC") is evaluating whether OTC options
should be considered liquid securities, and the procedure described
above could be affected by the outcome of that evaluation.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise by the Fund of puts on
securities will cause the sale of related investments, 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 a
put or call, sells a cal, or buys or sells 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 such 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 options could
result in the Fund's net asset value being more sensitive to
changes in the value of the underlying investments.
Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without
having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the
shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (i) selling investments, including Stock Index
Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (ii)
purchasing options which expire in less than three months; (iii)
effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv)
exercising puts or calls held by the Fund for less than three
months; or (v) writing calls on investments held less than three
months.
Certain foreign currency exchange contracts ("Forward
Contracts") in which the Fund may invest are treated as "section
1256 contracts." Gains or losses relating to section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this marked-
to-market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the character and timing of gains (or losses) recognized
by the Fund on straddle positions. Generally, a loss sustained on
the disposition of a position 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 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 the disposition also are
treated as an ordinary gain or loss. Currency gains and losses are
offset against market gains and losses on each trade before
determining a net "section 988" gain or loss under the Internal
Revenue Code, which may ultimately increase or decrease the amount
of the Fund's investment company income available for distribution
to its shareholders.
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 (i) selling Stock Index
Futures or (ii) purchasing puts on stock indices or Stock Index
Futures to attempt to protect against declines in the value of the
Fund's equity securities. The risk is that the prices of Stock
Index Futures will correlate imperfectly with the behavior of the
cash (i.e., market value) prices of the Fund's equity securities.
The ordinary spreads between prices in the cash and futures markets
are subject to distortions, due to differences in the natures of
those markets. First, all participants in the futures markets are
subject to margin deposit and maintenance requirements. Rather
than meeting additional margin deposit requirements, investors may
close out futures contracts through offsetting transactions which
could distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depends on
participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to
make or take delivery, liquidity in the futures markets could be
reduced, thus producing distortion. Third, from the point of view
of speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the equity securities being hedged and
movements in the price of the hedging instruments, the Fund may use
hedging instruments in a greater dollar amount than the dollar
amount of equity securities being hedged if the historical
volatility of the prices of the equity securities being hedged is
more than the historical volatility of the applicable index. It is
also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity
securities held in the Fund's portfolio may decline. If that
occurred, the Fund would lose money on the hedging instruments and
also experience a decline in value in its portfolio securities.
However, while this could occur for a very brief period or to a
very small degree, over time the value of a diversified portfolio
of equity securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position
in the equities markets as a temporary substitute for the purchase
of individual equity securities (long hedging) by buying Stock
Index Futures and/or calls on such Futures, on securities or on
stock indices, it is possible that the market may decline. If the
Fund then concludes not to invest in equity securities at that time
because of concerns as to a possible further market decline or for
other reasons, the Fund will realize a loss on the hedging
instruments that is not offset by a reduction in the price of the
equity securities purchased.
Short Sales Against-the-Box. In this type of short sale,
while the short position is open, the Fund must own an equal amount
of the securities sold short, or by virtue of ownership of other
securities have the right, without payment of further
consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer, for
Federal income tax purposes, recognition of gain or loss on the
sale of securities "in the box" until the short position is closed
out. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and recognize a
capital gain. No more than 15% of the Fund's net assets may be
held as collateral for these short sales.
Other Investment Restrictions
The Fund's most significant investment restrictions are set
forth in the Prospectus. There are additional investment
restrictions that the Fund must follow that are also fundamental
policies. Fundamental policies and the Fund's investment objective
cannot be changed without the vote of a "majority" of the Fund's
outstanding voting securities. Under the Investment Company Act,
such "majority" vote is defined as the vote of the holders of the
lesser of: (1) 67% or more of the shares present or represented by
proxy at a shareholder meeting, if the holders of more than 50% of
the outstanding shares are present, or (2) more than 50% of the
outstanding shares of the Fund.
Under these additional restrictions, the Fund cannot:
invest in companies for the primary purpose of acquiring
control or management thereof;
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;
invest in real estate or in interests in real estate, but
may purchase readily marketable securities of companies
holding real estate or interests therein;
purchase securities on margin, 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;
mortgage or pledge any of its assets; however, this does not
prohibit the escrow arrangements contemplated in the use of
hedging instruments;
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;
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;
invest in other open-end investment companies except in a
merger, consolidation, reorganization or acquisition of
assets.
invest in oil or gas exploration or development programs or
in mineral-related programs or leases; or
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.
For purposes of the Fund's policy not to concentrate its
investments, the Fund has adopted the industry classifications set
forth in the Appendix to this Statement of Additional Information.
How the Fund is Managed
Organization and History. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when
required to do so by the Investment Company Act or other applicable
law, or when a shareholder meeting is called by the Trustees or
upon proper request of the shareholders. Shareholders have the
right, upon the declaration in writing or vote of two-thirds of the
outstanding shares of the Fund, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the record holders of at least
10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund
valued at $25,000 or more or holding at least 1% of the Fund's
outstanding shares, whichever is less, stating that they wish to
communicate with other shareholders to request a meeting to remove
a Trustee, the Trustees will then either make the Fund's
shareholder list available to the applicants or mail their
communication to all other shareholders at the applicant's expense,
or the Trustees may take such other action as set forth under
Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer
of shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of
its property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a business trust (such as the Fund) to be held
personally liable as a "partner" under certain circumstances, the
risk of a Fund shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
obligations described above. Any person doing business with the
Fund, and any shareholder of the Fund, agrees under the Fund's
Declaration of Trust to look solely to the assets of the Fund for
satisfaction of any claim or demand which may arise out of any
dealings with the Fund, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers
and their principal occupations and business affiliations during
the past five years are listed below. The address of each Trustee
and officer is Two World Trade Center, New York, New York 10048-
0203, unless another address is listed below. All of the Trustees
are also trustees or directors of Oppenheimer Money Market Fund,
Inc., Oppenheimer Fund, Oppenheimer International Growth Fund,
Oppenheimer Global Fund, Oppenheimer Growth Fund, Oppenheimer
Discovery Fund, Oppenheimer Capital Appreciation Fund, Oppenheimer
Global Growth & Income Fund, Oppenheimer Gold & Special Minerals
Fund, Oppenheimer Municipal Bond Fund, Oppenheimer New York
Municipal Fund, Oppenheimer California Municipal Fund, Oppenheimer
Multi-State Municipal Trust, Oppenheimer Asset Allocation Fund,
Oppenheimer Enterprise Fund, Oppenheimer U.S. Government Trust,
Oppenheimer Series Fund, Inc., Oppenheimer Multi-Sector Income
Trust and Oppenheimer World Bond Fund (the "New York-based
Oppenheimer funds") except that Ms. Macaskill is not a director of
Oppenheimer Money Market Fund, Inc. Ms. Macaskill and Messrs.
Bishop, Bowen, Donohue, Farrar and Zack respectively hold the same
offices with the other New York-based Oppenheimer funds as with the
Fund. As of December 31, 1996, the Trustees and officers of the
Fund as a group owned less than 1% of the outstanding Class A
shares of the Fund. The statement does not include ownership of
shares held of record by an employee benefit plan for employees of
the Manager (one of the Trustees of the Fund listed below, Ms.
Macaskill, and one of the officers, Mr. Donohue, are trustees of
that plan), other than the shares beneficially owned under that
plan by officers of the Fund listed below.
Leon Levy, Chairman of the Board of Trustees; Age 71
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee*; Age 63
Vice Chairman of OppenheimerFunds, Inc. (the "Manager");
formerly he held the following positions: Vice President and
Counsel of Oppenheimer Acquisition Corp. ("OAC"), the Manager's
parent holding company; Executive Vice President & General Counsel
and a director of the Manager and OppenheimerFunds Distributor,
Inc. (the "Distributor"), Vice President and a director of
HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment
adviser subsidiaries of the Manager, a director of Shareholder
Financial Services, Inc. ("SFSI") and Shareholder Services, Inc.
("SSI"), transfer agent subsidiaries of the Manager and an officer
of other Oppenheimer funds.
Benjamin Lipstein, Trustee; Age 73
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex
Publishers, Inc (Publishers of Psychology Today and Mother Earth
News) and of Spy Magazine, L.P.
Bridget A. Macaskill, President and Trustee*; Age 48
President, Chief Executive Officer and a Director of the Manager;
Chairman and a director of SSI, and SFSI; President and a director
of OAC, HarbourView and Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; a director of
Oppenheimer Real Asset Management, Inc.; formerly an Executive
Vice President of the Manager.
Elizabeth B. Moynihan, Trustee; Age 67
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), National Building Museum; a member of the
Trustees Council, Preservation League of New York State, and of the
Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age 69
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company),
Kemper Corporation (insurance and financial services company),
Fidelity Life Association (mutual life insurance company); formerly
President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research) and a director of
Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
Edward V. Regan, Trustee; Age 66
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New
York; Senior Fellow of Jerome Levy Economics Institute, Bard
College; a member of the U.S. Competitiveness Policy Council; a
director of GranCare, Inc. (health care provider); formerly New
York State Comptroller and trustee, New York State and Local
Retirement Fund.
Russell S. Reynolds Jr., Trustee; Age 65
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directorship Inc. (corporate governance
consulting); a director of Professional Staff Limited (U.K.); a
trustee of Mystic Seaport Museum, International House and Greenwich
Historical Society.
Donald W. Spiro, Vice Chairman and Trustee*; Age 71
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Trustee; Age 84
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton Yeutter, Trustee; Age 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel, Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar,
Inc. (machinery), ConAgra, Inc. (food and agricultural products),
Farmers Insurance Company (insurance), FMC Corp. (chemicals and
machinery), IMC Global Inc. (chemicals and animal feed) and Texas
Instruments, Inc. (electronics); formerly (in descending
chronological order) Counsellor to the President (Bush) for
Domestic Policy, Chairman of the Republican National Committee,
Secretary of the U.S. Department of Agriculture, and U.S. Trade
Representative.
Andrew J. Donohue, Secretary; Age 46
Executive Vice President and General Counsel of the Manager and
the Distributor; President and a director of Centennial;
Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI, and Oppenheimer Partnership Holdings, Inc.;
President and director of Oppenheimer Real Asset Management, Inc.;
General Counsel of OAC; Executive Vice President, Chief Legal
Officer and a director of MultiSource Services, Inc. (a broker-
dealer); an officer of other Oppenheimer funds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor; Partner in, Kraft & McManimon (a law firm); an officer
of First Investors Corporation (a broker-dealer) and First
Investors Management Company, Inc. (broker-dealer and investment
adviser); director and an officer of First Investors Family of
Funds and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age 60
6803 South Tucson Way, Englewood, CO 80012
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Senior Vice President, Treasurer and Secretary of SSI;
Vice President, Treasurer and Secretary of SFSI; Treasurer of OAC;
Vice President and Treasurer of Oppenheimer Real Asset Management,
Inc.; Chief Executive Officer, Treasurer and a director of
MultiSource Services, Inc. (a broker-dealer); an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age 38
6803 South Tucson Way, Englewood, CO 80012
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and
Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott T. Farrar, Assistant Treasurer; Age 31
6803 South Tucson Way, Englewood, CO 80012
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; formerly a Fund Controller for the
Manager.
Robert G. Zack, Assistant Secretary; Age 48
Senior Vice President and Associate General Counsel of the Manager,
Assistant Secretary of SSI, SFSI; an officer of other Oppenheimer
funds.
Jay W. Tracy III, Vice President and Portfolio Manager; Age 43
Vice President of the Manager; Vice President and Portfolio Manager
of other Oppenheimer funds; from February 1994 through September
1994, he was a Managing Director of Buckingham Capital Management,
prior to which he was Portfolio Manager and Vice President of the
Fund and other Oppenheimer funds and a Vice President of the
Manager. Before that, he was Senior Vice President of Founders
Asset Management, Inc. (a mutual fund adviser), prior to which he
was a securities analyst and portfolio manager for Berger
Associates, Inc. (investment adviser).
George Evans, Vice President and Portfolio Manager; Age 37
Vice President of the Manager; formerly an International Equities
Portfolio Manager/Analyst with Brown Brothers Harriman & Co.
Remuneration of Trustees. The officers of the Fund and
certain Trustees of the Fund (Ms. Macaskill and Messrs. Galli and
Spiro; Ms. Macaskill is also an officer) who are affiliated with
the Manager receive no salary or fees from the Fund. The remaining
Trustees of the Fund received the compensation shown below from the
Fund. The compensation from the Fund was paid during the fiscal
year ended September 30, 1996. The compensation from all of the
New York-based Oppenheimer funds includes the Fund and is
compensation received as a director, trustee or member of a
committee of the Board of those funds during the calendar year
1996.
<TABLE>
<CAPTION>
Retirement
Benefits Total Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From Fund Fund Expenses Oppenheimer funds1
<S> <C> <C> <C>
Leon Levy $4,170 $6,651 $152,750
Chairman and Trustee
Benjamin Lipstein $2,549 $4,066 $ 91,350
Study Committee Chairman,
Audit Committee Member
and Trustee2
Elizabeth B. Moynihan $2,549 $4,066 $ 91,350
Study Committee
Member and Trustee
Kenneth A. Randall $2,318 $3,698 $ 83,450
Audit Committee
Chairman and Trustee
Edward V. Regan $2,035 $3,245 $ 78,150
Proxy Committee Chairman,
Audit Committee
Member and Trustee
Russell S. Reynolds, Jr. $1,541 $2,457 $ 58,800
Trustee
Pauline Trigere $1,541 $2,457 $ 55,300
Trustee
Clayton K. Yeutter $1,541 $2,457 $ 58,800
Proxy Committee Member
and Trustee
</TABLE>
______________________
1For the 1996 calendar year.
2Committee position held during a portion of the period shown.
The Fund has adopted a retirement plan that provides for payment to
a retired Trustee of up to 80% of the average compensation paid
during that Trustee's five years of service in which the highest
compensation was received. A Trustee must serve in that capacity
for any of the New York-based Oppenheimer funds for at least 15
years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the
Trustee's future compensation and length of service, the amount of
those benefits cannot be determined at this time, nor can the Fund
estimate the number of years of credited service that will be used
to determine those benefits.
Major Shareholders. As of December 31, 1996, no person
owned of record or was known by the Fund to own beneficially 5% or
more of the Fund's outstanding Class A, Class B or Class C shares,
except Merrill Lynch Pierce Fenner & Smith Inc., 4800 Deer Lake
Drive East, 3rd Floor, Jacksonville, Florida 32246-6484, which was
the record owner of 11,484.000 Class C shares (equal to 6.31% of
the Class C shares then outstanding).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager's directors and officers, some of
whom may also serve as officers of the Fund, and three of whom (Ms.
Macaskill and Messrs. Galli and Spiro) serve as Trustees of the
Fund.
The Manager and the Fund have a Code of Ethics. It is
designed to detect and prevent improper personal trading by certain
employees, including Portfolio Managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
The Investment Advisory Agreement. A management fee is
payable monthly to the Manager under the terms of the investment
advisory agreement between the Fund and the Manager and is computed
on the aggregate net assets of the Fund as of the close of business
each day. The investment advisory agreement between the Manager
and the Fund requires the Manager, at its expense, to provide the
Fund with adequate office space, facilities and equipment, and to
provide and supervise the activities of all administrative and
clerical personnel required to provide effective corporate
administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the
preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public
sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the
advisory agreement or by the Distributor under the General
Distributor's Agreement are paid by the Fund. The advisory
agreement lists examples of expenses paid by the Fund, the major
categories of which relate to interest, taxes, brokerage
commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses,
including litigation costs. For the Fund's fiscal years ended
September 30, 1994, 1995 and 1996, the management fees paid by the
Fund to the Manager were $1,555,894, $1,238,423 and $1,233,678,
respectively.
The Investment Advisory Agreement contains no expense
limitation. However, because of state regulations limiting fund
expenses that previously applied, the Manager had voluntarily
undertaken that the Fund's total expenses in any fiscal year
(including the investment advisory fee but exclusive of taxes,
interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses, including litigation) would
not exceed the most stringent state regulatory limitation
applicable to the Fund. Due to changes in federal securities laws,
such state regulations no longer apply and the Manger's undertaking
is therefore inapplicable and has been withdrawn. During the
Fund's last fiscal year, the Fund's expenses did not exceed the
most srtringent state regulatory limit and the voluntary
undertaking was not invoked.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or reckless disregard for its obligations and duties
under the advisory agreement, the Manager is not liable for any
loss resulting from a good faith error or omission on its part with
respect to any of its duties thereunder. The advisory 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 one or more companies for which it may act as
investment adviser or general distributor. If the Manager shall no
longer act as investment adviser to the Fund, the right of the Fund
to use the name "Oppenheimer" as part of its name may be withdrawn.
The Distributor. Under the General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's Class
A, Class B and Class C shares but is not obligated to sell a
specific number of shares. Expenses normally attributable to sales
(other than those paid under Class A, Class B and Class C
Distribution and Service Plans, including advertising and the cost
of printing and mailing prospectuses) other than those furnished to
existing shareholders), are borne by the Distributor. During the
Fund's fiscal years ended September 30, 1994, 1995, and 1996, the
aggregate amount of sales charges on sales of the Fund's Class A
shares was $1,033,737, $398,139 and $547,341, respectively, of
which the Distributor retained in the aggregate amounts of
$262,284, $114,956 and $159,815, in those respective years.
During the Fund's fiscal year ended September 30, 1996, the
contingent deferred sales charges collected on the Fund's Class B
and Class C shares totaled $8,208 and $1,057, respectively, all of
which the Distributor retained. For additional information about
distribution of the Fund's shares and expenses connected with such
activities, please refer to "Distribution and Service Plans,"
below.
The Transfer Agent. The Fund's Transfer Agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for the other
Oppenheimer funds.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreements. One of
the duties of the Manager under the advisory agreement is to
arrange the portfolio transactions for the Fund. The advisory
agreement contains provisions relating to the employment of broker-
dealers ("brokers") to effect the Fund's portfolio transactions.
In doing so, the Manager is authorized by the advisory agreement to
employ broker-dealers, including "affiliated" brokers, as that term
is defined in the Investment Company Act, as may, in its best
judgment based on all relevant factors, implement the policy of the
Fund to obtain, at reasonable expense, the "best execution" (prompt
and reliable execution at the most favorable price obtainable) of
such transactions. The Manager need not seek competitive
commission bidding or base its selection on "posted" rates, but is
expected to beware of the current sales rates of eligible brokers
to minimize the commissions paid to the extent consistent with the
provisions of the advisory agreement and the interests and policies
of the Fund as established by its Board of Trustees. Purchases of
securities from underwriters include a commission of concession
paid by the issuer to the underwriter and purchases from dealers
include a spread between the bid and asked price.
Under the advisory agreement, the Manager is authorized to
select brokers that provide brokerage and/or research services for
the Fund and/or the other accounts over which the Manager or its
affiliates have investment discretion. The commissions paid to
such brokers may be higher than another qualified broker would have
charged if a good faith determination is made by the Manager and
the commission is fair and reasonable in relation to the services
provided. Subject to the foregoing considerations, the Manager may
also consider sales of shares of the Fund and other investment
companies managed by the Manager or its affiliates as a factor in
the selection of brokers for the Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the advisory agreement, the procedures
and rules described above, allocations of brokerage are generally
made by the Manager's portfolio traders based upon new
recommendations from the Manager's portfolio managers. In certain
instances, portfolio managers may directly place trades and
allocate brokerage, also subject to the provisions of the advisory
agreement and the procedures and rules described above. In either
case, brokerage is allocated under the supervision of the Manager's
executive officers and the Manager. Transactions in securities
other than those for which an exchange is the primary market are
generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities or for certain fixed-income agency transactions in the
secondary market and are otherwise paid only if it appears likely
that a better price or execution can be obtained. When the Fund
engages in an option transaction, ordinarily the same broker will
be used for the purchase or sale of the option and any transaction
in the securities to which the option relates. When possible,
concurrent orders to purchase or sell the same security by more
than one of the accounts managed by the Manager or its affiliates
are combined. The transactions effected pursuant to such combined
orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account.
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
in commission dollars. The Board of Trustees has permitted the
Manager to use concessions on fixed-price offerings to obtain
research, in the same manner as is permitted for agency
transactions. The Board has also permitted the Manager to use
stated commissions on secondary fixed-income agency trades to
obtain research where the broker has represented to Manager that:
(i) the trade is not from or for the broker's own inventory, (ii)
the trade was not executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal
transaction.
The research services provided by brokers broaden the scope
and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and
enabling the Manager to obtain market information for the valuation
of securities held in the Fund's portfolio or being considered for
purchase. The Board of Trustees, including the "independent"
Trustees of the Fund (those Trustees of the Fund who are not
"interested persons" as defined in the Investment Company Act, and
who have no direct or indirect financial interest in the operation
of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to
the commissions paid to brokers furnishing such services so that
the Board may ascertain whether the amount of such commissions was
reasonably related to the value or benefit of such services.
During the Fund's fiscal years ended September 30, 1994, 1995
and 1996, total brokerage commissions paid by the Fund (not
including spreads or concessions on principal transactions on a net
trade basis) were $858,996, $1,698,126 and $987,876, respectively.
During the fiscal year ended September 30, 1996, $853,423 was paid
to brokers as commissions in return for research services; the
aggregate dollar amount of those transactions was $185,064,419.
The transactions giving rise to those commissions were allocated in
accordance with the Manager's internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return," "average annual total return at net asset value" and
"total return at net asset value" of an investment in each class of
Fund shares may be advertised. An explanation of how total returns
are calculated for each class and the components of those
calculations is set forth below.
The Fund's advertisement of its performance data must, under
applicable SEC rules, include the average annual total returns for
each advertised class of shares of the Fund for the 1, 5, and 10-
year periods (or the life of the class, if less) ending as of the
most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices
are not guaranteed and normally will fluctuate on a daily basis.
When redeemed, an investor's shares may be worth more or less than
their original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns on its
shares. The returns of each class of shares of the Fund are
affected by portfolio quality, portfolio maturity, the type of
investments the Fund holds and its operating expenses allocated to
the particular class.
Average Annual Total Returns. The Fund's "average annual
total return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value
("ERV"), according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). For Class
B shares, the payment of the applicable contingent deferred sales
charge (of 5.0% for the first year, 4.0% for the second year, 3.0%
for the third and fourth years, 2.0% for the fifth year, 1.0% in
the sixth year and none thereafter) is applied as described in the
Prospectus. For Class C shares, the payment of the 1% contingent
deferred sales charge is applied to the investment result for the
one-year period (or less). Total returns also assume that all
dividends and capital gains distributions during the period are
reinvested to buy additional shares at net asset value per share,
and that the investment is redeemed at the end of the period. The
"average annual total returns" on an investment in Class A shares
of the Fund for the one and five year periods ended September 30,
1996 and for the period December 30, 1987 (commencement of
operations) to September 30, 1996 were 9.57%, (5.68%) and 8.45%,
respectively. The cumulative "total return" on Class A shares for
the period December 30, 1987 (commencement of operations) to
September 30, 1996 was 103.43%. The cumulative total returns on
Class B and Class C shares of the Fund since inception of the
classes on November 1, 1995, through the fiscal year ended
Spetember 30, 1996, were 14.22% and 18.28%, respectively.
Total Returns at Net Asset Value. From time to time the Fund
may also quote an average annual total return at net asset value or
a cumulative "total return at net asset value" for Class A, Class
B or Class C shares. Each is based on the difference in net asset
value per share at the beginning and the end of the period for a
hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and
takes into consideration the reinvestment of dividends and capital
gains distributions. The average annual total return at net asset
value for the Fund's Class A shares for the one year period ended
September 30, 1996 was 16.25%. The cumulative total return at net
asset value for the period December 30, 1987 (commencement of
operations) to September 30, 1996 was 115.84%. The cumulative
total returns at net asset value on Class B and Class C shares of
the Fund since inception of the classes on 11/1/95, through the
fiscal year ended September 30, 1996, were 19.22% and 19.28%,
respectively.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A or Class B shares.
However, when comparing total return of an investment in Class A or
Class B shares of the Fund, a number of factors should be
considered before using such information as a basis for comparison
with other investments.
Other Performance Comparisons. From time to time the Fund may
publish the ranking of its Class A, Class B Class C shares by
Lipper Analytical Services, Inc. ("Lipper"), a widely-recognized
independent mutual fund monitoring service. Lipper monitors the
performance of regulated investment companies, including the Fund,
and ranks their performance for various periods based on categories
relating to investment objectives. The performance of the Fund's
classes is ranked against (i) all other funds, excluding money
market funds, and (ii) all other emerging growth funds. The Lipper
performance rankings are based on total return that include the
reinvestment of capital gain distributions and income dividends but
does not take sales charges or taxes into consideration. From time
to time the Fund may include in advertisement and sales literature
performance information about the Fund cited in other newspapers
and periodicals such as the New York Times, which may include
performance quotations from other sources including Lipper and
Morningstar.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by
Morningstar, Inc., an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, monthly in broad
investment categories (domestic stock, international stock, taxable
bond, municipal bond and hybrid) based upon risk-adjusted
investment return. Investment return measures a fund's or Class'
three, five and ten-year average annual total returns (when
available) in excess of 90-day U.S. Treasury bill returns after
considering sales charges and expenses. Risk measures fund
performance below 90-day U.S. Treasury bill monthly returns. Risk
and return are combined to produce star rankings reflecting
performance relative to the average fund in a given fund's
category. Five stars is the "highest" ranking (top 10%), four
stars is "above average" (next 22.5%), three stars is "average"
(next 35%), two stars is "below average" (next 22.5%) and one star
is "lowest" (bottom 10%). The current ranking is a weighted
average of 3, 5 and 10 year rankings (if available). Morningstar
ranks the Class A, Class B and Class C shares of the Fund in
relation to other equity funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class
B or Class C shares may be compared with performance for the same
period of the Morgan Stanley World Index, an unmanaged index of
issuers on the stock exchanges of 20 foreign countries and the
United States and widely recognized as a measure of global stock
market performance. The performance of such Index includes a
factor for the reinvestment of dividends but does not reflect
expenses or taxes. The performance of the Fund's Class A, Class B
or Class C shares may also be compared in publications to (i) the
performance of various market indices or to other investments for
which reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized
mutual fund statistical services.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or the Transfer Agent), by independent
third-parties, on the investor services provided by them to
shareholders of the Oppenheimer funds, other than the performance
rankings of the Oppenheimer funds themselves. These ratings or
rankings of shareholder/investor services may compare the
Oppenheimer funds' services to those of other mutual fund families
selected by the rating or ranking services, and may be based upon
the opinions of the rating or ranking service itself, using its own
research or judgment, or based upon surveys of investors, brokers,
shareholders or others. in relation to other equity funds.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares, and
Distribution and Service Plans for Class B and Class C shares under
Rule 12b-1 of the Investment Company Act pursuant to which the Fund
makes payments to the Distributor in connection with the
distribution and/or servicing of the shares of that class, as
described in the Prospectus. Each Plan has been approved by a vote
of (i) the Board of Trustees of the Fund, including a majority of
the Independent Trustees, cast in person at a meeting called for
the purpose of voting on that Plan, and (ii) the holders of a
"majority" (as defined in the Investment Company Act) of the Fund's
shares of each class. For the Class B and Class C Distribution and
Service Plans, that vote was cast by the Manager as the sole
initial shareholder of Class B and Class C shares of the Fund.
In addition, under the Plans the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform. The Distributor and the
Manager may, in their sole discretion, increase or decrease the
amount of payments they make from their own resources to
Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as 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.
Any Plan may be terminated at any time by the vote of a majority of
the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. Neither Plan may not be amended
to increase materially the amount of payments to be made unless
such amendment is approved by shareholders of the class affected by
the amendment. In addition, because Class B shares automatically
convert into Class A shares after six years, the Fund is required
to obtain the approval of Class B as well as Class A shareholders
for a proposed material amendment to the Class A Plan that would
materially increase payments under the Plan. Such approval must be
by a "majority" of the Class A and Class B shares (as defined in
the Investment Company Act, voting separately by class. All
material amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which each payment was made and the identity
of each Recipient that received any such payment. Those reports,
including the allocations on which they are based, will be subject
to the review and approval of the Independent Trustees in the
exercise of their fiduciary duty. Each Plan further provides that
while it is in effect, the selection and nomination of those
Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This
does not prevent the involvement of others in such selection and
nomination if the final decision on any such selection or
nomination is approved by a majority of such Independent Trustees.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers, did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Trustees. Initially, the
Board of Trustees has set the maximum rate allowed under the Plans
and set no minimum amount. For the fiscal year ended September 30,
1996, payments under the Class A Plan totalled $340,899, all of
which was paid by the Distributor to Recipients, including $17,351
paid to MML Investor Services, Inc., an affiliate of the
Distributor.
Any unreimbursed expenses incurred by the Distributor with
respect to Class A shares for any fiscal year may not be recovered
in subsequent fiscal years. Payments received by the Distributor
under the Plan for Class A shares will not be used to pay any
interest expense, carrying charges, or other financial costs, or
allocation of overhead by the Distributor.
The Class B and Class C Plans allow the service fee payments
to be paid by the Distributor to Recipients in advance for the
first year Class B and Class C shares are outstanding, and
thereafter on a quarterly basis, as described in the Prospectus.
The services rendered by Recipients in connection with personal
services and the maintenance of shareholder accounts may include
but shall not be limited to, the following: answering routine
inquiries from the Recipient's customers concerning the Fund,
assisting in the establishment and maintenance of accounts or sub-
accounts in the Fund and processing share redemption transactions,
making the Fund's investment plans and dividend payment options
available, and providing such other information and services in
connection with the rendering of personal services and/or the
maintenance of accounts, as the Distributor or the Fund may
reasonably request. The advance payment is based on the net asset
value of the Class B and Class C shares sold. An exchange of
shares does not entitle the Recipient to an advance service fee
payment. In the event Class B or Class C shares are redeemed
during the first year that the shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the
advance payment for those shares to the Distributor. Payments made
under the Class B Plan during the fiscal year ended September 30,
1996, totaled $42,516, of which $38,764 was retained by the
Distributor. Payments made under the Class C Plan during the
fiscal year ended September 30, 1996, totaled $14,558, of which
$12,877 was retained by the Distributor.
Although the Class B and Class C Plans permit the Distributor
to retain both the asset-based sales charge and the service fee on
Class B shares, or to pay Recipients the service fee on a quarterly
basis without payment in advance, the Distributor intends to pay
the service fee to Recipients in the manner described above. A
minimum holding period may be established from time to time under
the Class B or Class C Plan by the Board. Initially, the Board has
set no minimum holding period. All payments under the Class B and
Class C Plans are subject to the limitations imposed by the Conduct
Rules of the National Association of Securities Dealers, Inc. on
payments of asset-based sales charges and service fees. The
Distributor anticipates that it will take a number of years for it
to recoup (from the Fund's payments to the Distributor under the
Class B Plan and recoveries of the contingent deferred sales charge
collected on redeemed Class B shares) the Class B sales commissions
paid to authorized brokers or dealers.
Asset-based sales charge payments are designed to permit an
investor to purchase shares of the Fund without paying a front-end
sales load and at the same time permit the Distributor to
compensate Recipients in connection with the sale of Class B and
Class C shares of the Fund. The Distributor retains the asset-
based sales charge on Class B shares. As to Class C shares, the
Distributor retains the asset-based sales charge during the first
year shares are outstanding, and pays the asset-based sales charge
as an ongoing commission to the dealer on Class C shares
outstanding for a year or more. Under the Class B and Class C
Plans, the asset-based sales charge is paid to compensate the
Distributor for its services, described below, to the Fund.
Under the Class B and Class C Plans, the distribution
assistance and administrative support services rendered by the
Distributor in connection with the distribution of Class B and
Class C shares may include: (i) paying service fees and sales
commissions to any broker, dealer, bank or other person or entity
that sells and services the Fund's Class B or Class C shares, (ii)
paying compensation to and expenses of personnel of the Distributor
who support distribution of Class B or Class C shares by
Recipients, (iii) obtaining financing or providing such financing
from its own resources, or from an affiliate, for interest and
other borrowing costs of the Distributor's unreimbursed expenses
incurred in rendering distribution assistance for Class B or Class
C shares, and (iv) paying certain other distribution expenses.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C
Shares. The availability of three classes of shares permits the
individual investor to choose the method of purchasing shares that
is more beneficial to the investor depending on the amount of the
purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that
the purpose and function of the deferred sales charge and asset-
based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class
A shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other.
The Distributor normally will not accept any order for $500,000 or
$1 million or more of Class B or Class C shares, respectively, on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The three classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on such shares will be reduced by incremental expenses
borne solely by those classes, including the asset-based sales
charge to which both classes of shares are subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax advisor, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to a class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to unaffiliated
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (a) Distribution and Service Plan
fees, (b) incremental transfer and shareholder servicing agent fees
and expenses, (c) registration fees and (d) shareholder meeting
expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Value Per Share. The net asset values
per share of Class A, Class B and Class C shares of the Fund are
determined as of the close of business of The New York Stock
Exchange (the "Exchange") on each day the Exchange is open, by
dividing the value of the Fund's net assets attributable to a class
by the total number of shares of that class that are outstanding.
The Exchange normally closes at 4:00 P.M., New York time, but may
close earlier on some days (for example, in case of weather
emergencies or on days falling before a holiday). The Exchange's
most recent annual holiday schedule 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. Trading in (debt) securities and
foreign securities at times when the New York Stock Exchange is
closed, including weekends and holidays, or after the close of the
Exchange on a regular business day. The Fund may invest a
substantial portion of its assets in foreign securities primarily
listed on foreign exchanges or foreign over-the-counter markets
that may trade on Saturdays or customary U.S. business holidays on
which the Exchange is closed. Because the Fund's net asset values
will not be calculated on those days, the Fund's net asset values
per share may be significantly affected on such days when
shareholders cannot purchase or redeem shares.
The Fund's Board of Trustees has established procedures for
the valuation of the Fund's securities, generally as follows: (i)
equity securities traded on a U.S. securities exchange or on NASDAQ
for which last sale information is regularly reported are valued at
the last reported sale price on their primary exchange or NASDAQ
that day (or, in the absence of sales that day, at values based on
the last sale prices of the preceding trading day or closing "bid"
prices that day); (ii) securities traded on a foreign securities
exchange are valued generally at the last sales price available to
the pricing service approved by the Fund's Board of Trustees or to
the Manager as reported by the principal exchange on which the
security is traded at its last trading session on or immediately
preceding the valuation date, or at the mean between "bid" and
"ask" prices obtained from the principal exchange or two active
market makers in the security on the basis of reasonable inquiry;
(iii) long-term debt securities having a remaining maturity in
excess of 60 days are valued based on the mean between the "bid"
and "ask" prices determined by a portfolio pricing service approved
by the Fund's Board of Trustees or obtained by the Manager from two
active market makers in the security on the basis of reasonable
inquiry; (iv) debt instruments having a maturity of more than 397
days when issued, and non-money market type instruments having a
maturity of 397 days or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between the
"bid" and "ask" prices determined by a pricing service approved by
the Fund's Board of Trustees or obtained by the Manager from two
active market makers in the security on the basis of reasonable
inquiry; (v) money market debt securities that had a maturity of
less than 397 days when issued that have a remaining maturity of 60
days or less are valued at cost, adjusted for amortization of
premiums and accretion of discounts; and (vi) securities (including
restricted securities) not having readily-available market
quotations are valued at fair value determined under the Board's
procedures. If the Manager is unable to locate two market makers
willing to give quotes (see (ii), (iii) and (iv) above), the
security may be priced at the mean between the "bid" and "ask"
prices provided by a single active market maker (which in certain
cases may be the "bid" price if no "ask" price is available).
In the case of U.S. Government Securities and 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 Manager may use
pricing services approved by the Board of Trustees to price U.S.
Government Securities for which last sale information is not
generally available. The Manager will monitor the accuracy of such
pricing services, which may include comparing prices used for
portfolio evaluation to actual sales prices of selected securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the New York Stock Exchange. Events affecting the values of
foreign securities traded in securities markets that occur between
the time their prices are determined and the close of the New York
Stock Exchange will not be reflected in the Fund's calculation of
net asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that
the particular event is likely to effect a material change in the
value of such security. Foreign currency, including forward
contracts, will be valued at the closing price in the London
foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the closing
price in the London foreign exchange market that day as provided by
a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on
the principal exchange on which they are traded or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing "bid" and "ask"
prices on the principal exchange or on NASDAQ on the valuation
date, or, if not, value shall be the closing "bid" price on the
principal exchange or on NASDAQ on the valuation date. If the put,
call or future is not traded on an exchange or on NASDAQ, it shall
be valued at the mean between "bid" and "ask" prices obtained by
the Manager from two active market makers (which in certain cases
may be the "bid" price if no "ask" price is available).
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy shares. Dividends
will begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for
the purchase through the ACH system before the close of the
Exchange. The Exchange normally closes at 4:00 P.M. but may close
earlier on certain days. If the Federal Funds are received on a
business day after the close of the Exchange, the shares will be
purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received
by the Fund 3 days after the transfers are initiated. The
Distributor and the Fund are not responsible for any delays in
purchasing shares resulting from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced
sales charge rate may be obtained for Class A shares under Right of
Accumulation and Letters of Intent because of the economies of
sales efforts and reduction of 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 or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers
to one's spouse, children, grandchildren, grandparents, parents,
parents-in-law, aunts, uncles, nieces and nephews, siblings, a
sibling's spouse and a spouse's siblings.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Fund
Oppenheimer Developing Markets Fund
Oppenheimer International Growth Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Value Opportunity Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Rochester Fund Municipals*
Rochester Fund Series - The Bond Fund For Growth
Rochester Portfolio Series - Limited-Term New York Municipal Fund*
Oppenheimer International Growth Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Lifespan Balanced Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer LifeSpan Growth Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
_______________________
*Shares of the Fund are not presently exchangeable for shares of
these funds.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as a
"Letter") is an investor's statement in writing to the Distributor
of the intention to purchase Class A shares or Class A and Class B
shares of the Fund and of other Oppenheimer funds during a 13-month
period from the investor's first purchase pursuant to the Letter
(the "Letter of Intent period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of
the Letter. The Letter states the investor's intention to make the
aggregate amount of purchases of shares which, when added to the
investor's holdings of shares of those funds, will equal or exceed
the amount specified in the Letter. Purchases made by reinvestment
of dividends or distributions of capital gains and purchases made
at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor
to count the Class A and Class B shares purchased under the Letter
to obtain the reduced sales charge rate on purchases of Class A
shares of the Fund (and other Oppenheimer funds) that applies under
the Right of Accumulation to current purchases of Class A shares.
Each purchase of Class A shares under the Letter will be made at
the public offering price (including the sales charge) that applies
to a single lump-sum purchase of shares in the amount intended to
be purchased under the Letter. 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 purchase amount, as
described in the Prospectus.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period
exceed the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow that Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value to 5% of the intended purchase amount specified in the Letter
shall be held in escrow by the Transfer Agent. For example, if the
intended purchase amount 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 purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares acquired subject to a contingent deferred sales charge, and
(c) Class A or Class B shares acquired by reinvestment of dividends
and distributions or acquired in exchange for either (i) Class A
shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge or
(ii) Class B shares of one of the other Oppenheimer funds that were
acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a
bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee benefit
plans that may purchase Class A shares without being subject to the
Class A contingent deferred sales charge, the term "employee
benefit plan" means any plan or arrangement, whether or not
"qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However,
the Board of Trustees of the Fund determines that it would be
detrimental to the best interests of the remaining shareholders of
the Fund to make payment of a redemption order wholly or partly in
cash. In that case the Fund may pay the redemption proceeds in
whole or in part by a distribution "in kind" of securities from the
portfolio of the Fund, in lieu of cash, in conformity with
applicable rules of the Securities and Exchange Commission. The
Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net
assets of the Fund during any 90-day period for any one
shareholder. If shares are redeemed in kind, the redeeming
shareholder might incur brokerage or other costs in selling the
securities for cash. The method of valuing securities used to make
redemptions in kind will be the same as the method the Fund uses to
value it portfolio securities described above under "Determination
of Net Asset Value Per Share" and that valuation will be made as of
the time the redemption price is determined.
Involuntary Redemptions. The Fund's Board of Trustees has
the right to cause the involuntary redemption of the shares held in
any account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Trustees will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in
question (not less than 30 days), or the Board may set requirements
for the shareholder to increase the investment, and set other terms
and conditions so that the shares would not be involuntarily
redeemed.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
Class A shares or Class B shares of the Fund that you purchased by
reinvesting dividends or distributions or on which you paid a
contingent deferred sales charge when you redeemed them. The
reinvestment privilege does not apply to Class C shares. The
reinvestment may be made without sales charge only in Class A
shares of the Fund or any of the other Oppenheimer funds into which
shares of the Fund are exchangeable as described below, at the net
asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Distributor for
that privilege at the time of reinvestment. Any capital gain that
was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that
gain. If there has been a capital loss on the redemption, some or
all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code,
if the redemption proceeds of Fund shares on which a sales charge
was paid are reinvested in shares of the Fund or another of the
Oppenheimer funds within 90 days of payment of the sales charge,
the shareholder's basis in the shares of the Fund that were
redeemed may not include the amount of the sales charge paid. That
would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the proprieties described in the
Prospectus under "How to Buy Shares" for the imposition of Class B
or Class C contingent deferred sales charge, will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans or pension or profit-sharing plans should be addressed
to "Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer
Agent at its address listed in "How to Sell Shares" in the
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining a plan account in their own name) in OppenheimerFunds-
sponsored prototype pension, profit-sharing or 401(k) plans may not
directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are
subject to special requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the
Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that
tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by such dealer or broker, except that if
the Distributor receives a repurchase order from a dealer or broker
after the close of the New York Stock Exchange on a regular
business day, it will be processed at that day's net asset value if
the order was received by the dealer or broker from its customers
prior to the time the Exchange closed (normally that is 4:00 P.M.,
but may be earlier on some days) and the order was transmitted to
and received by the Distributor prior to its close of business that
day (normally 5:00 P.M.). Ordinarily, for accounts redeemed by a
broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in
proper form, with the signature(s) of the registered owners
guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How To Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. The Fund cannot guarantee
receipt of a payment on the date requested and reserves the right
to amend, suspend or discontinue offering such plans at any time
without prior notice. Because of the sales charge assessed on
Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an
Automatic Withdrawal Plan. Class B and Class C shareholders should
not establish withdrawal plans that would require the redemption of
shares purchased subject to a contingent deferred sales charge and
held less than 6 years or 12 months, respectively, because of the
imposition of the Class B or Class C contingent deferred sales
charge on such withdrawals (except where the Class B or Class C
contingent deferred sales charge is waived as described in the
Prospectus under "Waivers of Class B and Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the
OppenheimerFunds Application relating to such Plans, as well as the
Prospectus. These provisions may be amended from time to time by
the Fund and/or the Distributor. When adopted, such amendments
will automatically apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and thereafter shares acquired
with reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making withdrawals because
of sales charges that apply to purchases when made. Accordingly,
a shareholder normally may not maintain an automatic withdrawal
plan while simultaneously making regular purchases of Class A
shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent and the Fund
shall incur no liability to the Planholder for any action taken or
omitted by the Transfer Agent in good faith to administer the Plan.
Certificates will not be issued for shares of the Fund purchased
for and held under the Plan, but the Transfer Agent will credit all
such shares to the account of the Planholder on the records of the
Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or AccountLink payments of the proceeds of
Plan withdrawals will normally be transmitted three business days
prior to the date selected for receipt of the payment (the receipt
of payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to
stop because of exhaustion of uncertificated shares needed to
continue payments. However, should such uncertificated shares
become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C
shares except Oppenheimer Money Market Fund, Inc., Centennial Tax
Exempt Trust, Centennial Government Trust, Centennial New York Tax
Exempt Trust, Centennial California Tax Exempt Trust, Centennial
America Fund, L.P. and Daily Cash Accumulation Fund Inc., which
only offer Class A shares and Oppenheimer Main Street California
Tax Exempt Fund which only offers Class A and Class B shares (Class
B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds sponsored 401 (k)
plans). A list of funds showing which funds offer which classes
can be obtained by calling the Distributor at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds except
Oppenheimer Cash Reserves, or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for Class A shares of any of
the Oppenheimer funds. No contingent deferred sales charge is
imposed on exchanges of shares purchased subject to a contingent
deferred sales charge. However, shares of Oppenheimer Money Market
Fund, Inc. purchased with the redemption proceeds of shares of
other mutual funds (other than funds managed by the Manager or its
subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales
charge, whichever is applicable. To qualify for that privilege,
the investor or the investor's dealer must notify the Distributor
of eligibility for this privilege at the time the shares of
Oppenheimer Money Market Fund, Inc. are purchased, and, if
requested, must supply proof of entitlement to this privilege. No
contingent deferred sales charge is imposed on exchanges of shares
of either class purchased subject to a contingent deferred sales
charge. However, when Class A shares acquired by exchange of Class
A shares of other Oppenheimer funds purchased subject to a Class A
contingent deferred sales charge are redeemed within 18 months of
the end of the calendar month of the initial purchase of the
exchanged Class A shares, the Class A contingent deferred sales
charge is imposed on the redeemed shares (see "Class A Contingent
Deferred Sales Charge" in the Prospectus). The Class B contingent
deferred sales charge is imposed on Class B shares acquired by
exchange if they are redeemed within 6 years of the initial
purchase of the exchanged Class B shares. The Class C contingent
deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial
purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How To Buy Shares" in the
Prospectus for the imposition of the Class B or Class C contingent
deferred sales charge will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders should
take into account the effect of any exchange on the applicability
and rate of any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares.
Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or shares covered by a share
certificate that is not tendered with the request. In those cases,
only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, the shareholder must
either have an existing account in, or obtain, open an account in,
and acknowledge receipt of a prospectus of, the fund to which the
exchange is to be made. For full or partial exchanges of an
account made by telephone, any special account features such as
Asset Builder Plans, Automatic Withdrawal Plans and retirement plan
contributions will be switched to the new account unless the
Transfer Agent is instructed otherwise. If all telephone lines are
busy (which might occur, for example, during periods of substantial
market fluctuations), shareholders might not be able to request
exchanges by telephone and would have to submit written exchange
requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Dividends and Distributions. Dividends will be payable on shares
held of record at the time of the previous determination of net
asset value, or as otherwise described in "How to Buy Shares."
Daily dividends on newly purchased shares will not be declared or
paid until such time as Federal Funds (funds credited to a member
bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks
received from investors are converted to Federal Funds on the next
business day. Shares purchased through dealers or brokers normally
are paid for by the third business day following the placement of
the purchase order. Shares redeemed through the regular redemption
procedure will be paid dividends through and including the day on
which the redemption request is received by the Transfer Agent in
proper form. Dividends will be declared on shares repurchased by
a dealer or broker for four business days following the trade date
(i.e., to and including the day prior to settlement of the
repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will
be paid together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds.
Tax Status of the Fund's Dividends and Distributions. The Federal
tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund that may qualify for the deduction is limited to
the aggregate amount of qualifying dividends that the Fund derives
from its portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be
eligible for the deduction on dividends paid on shares held for 45
days or less. To the extent the Fund's dividends are derived from
its gross income from option premiums, interest income or short-
term gains from the sale of securities or dividends from foreign
corporations, its dividends will not qualify for the deduction. It
is expected that for the most part the Fund's dividends will not
qualify, because of the investments held by the Fund in its
portfolio.
The amount of a class's distributions may vary from time to
time depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C," above. Dividends are calculated in the same
manner, at the same time and on the same day for shares of each
class. However, dividends on Class B and Class C shares are
expected to be lower as a result of the asset-based sales charge on
Class B and Class C shares, and Class B and Class C dividends will
also differ in amount as a consequence of any difference in net
asset value between Class A, Class B and Class C shares.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Fund's Board of Trustees and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
If the Fund has more than 50% of its total assets invested in
foreign securities at the end of its fiscal year, it may elect the
application of Section 853 of the Internal Revenue Code to permit
shareholders to take a credit (or, at their option, a deduction)
for foreign taxes paid by the Fund. Under Section 853,
shareholders would be entitled to treat the foreign taxes withheld
from interest and dividends paid to the Fund from its foreign
investments as a credit on their federal income taxes. As an
alternative, shareholders could, if to their advantage, treat the
foreign tax withheld as a deduction from gross income in computing
taxable income rather than as a tax credit. In substance, the
Fund's election would enable shareholders to benefit from the same
foreign tax credit or deduction that would be received if they had
been the record owners of the Fund's foreign securities and had
paid foreign taxes on the income received.
If the Fund qualifies as a "regulated investment company"
under the Internal Revenue Code, it will not be liable for Federal
income taxes on amounts paid by it as dividends and distributions.
The Fund qualified as a regulated investment company during its
last fiscal year, and intends to qualify in current and future
years, but reserves the right not to do so. The Internal Revenue
Code contains a number of complex tests relating to such
qualification to determine whether the Fund will qualify, and the
Fund might not meet those tests in a particular year. For example,
the Fund derives 30% or more of its gross income from the sale of
securities held less than three months, it may fail to qualify (see
"Investment Objective and Policies-Tax Aspects of Hedging
Instruments" in the Statement of Additional Information). If it
did not so qualify, the Fund would be treated for tax purposes as
an ordinary corporation and receive no tax deduction for payments
of dividends and distributions made to shareholders.
The Fund had an unused capital loss carryover of approximately
$29,567,000 at September 30, 1996. It will expire between 1998 and
2004.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made
at the net asset value per share in effect at the close of business
on the payable date of the dividend or distribution. Dividends
and/or distributions from shares of other Oppenheimer funds may be
invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities collecting income on
the portfolio securities and handling the delivery of such
securities to and from the Fund. The Manager has represented to
the Fund that the banking relationships between the Manager and the
Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian.
It will be the practice of the Fund to deal with the Custodian in
a manner uninfluenced by any banking relationship the Custodian may
have with the Manager and its affiliates. The Fund's cash balance
in excess of $100,000 are not protected by Federal Deposit
Insurance. Such uninsured balances may at times be substantial.
Independent Auditors. The independent auditors of the Fund audit
the Fund's financial statements and perform other related audit
services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
<PAGE>
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INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer
Global Emerging Growth Fund:
We have audited the accompanying statements of
investments and assets and liabilities of Oppenheimer
Global Emerging Growth Fund as of September 30, 1996,
and the related statement of operations for the year
then ended, the statements of changes in net assets for
each of the years in the two year period then ended and
the financial highlights for each of the years in the
five year period then ended. These financial statements
and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an
opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements and financial highlights are free of
material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures
included confirmation of securities owned as of
September 30, 1996 by correspondence with the custodian
and brokers; and where confirmations were not received
from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present fairly,
in all material respects, the financial position of
Oppenheimer Global Emerging Growth Fund as of September
30, 1996, the results of its operations for the year
then ended, the changes in its net assets for each of
the years in the two year period then ended, and the
financial highlights for each of the years in the five
year period then ended, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
/s/ KPMG Peat Marwick LLP
-----------------------
Denver, Colorado
October 21, 1996
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS SEPTEMBER 30, 1996
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
COMMON STOCKS--95.0%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
BASIC MATERIALS--3.7%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
CHEMICALS--1.1% Saes Getters SpA 120,000
$ 1,785,749
- ----------------------------------------------------------------------------------------------------------------
- ------------------
GOLD--1.0% Cambior, Inc. 75,000
1,029,519
- -------------------------------------------------------------------------------------------------------
Dayton Mining Corp.(1) 100,000
682,676
----------
1,712,195
- ----------------------------------------------------------------------------------------------------------------
- ------------------
METALS--1.6% Boehler-Uddeholm AG 10,000
799,617
- -------------------------------------------------------------------------------------------------------
Cia de Minas Buenaventura SA, Sponsored ADR(1) 100,000
1,925,000
----------
2,724,617
- ----------------------------------------------------------------------------------------------------------------
- ------------------
CONSUMER CYCLICALS--22.8%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
AUTOS & HOUSING--5.7% Alrenco, Inc.(1) 30,000
630,000
- -------------------------------------------------------------------------------------------------------
Belmont Homes, Inc.(1) 70,000
1,767,500
- -------------------------------------------------------------------------------------------------------
Ciadea SA 219,997
1,045,120
- -------------------------------------------------------------------------------------------------------
IRSA Inversiones y Representaciones, SA 257,201
751,123
- -------------------------------------------------------------------------------------------------------
Orbital Engine Corp. Ltd.(1) 1,100,000
983,504
- -------------------------------------------------------------------------------------------------------
Porsche AG, Preference(1) 5,500
3,760,986
- -------------------------------------------------------------------------------------------------------
Thai Stanley Electric Co. Ltd. 150,000
708,174
----------
9,646,407
- ----------------------------------------------------------------------------------------------------------------
- ------------------
LEISURE &
ENTERTAINMENT--6.9% Applebee's International, Inc. 30,000
795,000
- -------------------------------------------------------------------------------------------------------
Casa Ole Restaurants, Inc.(1) 61,700
794,387
- -------------------------------------------------------------------------------------------------------
China Hong Kong Photo Products Holdings Ltd. 1,500,000
547,975
- -------------------------------------------------------------------------------------------------------
Cinar Films, Inc., Cl. B(1) 60,000
1,563,750
- -------------------------------------------------------------------------------------------------------
CKE Restaurants, Inc. 40,000
1,230,000
- -------------------------------------------------------------------------------------------------------
Coach USA, Inc.(1) 30,000
802,500
- -------------------------------------------------------------------------------------------------------
Galoob (Lewis) Toys, Inc.(1) 30,000
877,500
- -------------------------------------------------------------------------------------------------------
Longhorn Steaks, Inc.(1) 40,000
610,000
- -------------------------------------------------------------------------------------------------------
Lusomundo SGPS SA(1) 200,000
2,043,776
- -------------------------------------------------------------------------------------------------------
Metromedia International Group, Inc.(1) 65,000
690,625
- -------------------------------------------------------------------------------------------------------
Quality Dining, Inc.(1) 30,000
855,000
- -------------------------------------------------------------------------------------------------------
Square Co. Ltd. 15,000
861,953
----------
11,672,466
- ----------------------------------------------------------------------------------------------------------------
- ------------------
MEDIA--2.0% Capital Radio PLC 85,000
794,676
- -------------------------------------------------------------------------------------------------------
Dorling Kindersley Holdings PLC 90,000
686,645
- -------------------------------------------------------------------------------------------------------
NRJ SA 6,500
774,522
- -------------------------------------------------------------------------------------------------------
Wireless One, Inc.(1) 70,000
1,032,500
----------
3,288,343
- ----------------------------------------------------------------------------------------------------------------
- ------------------
RETAIL: GENERAL--3.4% Galeries Lafayette(1) 4,201
1,217,669
- -------------------------------------------------------------------------------------------------------
Lojas Americanas SA, Preference 19,000,000
321,925
- -------------------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(1) 20,000
645,000
</TABLE>
6 Oppenheimer Global Emerging Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
RETAIL: GENERAL PT Matahari Putra Prima 400,000
$ 435,064
(CONTINUED)
- -------------------------------------------------------------------------------------------------------
PT Ramayana Lestari Sentosa(1) 835,000
1,402,757
- -------------------------------------------------------------------------------------------------------
Vans, Inc.(1) 40,000
765,000
- -------------------------------------------------------------------------------------------------------
Wolverine World Wide, Inc. 36,000
999,000
----------
5,786,415
- ----------------------------------------------------------------------------------------------------------------
- ------------------
RETAIL: SPECIALTY--4.8% Giordano International Ltd. 1,000,000
879,346
- -------------------------------------------------------------------------------------------------------
Maruko Co. Ltd. 12,100
793,086
- -------------------------------------------------------------------------------------------------------
Moebel Walther AG, Preference 40,000
2,438,920
- -------------------------------------------------------------------------------------------------------
Moovies, Inc.(1) 60,000
330,000
- -------------------------------------------------------------------------------------------------------
Party City Corp.(1) 50,000
937,500
- -------------------------------------------------------------------------------------------------------
Ryohin Keikaku Co. Ltd. 13,000
1,101,863
- -------------------------------------------------------------------------------------------------------
Wolford AG 6,000
1,532,133
----------
8,012,848
- ----------------------------------------------------------------------------------------------------------------
- ------------------
CONSUMER NON-CYCLICALS--23.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
BEVERAGES--2.7% Hellenic Bottling Co., SA 40,000
1,361,165
- -------------------------------------------------------------------------------------------------------
Panamerican Beverages, Inc., Cl. A 20,000
822,500
- -------------------------------------------------------------------------------------------------------
Remy Cointreau 65,469
1,654,087
- -------------------------------------------------------------------------------------------------------
Serm Suk Public Co. Ltd. 25,000
767,188
----------
4,604,940
- ----------------------------------------------------------------------------------------------------------------
- ------------------
EDUCATION--0.8% National Education Corp.(1) 70,000
1,338,750
- ----------------------------------------------------------------------------------------------------------------
- ------------------
FOOD--4.9% Disco SA, Sponsored ADR(1) 51,800
1,016,575
- -------------------------------------------------------------------------------------------------------
Hokuto Corp. 19,000
812,031
- -------------------------------------------------------------------------------------------------------
Lindt & Spruengli AG, Participation Certificates 1,000
1,659,288
- -------------------------------------------------------------------------------------------------------
Molinos Rio de la Plata SA, Cl. B 437,499
1,435,180
- -------------------------------------------------------------------------------------------------------
Perdigao SA, Comercio e Industria, Preference 240,000,000
378,436
- -------------------------------------------------------------------------------------------------------
Performance Food Group Co.(1) 42,000
693,000
- -------------------------------------------------------------------------------------------------------
Raision Tehtaat Oy 32,000
1,926,637
- -------------------------------------------------------------------------------------------------------
Universal Robina Corp. 667,000
336,869
----------
8,258,016
- ----------------------------------------------------------------------------------------------------------------
- ------------------
HEALTHCARE/DRUGS--6.9% Alpha-Beta Technology, Inc.(1) 40,000
430,000
- -------------------------------------------------------------------------------------------------------
Biocompatibles International PLC(1) 297,500
2,502,298
- -------------------------------------------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(1) 40,000
1,475,000
- -------------------------------------------------------------------------------------------------------
Marseille-Kliniken AG 35,000
1,262,076
- -------------------------------------------------------------------------------------------------------
Norland Medical Systems, Inc.(1) 50,000
1,062,500
- -------------------------------------------------------------------------------------------------------
Rohto Pharmaceutical Co. 60,000
635,690
- -------------------------------------------------------------------------------------------------------
SangStat Medical Corp.(1) 50,000
1,275,000
- -------------------------------------------------------------------------------------------------------
Teikoku Hormone Manufacturing Co. Ltd. 50,000
673,401
- -------------------------------------------------------------------------------------------------------
Tiger Medicals Ltd. 493,000
808,743
- -------------------------------------------------------------------------------------------------------
Torii Pharmaceutical Co. Ltd. 70,000
1,489,562
----------
11,614,270
</TABLE>
7 Oppenheimer Global Emerging Growth Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
HEALTHCARE/SUPPLIES & Althin Medical AB, B Shares 60,000
$ 1,266,835
SERVICES--7.6%
- -------------------------------------------------------------------------------------------------------
AmeriSource Health Corp., Cl. A(1) 30,000
1,335,000
- -------------------------------------------------------------------------------------------------------
Capstone Pharmacy Services, Inc.(1) 60,000
742,500
- -------------------------------------------------------------------------------------------------------
Egis RT(1) 20,000
1,408,132
- -------------------------------------------------------------------------------------------------------
Elekta AB, B Shares 15,000
506,734
- -------------------------------------------------------------------------------------------------------
Gulf South Medical Supply, Inc.(1) 30,000
772,500
- -------------------------------------------------------------------------------------------------------
Nichii Gakkan Co. 27,000
1,367,273
- -------------------------------------------------------------------------------------------------------
OccuSystems, Inc.(1) 30,000
900,000
- -------------------------------------------------------------------------------------------------------
Omnicare, Inc. 26,000
793,000
- -------------------------------------------------------------------------------------------------------
Pediatrix Medical Group, Inc.(1) 13,500
676,687
- -------------------------------------------------------------------------------------------------------
PhyCor, Inc.(1) 25,000
951,562
- -------------------------------------------------------------------------------------------------------
Rural/Metro Corp.(1) 15,000
547,500
- -------------------------------------------------------------------------------------------------------
Serologicals Corp.(1) 20,000
695,000
- -------------------------------------------------------------------------------------------------------
Total Renal Care Holdings, Inc.(1) 20,000
795,000
----------
12,757,723
- ----------------------------------------------------------------------------------------------------------------
- ------------------
HOUSEHOLD GOODS--0.5% Srithai Superware Co. Ltd. 175,000
757,353
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ENERGY--4.7%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ENERGY SERVICES & Cie Generale de Geophysique SA(1) 37,500
2,492,128
PRODUCERS--3.5%
- -------------------------------------------------------------------------------------------------------
Newfield Exploration Co.(1) 20,000
900,000
- -------------------------------------------------------------------------------------------------------
Smedvig AS 100,000
2,061,052
- -------------------------------------------------------------------------------------------------------
Smedvig AS, Series B(1) 25,000
463,352
----------
5,916,532
- ----------------------------------------------------------------------------------------------------------------
- ------------------
OIL-INTEGRATED--1.2% Expro International Group PLC 210,100
1,231,763
- -------------------------------------------------------------------------------------------------------
Forasol-Foramer NV(1) 60,000
727,500
----------
1,959,263
- ----------------------------------------------------------------------------------------------------------------
- ------------------
FINANCIAL--7.8%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
BANKS--0.8% Industrial Credit & Investment Corp. of India Ltd. (The), GDR(1)(2) 92,900
1,033,512
- -------------------------------------------------------------------------------------------------------
PT Lippo Bank 209,500
324,876
----------
1,358,388
- ----------------------------------------------------------------------------------------------------------------
- ------------------
DIVERSIFIED
FINANCIAL--3.2% Credicorp Ltd. 47,000
893,000
- -------------------------------------------------------------------------------------------------------
Egypt Investment Co.(1) 96,500
1,145,937
- -------------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 30,000
1,177,500
- -------------------------------------------------------------------------------------------------------
Manhattan Card Co. Ltd. 2,500,000
1,236,581
- -------------------------------------------------------------------------------------------------------
Wing Hang Bank Ltd. 250,000
937,538
----------
5,390,556
- ----------------------------------------------------------------------------------------------------------------
- ------------------
INSURANCE--3.8% CapMAC Holdings, Inc. 30,000
997,500
- -------------------------------------------------------------------------------------------------------
Ockham Holdings PLC 1,200,000
1,791,655
- -------------------------------------------------------------------------------------------------------
Reinsurance Australia Corp. Ltd. 1,250,000
3,580,336
----------
6,369,491
</TABLE>
8 Oppenheimer Global Emerging Growth Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
INDUSTRIAL--20.2%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRICAL EQUIPMENT--0.8% Crompton Greaves Ltd., GDR(1) 70,000
$ 346,500
- -------------------------------------------------------------------------------------------------------
LEM Holdings SA 4,300
998,205
----------
1,344,705
- ----------------------------------------------------------------------------------------------------------------
- ------------------
INDUSTRIAL MATERIALS--0.5% HI Cement Corp.(1)(2) 2,592,000
869,434
- ----------------------------------------------------------------------------------------------------------------
- ------------------
INDUSTRIAL SERVICES--11.2% Affiliated Computer Services, Inc., Cl. A(1) 17,000
998,750
- -------------------------------------------------------------------------------------------------------
Boskalis Westminster 152,000
2,967,240
- -------------------------------------------------------------------------------------------------------
Cordiant PLC(1) 1,010,000
1,768,517
- -------------------------------------------------------------------------------------------------------
Daisytek International Corp.(1) 25,000
1,081,250
- -------------------------------------------------------------------------------------------------------
DecisionOne Holdings Corp.(1) 35,000
490,000
- -------------------------------------------------------------------------------------------------------
Fugro NV 100,000
1,537,158
- -------------------------------------------------------------------------------------------------------
KCI Konecranes International Corp.(1) 80,000
2,224,390
- -------------------------------------------------------------------------------------------------------
May & Speh, Inc.(1) 50,000
1,000,000
- -------------------------------------------------------------------------------------------------------
MRC Allied Industries, Inc.(1) 8,000,000
975,796
- -------------------------------------------------------------------------------------------------------
PT Citra Marga Nusaphala Persada 2,331,000
1,581,445
- -------------------------------------------------------------------------------------------------------
Rent-Way, Inc.(1) 10,000
126,250
- -------------------------------------------------------------------------------------------------------
Serco Group PLC 100,000
953,673
- -------------------------------------------------------------------------------------------------------
Transaction Systems Architects, Inc., Cl. A(1) 20,000
845,000
- -------------------------------------------------------------------------------------------------------
VBH Vereinigter Baubeschlag Handel AG 70,000
1,733,863
- -------------------------------------------------------------------------------------------------------
Walsh International, Inc.(1) 60,000
600,000
----------
18,883,332
- ----------------------------------------------------------------------------------------------------------------
- ------------------
MANUFACTURING--5.8% Bucher Holding AG, B Shares 2,000
1,499,741
- -------------------------------------------------------------------------------------------------------
First Philippine Holdings Corp., B Shares 700,000
1,520,869
- -------------------------------------------------------------------------------------------------------
Legris Industries SA 20,000
759,506
- -------------------------------------------------------------------------------------------------------
Powerscreen International PLC 200,000
1,718,175
- -------------------------------------------------------------------------------------------------------
Toolex Alpha NV(1) 65,000
1,462,500
- -------------------------------------------------------------------------------------------------------
U.S. Filter Corp.(1) 60,000
2,047,500
- -------------------------------------------------------------------------------------------------------
Wai Kee Holdings Ltd. 3,500,000
792,058
----------
9,800,349
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TRANSPORTATION--1.9% Guangshen Railway Co. Ltd., Sponsored ADR(1) 39,000
741,000
- -------------------------------------------------------------------------------------------------------
Koninklijke Van Ommeren NV 30,000
1,174,786
- -------------------------------------------------------------------------------------------------------
Lisnave-Estaleiros Navais de Lisboa SA(1) 467,400
1,205,377
----------
3,121,163
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TECHNOLOGY--12.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
COMPUTER HARDWARE--1.8% PT Multipolar Corp.(3) 6,349,200
3,083,413
- ----------------------------------------------------------------------------------------------------------------
- ------------------
COMPUTER SOFTWARE--6.1% Business Objects SA, Sponsored ADR(1) 25,000
481,250
- -------------------------------------------------------------------------------------------------------
Engineering Animation, Inc.(1) 41,800
1,003,200
- -------------------------------------------------------------------------------------------------------
Global DirectMail Corp.(1) 20,000
955,000
- -------------------------------------------------------------------------------------------------------
Ines Corp. 40,000
721,885
</TABLE>
9 Oppenheimer Global Emerging Growth Fund
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF INVESTMENTS (CONTINUED)
MARKET VALUE
SHARES
SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
COMPUTER SOFTWARE Integrated Measurement Systems, Inc.(1) 40,000
$ 660,000
(CONTINUED)
- -------------------------------------------------------------------------------------------------------
McAfee Associates, Inc.(1) 15,000
1,035,000
- -------------------------------------------------------------------------------------------------------
Misys PLC 201,833
2,751,556
- -------------------------------------------------------------------------------------------------------
National Instruments Corp.(1) 30,000
795,000
- -------------------------------------------------------------------------------------------------------
PLATINUM Technology, Inc.(1) 60,000
757,500
- -------------------------------------------------------------------------------------------------------
Technology Modeling Associates, Inc.(1) 32,500
422,500
- -------------------------------------------------------------------------------------------------------
Versant Object Technology Corp.(1) 30,000
712,500
------------
10,295,391
- ----------------------------------------------------------------------------------------------------------------
- ------------------
ELECTRONICS--2.3% Gold Peak Industries (Holdings) Ltd. 1,600,000
987,971
- -------------------------------------------------------------------------------------------------------
Medasys Digital Systems(1) 50,000
547,348
- -------------------------------------------------------------------------------------------------------
Pittway Corp., Cl. A 20,000
892,500
- -------------------------------------------------------------------------------------------------------
SDL, Inc.(1) 30,000
615,000
- -------------------------------------------------------------------------------------------------------
Shinmei Electric Co. 35,000
741,638
------------
3,784,457
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TELECOMMUNICATIONS- Amper SA(1) 120,000
1,495,269
TECHNOLOGY--2.2%
- -------------------------------------------------------------------------------------------------------
LCI International, Inc.(1) 36,000
1,134,000
- -------------------------------------------------------------------------------------------------------
Tel-Save Holdings, Inc.(1) 20,000
575,000
- -------------------------------------------------------------------------------------------------------
Teltrend, Inc.(1) 10,000
425,000
------------
3,629,269
------------
Total Common Stocks (Cost $142,869,934)
159,765,835
- ----------------------------------------------------------------------------------------------------------------
- ------------------
- ----------------------------------------------------------------------------------------------------------------
- ------------------
PREFERRED STOCKS--1.5%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Marschollek, Lautenschlaeger und Partner-VO,
Non-vtg. Preferred Stock (Cost $1,127,145) 20,000
2,517,595
UNITS
- ----------------------------------------------------------------------------------------------------------------
- ------------------
- ----------------------------------------------------------------------------------------------------------------
- ------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.1%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Biocompatibles International PLC Wts., Exp. 2/97 42,500
41,196
- -------------------------------------------------------------------------------------------------------
PerSeptive Biosystems, Inc., Cl. A Wts., Exp. 12/97 40,110
--
- -------------------------------------------------------------------------------------------------------
PT Matahari Putra Prima Rts., Exp. 11/96 400,000
262,761
------------
Total Rights, Warrants and Certificates (Cost $283,984)
303,957
FACE
AMOUNT
- ----------------------------------------------------------------------------------------------------------------
- ------------------
- ----------------------------------------------------------------------------------------------------------------
- ------------------
REPURCHASE AGREEMENT--3.4%
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Repurchase agreement with Goldman, Sachs & Co., 5.62%,
dated 9/30/96, to be repurchased at $5,700,890 on 10/1/96,
collateralized by U.S. Treasury Bonds, 8.875%--11.125%,
8/15/03--8/15/17, with a value of $5,820,580 (Cost $5,700,000) $5,700,000
5,700,000
- ----------------------------------------------------------------------------------------------------------------
- ------------------
TOTAL INVESTMENTS, AT VALUE (COST $149,981,063) 100.0%
168,287,387
- ----------------------------------------------------------------------------------------------------------------
- ------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.0)
(81,030)
----------
------------
NET ASSETS 100.0%
$168,206,357
----------
------------
----------
------------
</TABLE>
10 Oppenheimer Global Emerging Growth Fund
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Distribution of investments by country of issue, as a percentage of total investments
at value, is as
follows:
COUNTRY MARKET VALUE
PERCENT
- ----------------------------------------------------------------------------------------------------------------
- ------------------
<S> <C>
<C>
United States $55,336,400
32.9%
- -------------------------------------------------------------------------------------------------------
Great Britain 14,240,155
8.5
- -------------------------------------------------------------------------------------------------------
Germany 11,713,440
7.0
- -------------------------------------------------------------------------------------------------------
Japan 9,198,383
5.5
- -------------------------------------------------------------------------------------------------------
France 8,654,010
5.1
- -------------------------------------------------------------------------------------------------------
The Netherlands 7,141,684
4.2
- -------------------------------------------------------------------------------------------------------
Indonesia 7,090,315
4.2
- -------------------------------------------------------------------------------------------------------
Hong Kong 5,381,469
3.2
- -------------------------------------------------------------------------------------------------------
Australia 4,563,840
2.7
- -------------------------------------------------------------------------------------------------------
Argentina 4,247,998
2.5
- -------------------------------------------------------------------------------------------------------
Switzerland 4,157,233
2.5
- -------------------------------------------------------------------------------------------------------
Finland 4,151,026
2.5
- -------------------------------------------------------------------------------------------------------
Philippines 3,702,967
2.2
- -------------------------------------------------------------------------------------------------------
Canada 3,275,944
1.9
- -------------------------------------------------------------------------------------------------------
Portugal 3,249,153
1.9
- -------------------------------------------------------------------------------------------------------
Peru 2,818,000
1.7
- -------------------------------------------------------------------------------------------------------
Norway 2,524,404
1.5
- -------------------------------------------------------------------------------------------------------
Austria 2,331,750
1.4
- -------------------------------------------------------------------------------------------------------
Thailand 2,232,715
1.3
- -------------------------------------------------------------------------------------------------------
Italy 1,785,749
1.1
- -------------------------------------------------------------------------------------------------------
Sweden 1,773,568
1.1
- -------------------------------------------------------------------------------------------------------
Spain 1,495,269
0.9
- -------------------------------------------------------------------------------------------------------
Hungary 1,408,132
0.8
- -------------------------------------------------------------------------------------------------------
India 1,380,013
0.8
- -------------------------------------------------------------------------------------------------------
Greece 1,361,165
0.8
- -------------------------------------------------------------------------------------------------------
Mexico 822,500
0.5
- -------------------------------------------------------------------------------------------------------
Singapore 808,743
0.5
- -------------------------------------------------------------------------------------------------------
China 741,000
0.4
- -------------------------------------------------------------------------------------------------------
Brazil 700,362
0.4
------------
------------
Total $168,287,387
100.0%
------------
------------
------------
------------
1. Non-income producing security.
2. Represents a security sold under Rule 144A, which is exempt from registration under
the Securities Act
of 1933, as amended. This security has been determined to be liquid under guidelines
established by the
Board of Trustees. These securities amount to $1,902,946 or 1.13% of the Fund's net
assets, at September
30, 1996.
3. Affiliated company. Represents ownership of at least 5% of the voting securities of
the issuer and is
or was an affiliate, as defined in the Investment Company Act of 1940, at or during the
period ended
September 30, 1996. The aggregate fair value of all securities of affiliated companies
as of September
30, 1996 amounted to $3,083,413. Transactions during the period in which the issuer was
an affiliate are
as follows:
BALANCE BALANCE
SEPTEMBER 30, 1995 GROSS ADDITIONS GROSS REDUCTIONS
SEPTEMBER 30, 1996
------------------ --------------------- ---------------------
- ---------------------
SHARES COST SHARES COST SHARES COST SHARES
COST
- ----------------------------------------------------------------------------------------------------------------
- ------------------
Cambridge Antibody
Technology Ltd., CV. 100,000 $3,300,000 -- $ -- 100,000 $3,300,000
-- $ --
- ----------------------------------------------------------------------------------------------------------------
- ------------------
PT Multipolar Corp. -- -- 6,349,200 3,947,959 -- --
6,349,200 3,947,959
---------- ---------- ----------
----------
$3,300,000 $3,947,959 $3,300,000
$3,947,959
---------- ---------- ----------
----------
---------- ---------- ----------
----------
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Global Emerging Growth Fund
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1996
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments, at value--see accompanying statement:
Unaffiliated companies (cost $146,033,104) $165,203,974
Affiliated companies (cost $3,947,959) 3,083,413
----------------------------------------------------------------
Cash 298,216
----------------------------------------------------------------
Unrealized appreciation on forward foreign
currency exchange contracts--Note 5 112,867
----------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 422,037
Investments sold 332,151
Interest and dividends 203,369
----------------------------------------------------------------
Other 10,507
------------
Total assets 169,666,534
- -------------------------------------------------------------------------------------------
LIABILITIES Unrealized depreciation on forward foreign
currency exchange contracts--Note 5 12,948
----------------------------------------------------------------
Payables and other liabilities:
Investments purchased 546,537
Shares of beneficial interest redeemed 432,158
Shareholder reports 130,516
Trustees' fees 106,873
Distribution and service plan fees 99,748
Transfer and shareholder servicing agent fees 55,505
Custodian fees 41,301
Other 34,591
------------
Total liabilities 1,460,177
- -------------------------------------------------------------------------------------------
NET ASSETS $168,206,357
------------
------------
- -------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $170,369,937
NET ASSETS ----------------------------------------------------------------
Accumulated net investment loss (266,679)
----------------------------------------------------------------
Accumulated net realized loss on investments
and foreign currency transactions (20,303,931)
----------------------------------------------------------------
Net unrealized appreciation on investments
and translation of assets and liabilities
denominated in foreign currencies 18,407,030
------------
Net assets $168,206,357
------------
------------
- -------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share
(based on net assets of $154,081,998 and 7,351,701
shares of beneficial interest outstanding) $20.96
Maximum offering price per share (net asset value
plus sales charge of 5.75% of offering price) $22.24
----------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering
price per share (based on net assets of
$10,854,911 and 522,496 shares of beneficial
interest outstanding) $20.78
----------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $3,269,448
and 157,283 shares of beneficial interest
outstanding) $20.79
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Global Emerging Growth Fund
<PAGE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
- -------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME Dividends (net of foreign withholding
taxes of $66,338) $1,980,310
----------------------------------------------------------------
Interest 585,187
----------
Total income 2,565,497
- -------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 1,233,678
----------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 603,641
----------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 340,899
Class B 42,516
Class C 14,558
----------------------------------------------------------------
Shareholder reports 230,027
----------------------------------------------------------------
Custodian fees and expenses 175,262
----------------------------------------------------------------
Trustees' fees and expenses--Note 1 66,235
----------------------------------------------------------------
Legal and auditing fees 38,828
----------------------------------------------------------------
Registration and filing fees:
Class A 774
Class B 3,643
Class C 1,103
----------------------------------------------------------------
Other 49,448
----------
Total expenses 2,800,612
- -------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (235,115)
- -------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain (loss) on:
GAIN (LOSS) Investments:
Unaffiliated companies 21,952,395
Affiliated companies (135,000)
Foreign currency transactions (691,072)
----------
Net realized gain 21,126,323
----------------------------------------------------------------
Net change in unrealized appreciation or
depreciation on:
Investments 491,725
Translation of assets and liabilities denominated
in foreign currencies (824,768)
----------
Net change (333,043)
----------
Net realized and unrealized gain 20,793,280
- -------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $20,558,165
-----------
-----------
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Global Emerging Growth Fund
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
1996 1995
- ----------------------------------------------------------------------------------------------------------------
- --------
<S> <C> <C> <C>
OPERATIONS Net investment income (loss) $ (235,115) $
107,231
- -------------------------------------------------------------------------------------------------
Net realized gain (loss) 21,126,323
(40,930,783)
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (333,043)
27,445,462
------------
- ------------
Net increase (decrease) in net assets resulting from operations 20,558,165
(13,378,090)
- -------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase (decrease) in net assets resulting from beneficial
TRANSACTIONS interest transactions--Note 2:
Class A (6,010,385)
(10,093,708)
Class B 10,625,564
--
Class C 3,210,027
--
- ----------------------------------------------------------------------------------------------------------------
- --------
NET ASSETS Total increase (decrease) 28,383,371
(23,471,798)
- -------------------------------------------------------------------------------------------------
Beginning of period 139,822,986
163,294,784
------------
- ------------
End of period (including accumulated net investment losses
of $266,679 and $130,131, respectively) $168,206,357
$139,822,986
------------
- ------------
------------
- ------------
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Global Emerging Growth Fund
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS
C
------------------------------------------------ ---------
- ---------
PERIOD PERIOD
ENDED ENDED
YEAR ENDED SEPTEMBER 30, SEPT. 30, SEPT.
30,
1996 1995 1994 1993 1992 1996(1)
1996(1)
- ----------------------------------------------------------------------------------------------------------------
- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $18.03 $19.35 $21.64 $20.25 $26.90 $17.43 $17.43
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment
operations:
Net investment income (loss) (.03) .01 (.01) (.10) (.17) (.01)
(.01)
Net realized and unrealized
gain (loss) 2.96 (1.33) (2.11) 1.69 (6.47) 3.36 3.37
------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations 2.93 (1.32) (2.12) 1.59 (6.64) 3.35 3.36
- --------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income -- -- -- -- (.01) --
- --
Distributions from net
realized gain -- -- (.17) (.20) -- --
- --
------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders -- -- (.17) (.20) (.01) --
- --
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.96 $18.03 $19.35 $21.64 $20.25 $20.78 $20.79
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE(2) 16.25% (6.82)% (9.91)% 7.79% (24.70)% 19.22%
19.28%
- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $154,082 $139,823 $163,295 $199,697 $129,634 $10,855 $3,269
- --------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $142,045 $148,378 $190,984 $194,184 $166,144 $4,675 $1,599
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.15)% 0.07% (1.05)% (0.80)% (0.71)% (0.42)%(3)
(0.45)%(3)
Expenses 1.87% 1.76% 1.77% 1.59% 1.39% 2.56%(3)
2.54%(3)
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 125.9% 160.3% 54.7% 41.0% 2.6% 125.9% 125.9%
Average brokerage
commission rate(5) $0.0030 -- -- -- -- $0.0030 $0.0030
</TABLE>
1.For the period from November 1, 1995 (inception of offering) to September 30,
1996.
2. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
3. Annualized.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1996 were $182,488,843 and $175,044,184, respectively.
5. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
15 Oppenheimer Global Emerging Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- ------
1. SIGNIFICANT Oppenheimer Global Emerging Growth Fund (the Fund) is
ACCOUNTING POLICIES registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management
investment company. The Fund's investment objective is
to aggressively seek capital appreciation from equity
securities. In seeking its objective, the Fund
emphasizes investments in emerging growth companies in
the U.S. and foreign countries that offer the potential
for growth of earnings or capital. The Fund's
investment adviser is OppenheimerFunds, Inc. (the
Manager). The Fund offers Class A, Class B and Class C
shares. Class A shares are sold with a front-end sales
charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All three classes of
shares have identical rights to earnings, assets and
voting privileges, except that each class has its own
distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting
rights with respect to matters affecting a single
class. Class B shares will automatically convert to
Class A shares six years after the date of purchase.
The following is a summary of significant accounting
policies consistently followed by the Fund.
-------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued
at the close of the New York Stock Exchange on each
trading day. Listed and unlisted securities for which
such information is regularly reported are valued at
the last sale price of the day or, in the absence of
sales, at values based on the closing bid or the last
sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are
valued by a portfolio pricing service approved by the
Board of Trustees. Such securities which cannot be
valued by the approved portfolio pricing service are
valued using dealer-supplied valuations provided the
Manager is satisfied that the firm rendering the quotes
is reliable and that the quotes reflect current market
value, or are valued under consistently applied
procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money
market type" debt securities having a remaining
maturity of 60 days or less are valued at cost (or last
determined market value) adjusted for amortization to
maturity of any premium or discount. Forward foreign
currency exchange contracts are valued based on the
closing prices of the forward currency contract rates
in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer.
-------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of
the Fund are maintained in U.S. dollars. Prices of
securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of
securities and investment income are translated at the
rates of exchange prevailing on the respective dates of
such transactions.
The effect of changes in foreign currency
exchange rates on investments is separately identified
from fluctuations arising from changes in market values
of securities held and reported with all other foreign
currency gains and losses in the Fund's Statement of
Operations.
-------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian
to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated
within the custodian's vault, all securities held as
collateral for repurchase agreements. The market value
of the underlying securities is required to be at least
102% of the resale price at the time of purchase. If
the seller of the agreement defaults and the value of
the collateral declines, or if the seller enters an
insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
-------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated
daily to each class of shares based upon the relative
proportion of net assets represented by such class.
Operating expenses directly attributable to a specific
class are charged against the operations of that class.
-------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply
with provisions of the Internal Revenue Code applicable
to regulated investment companies and to distribute all
of its taxable income, including any net realized gain
on investments not offset by loss carryovers, to
shareholders. Therefore, no federal income or excise
tax provision is required. At September 30, 1996, the
Fund had available for federal income tax purposes an
unused capital loss carryover of approximately
$29,567,000, which expires between 1998 and 2004.
-------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service.
During the year ended September 30, 1996, a provision
of $40,711 was made for the Fund's projected benefit
obligations and payments of $4,045 were made to retired
trustees, resulting in an accumulated liability of
$100,657 at September 30, 1996.
16 Oppenheimer Global Emerging Growth Fund
<PAGE>
- --------------------------------------------------------------------------------
1. SIGNIFICANT DISTRIBUTIONS TO SHAREHOLDERS. Dividends and
ACCOUNTING POLICIES distributions to shareholders are recorded on the ex-
(CONTINUED) dividend date.
-------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net
investment income (loss) and net realized gain (loss)
may differ for financial statement and tax purposes.
The character of the distributions made during the year
from net investment income or net realized gains may
differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividend
distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or
realized gain (loss) was recorded by the Fund.
During the year ended September 30, 1996, the
Fund adjusted the classification of investment income
and capital gain (loss) to shareholders to reflect the
differences between the financial statement amounts and
those determined in accordance with income tax
regulations. Accordingly, during the year ended
September 30, 1996, amounts have been reclassified to
reflect a decrease in undistributed net investment
income of $312,755, a decrease in accumulated net
realized loss on investments of $460,650, and a
decrease in paid-in capital of $147,895. In addition,
to properly reflect foreign currency gain in the
components of capital, $411,322 of foreign exchange
gain determined according to U.S. federal income tax
rules has been reclassified from net realized gain to
net investment loss.
-------------------------------------------------------
OTHER. Investment transactions are accounted for on the
date the investments are purchased or sold (trade date)
and dividend income is recorded on the ex-dividend
date. Realized gains and losses on investments and
unrealized appreciation and depreciation are determined
on an identified cost basis, which is the same basis
used for federal income tax purposes.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
the reported amounts of income and expenses during the
reporting period. Actual results could differ from
those estimates.
- --------------------------------------------------------------------------------
2. SHARES OF The Fund has authorized an unlimited number of no par
BENEFICIAL INTEREST value shares of beneficial interest. Transactions in
shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996(1) YEAR ENDED SEPTEMBER
30, 1995
--------------------------------
- ------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 3,277,006 $ 65,681,449 1,148,488 $
19,774,392
Issued in connection with the
acquisition of Oppenheimer Global
Environment Fund--Note 6 -- -- 1,540,515
27,636,869
Redeemed (3,681,446) (71,691,834) (3,370,269)
(57,504,969)
---------- ----------- ----------
- -----------
Net decrease (404,440) $ (6,010,385) (681,266)
$(10,093,708)
---------- ----------- ----------
- -----------
---------- ----------- ----------
- -----------
- ----------------------------------------------------------------------------------------------------
Class B:
Sold 722,783 $ 14,601,668 -- $
--
Redeemed (200,287) (3,976,104) --
--
---------- ----------- ----------
- -----------
Net increase 522,496 $ 10,625,564 -- $
--
---------- ----------- ----------
- -----------
---------- ----------- ----------
- -----------
- ----------------------------------------------------------------------------------------------------
Class C:
Sold 244,882 $ 4,972,628 -- $
--
Redeemed (87,599) (1,762,601) --
--
---------- ----------- ----------
- -----------
Net increase 157,283 $ 3,210,027 -- $
--
---------- ----------- ----------
- -----------
---------- ----------- ----------
- -----------
</TABLE>
1. For the year ended September 30, 1996 for Class A
shares and for the period from November 1, 1995
(inception of offering) to September 30, 1996 for Class
B and Class C shares.
17 Oppenheimer Global Emerging Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS AND At September 30, 1996, net unrealized appreciation on
LOSSES ON INVESTMENTS investments of $18,306,324 was composed of gross
appreciation of $26,458,740, and gross depreciation of
$8,152,416.
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER TRANSACTIONS with the investment advisory agreement with the Fund
WITH AFFILIATES which provides for a fee of 1% 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. The
Manager has agreed to reimburse the Fund if aggregate
expenses (with specified exceptions) exceed the most
stringent applicable regulatory limit on Fund expenses.
For the year ended September 30, 1996,
commissions (sales charges paid by investors) on sales
of Class A shares totaled $547,341, of which $159,815
was retained by OppenheimerFunds Distributor, Inc.
(OFDI), a subsidiary of the Manager, as general
distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of
the Fund's Class B and Class C shares totaled $280,291
and $29,431 of which $15,404 was paid to an affiliated
broker/dealer for Class B. During the period ended
September 30, 1996, OFDI received contingent deferred
sales charges of $8,208 and $1,057, respectively, upon
redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI at
the time of sale of such shares.
OppenheimerFunds Services (OFS), a division
of the Manager, is the transfer and shareholder
servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing
such services are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class
A shares to reimburse OFDI for a portion of its costs
incurred in connection with the personal service and
maintenance of accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that
may not exceed 0.25% of the average annual net assets
of Class A shares of the Fund. OFDI uses the service
fee to reimburse brokers, dealers, banks and other
financial institutions quarterly for providing personal
service and maintenance of accounts of their customers
that hold Class A shares. During the year ended
September 30, 1996, OFDI paid $17,351 to an affiliated
broker/dealer as reimbursement for Class A personal
service and maintenance expenses.
The Fund has adopted compensation type
Distribution and Service Plans for Class B and Class C
shares to compensate OFDI for its services and costs in
distributing Class B and Class C shares and servicing
accounts. Under the Plans, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class B
shares and on Class C shares, as compensation for sales
commissions paid from its own resources at the time of
sale and associated financing costs. If the Plans are
terminated by the Fund, the Board of Trustees may allow
the Fund to continue payments of the asset-based sales
charge to OFDI for certain expenses it incurred before
the Plans were terminated. OFDI also receives a service
fee of 0.25% per year as compensation for costs
incurred in connection with the personal service and
maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and
other financial institutions. Both fees are computed on
the average annual net assets of Class B and Class C
shares, determined as of the close of each regular
business day. During the year ended September 30, 1996,
OFDI retained $38,764 and $12,877, respectively, as
compensation for Class B and Class C sales commissions
and service fee advances, as well as financing costs.
At September 30, 1996, OFDI had incurred unreimbursed
expenses of $284,933 for Class B and $48,241 for Class
C.
18 Oppenheimer Global Emerging Growth Fund
<PAGE>
- --------------------------------------------------------------------------------
5. FORWARD CONTRACTS A forward foreign currency exchange contract (forward
contract) is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to
manage foreign currency risks. They may also be used to
tactically shift portfolio currency risk. The Fund
generally enters into forward contracts as a hedge upon
the purchase or sale of a security denominated in a
foreign currency. In addition, the Fund may enter into
such contracts as a hedge against changes in foreign
currency exchange rates on portfolio positions.
Forward contracts are valued based on the
closing prices of the forward currency contract rates
in the London foreign exchange markets on a daily basis
as provided by a reliable bank or dealer. The Fund will
realize a gain or loss upon the closing or settlement
of the forward transaction.
Securities held in segregated accounts to
cover net exposure on outstanding forward contracts are
noted in the Statement of Investments where applicable.
Unrealized appreciation or depreciation on forward
contracts is reported in the Statement of Assets and
Liabilities. Realized gains and losses are reported
with all other foreign currency gains and losses in the
Fund's Statement of Operations.
Risks include the potential inability of the
counterparty to meet the terms of the contract and
unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At September 30, 1996, the Fund had outstanding forward
contracts to purchase and sell foreign currencies as
follows:
<TABLE>
<CAPTION>
CONTRACT AMOUNT VALUATION AS OF UNREALIZED
UNREALIZED
CONTRACTS TO PURCHASE EXPIRATION DATE (000'S) SEPTEMBER 30, 1996 APPRECIATION
DEPRECIATION
- ----------------------------------------------------------------------------------------------------------------
- -----------
<S> <C> <C> <C> <C> <C>
British Pound Sterling (GBP) 10/2/96 38 GBP $ 59,629 $ 34
$ --
- ----------------------------------------------------------------------------------------------------------------
- -----------
Japanese Yen (JPY) 10/1/96 343,940 JPY 3,088,125 --
12,948
---------- --------
- --------
$3,147,754 34
12,948
---------- --------
- --------
---------- --------
- --------
CONTRACTS TO SELL
- ----------------------------------------------------------------------------------------------------------------
- -----------
Indonesian Rupiah (IDR) 10/1/96--10/2/96 33,562 IDR $ 14,457 $ 3
$ --
- ----------------------------------------------------------------------------------------------------------------
- -----------
Japanese Yen (JPY) 10/1/96--10/6/96 687,880 JPY 6,216,417 112,830
--
---------- --------
- --------
$6,230,874 112,833
--
---------- --------
- --------
----------
Total Unrealized Appreciation and Depreciation $112,867
$ 12,948
--------
- --------
--------
- --------
- ----------------------------------------------------------------------------------------------------------------
- -----------
</TABLE>
6. ACQUISITION OF On November 18, 1994, the Fund acquired all of the net
OPPENHEIMER GLOBAL assets of Oppenheimer Global Environment Fund, pursuant
ENVIRONMENT FUND to an Agreement and Plan of Reorganization approved by
the Oppenheimer Global Environment Fund shareholders on
November 4, 1994. The Fund issued 1,540,515 Class A
shares of beneficial interest, valued at $27,636,869,
in exchange for the net assets, resulting in combined
Class A net assets of $174,971,153 on November 18,
1994. The net assets acquired included net unrealized
appreciation of $2,684,431. The exchange qualifies as a
tax-free reorganization for federal income tax
purposes.
<PAGE>
Appendix A
Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Transmission
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking<PAGE>
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
PX0750.001
