OPPENHEIMER GLOBAL ENVIRONMENT FUND
Two World Trade Center, New York, NY 10048-0203
Telephone: 1-800-525-7048
Oppenheimer Global Environment Fund (the "Fund") is a mutual fund with the
investment objective of seeking long-term capital appreciation through
investment principally in companies offering products, services or
processes that contribute to a cleaner and healthier environment. These
companies have operations or products relating to pollution control, solid
waste management, hazardous waste treatment and disposal, pulp and paper
recycling, waste-to-energy conversion, asbestos and nuclear waste removal,
development of energy alternatives, biodegradable products, biotechnology,
related engineering and construction, and the achievement of cleaner and
healthier air, groundwater and foods. The Fund will invest in foreign as
well as domestic securities and normally will invest in securities of
issuers traded in markets in at least four countries (including the United
States). In an uncertain investment environment, defensive investment
methods may be emphasized. The Fund is designed for investors who are
willing to accept greater risks of loss in the hopes of greater gains over
the long term, and is not intended for those who desire assured income,
conservation of capital or short-term returns. See "The Fund and Its
Investment Policies."
This Prospectus sets forth concisely information about the Fund that a
prospective investor should know before investing. A Statement of
Additional Information about the Fund (the "Additional Statement"), dated
February 1, 1994, has been filed with the Securities and Exchange
Commission (the "SEC") and is available without charge upon written
request to Oppenheimer Shareholder Services (the "Transfer Agent"), P.O.
Box 5270, Denver, Colorado 80217, or by calling the toll-free number shown
above. The Additional Statement (which is incorporated in its entirety
by reference in this Prospectus) contains more detailed information about
the Fund and its management, including more complete information as to
certain risk factors.
Investors are advised to read and retain this Prospectus for future
reference. These securities may be considered to be speculative. Shares
of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the FDIC or any other agency,
and involve investment risks, including the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is effective February 1, 1994.
<PAGE>
Table of Contents
Page
Fund Expenses
Financial Highlights
The Fund and Its Investment Policies
Special Investment Methods
Investment Restrictions
Management of the Fund
How to Buy Shares
Minimum Investment
Sales Charge Table
Contingent Deferred Sales Charge
AccountLink
PhoneLink
Reduced Sales Charges
Right of Accumulation
Letter of Intent
Other Circumstances
Asset Builder Plans
Service Plan
How to Redeem Shares
Regular Redemption Procedures
Telephone Redemptions
Distributions from Retirement Plans
Automatic Withdrawal and Exchange Plans
Repurchase
Reinvestment Privilege
General Information on Redemptions
Exchanges of Shares and Retirement Plans
Dividends, Distributions and Taxes
Fund Performance Information
Additional Information
<PAGE>
Fund Expenses
The following table sets forth the fees that an investor in the Fund might
pay and the expenses paid by the Fund during the Fund's fiscal year ended
September 30, 1993.
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a percentage of offering price 5.75%
Sales Charge on Reinvested Dividends None
Redemption Fees None
Deferred Sales Load None*
Exchange Fee $5.00
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 0.75%
12b-1 (Service Plan) Fees 0.24%
Other Expenses 0.66%
--------
Total Fund Operating Expenses 1.65%
____________
*Certain purchases of Fund shares of $1 million or more are not subject
to front-end sales charges, but a contingent deferred sales charge
(maximum of 1.0%) is imposed on the proceeds of such shares redeemed
within 18 months of the end of the calendar month of their purchase,
subject to certain conditions. See "How to Buy Shares-Contingent Deferred
Sales Charge," below.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly (shareholder transaction expenses) or indirectly (annual fund
operating expenses). The sales charge rate in the table is the current
maximum rate applicable to purchases of Fund shares. Investors may be
entitled to reduced sales charges based on the amount purchased or the
value of shares already owned and may be subject to a contingent deferred
sales charge in limited circumstances. See "How to Buy Shares --
Contingent Deferred Sales Charge", below. "Other Expenses" includes such
expenses as custodial and transfer agent fees, audit and legal and other
business operating expenses, but excludes extraordinary expenses. For
further details, see the Fund's financial statements included in the
Additional Statement.
The following example applies the above-stated expenses and the
current maximum sales charge to a hypothetical $1,000 investment in shares
of the Fund over the time periods shown below, assuming a 5% annual rate
of return on the investment and also that the shares are redeemed at the
end of each stated period. The amounts below are the cumulative costs of
such hypothetical $1,000 investment for the periods shown.
1 year 3 years 5 years 10 years
------ ------- -------- ----------
$73 $107 $142 $242
This example should not be considered a representation of past or
future expenses or performance. Expenses are subject to change and actual
performance and expenses may be less or greater than those illustrated
above.
Financial Highlights
Selected data for a share of the Fund outstanding throughout each period
The information in the table below has been audited by KPMG Peat
Marwick, independent auditors, whose report on the financial statements
of the Fund for the fiscal year ended September 30, 1993, is included in
the Additional Statement.
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992 1991 1990+
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 9.69 $ 11.35 $ 10.40 $ 11.43
Income (loss) from investment operations:
Net investment income (loss) .01 (.03) .06 .04
Net realized and unrealized
gain (loss) on investments .80 (1.61) .99 (1.07)
Total income (loss) from
investment operations .81 (1.64) 1.05 (1.03)
Dividends and distributions to shareholders:
Dividends from net investment income -- (.02) (.08) --
Distributions from net realized gain
on investments -- -- (.02) --
Total dividends and
distributions to shareholders -- (.02) (.10) --
Net asset value, end of period $ 10.50 $ 9.69 $ 11.35 $ 10.40
Total Return,
at Net Asset Value** 8.36% (14.44)% 10.10% (9.01)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $43,272 $50,011 $62,607 $45,050
Average net assets (in thousands) $47,040 $57,224 $58,025 $26,638
Number of shares outstanding
at end of period (in thousands) 4,120 5,161 5,514 4,332
Ratios to average net assets:
Net investment income (loss) .15% (.23)% .57% 1.18%*
Expenses 1.65% 1.68)% 1.57% 1.89%*
Portfolio turnover rate*** 141.6% 134.7% 33.4% 7.9%
<FN>
+ For the period from March 2, 1990 (commencement of operations) to
September 30, 1990.
* Annualized.
** Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
*** The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended September 30, 1993 were
$64,504,041 and $74,339,309, respectively.
</TABLE>
<PAGE>
The Fund and Its Investment Policies
The Fund is an open-end, diversified management investment company
organized in 1989 as a Massachusetts business trust with the investment
objective of seeking long-term capital appreciation through investment
principally in companies offering products, services or processes that
contribute to a cleaner and healthier environment ("Environmental
Companies"). These companies have operations or products relating to
pollution control, solid waste management, hazardous waste treatment and
disposal, pulp and paper recycling, waste-to-energy conversion, asbestos
and nuclear waste removal, the development of energy alternatives,
biodegradable products, biotechnology, related engineering and
construction, and the achievement of cleaner and healthier air,
groundwater and foods. To be considered Environmental Companies for the
purpose of the Fund's investment objective, these companies must invest
at least 50% of their research and development expenditures in, or derive
at least 50% of their revenues from, one or more of the environmental
activities identified above. The Fund intends to invest in a wide
spectrum of Environmental Companies, including foreign Environmental
Companies as international opportunities become available. The Fund's
Board of Trustees may, from time to time, add to the above list new
environmental activities that contribute to the achievement of a cleaner
and healthier environment. These activities will be identified in updated
Prospectuses or supplements thereto. The Fund's investment policies and
practices, described below, are not "fundamental" policies unless a
particular policy is identified as "fundamental." "Fundamental" policies
are those that cannot be changed without the approval of a "majority", as
defined in the Investment Company Act of 1940 (the "Investment Company
Act"), of the Fund's outstanding voting securities. The Fund's Board of
Trustees may change non-fundamental investment policies without
shareholder approval.
As a fundamental policy, the Fund normally will invest at least 65%
of its total assets in common stocks of Environmental Companies traded in
markets in at least four countries (including the United States). The
Fund normally will invest that portion of its assets not invested in
Environmental Companies in a manner consistent with its objective of
capital appreciation. Such investments are limited to common and
preferred stocks, bonds, warrants and rights, convertible debt, or Hedging
Instruments (defined below). Bonds in which the Fund may invest will be
rated at least "A" by Standard & Poor's Corporation ("Standard & Poor's")
or Moody's Investors Service, Inc. ("Moody's") or, if unrated, will be of
equivalent quality as determined by the Fund's investment adviser,
Oppenheimer Management Corporation (the "Manager"). Bonds are subject to
two types of risks: credit risk and interest rate risk. Credit risk
relates to the ability of the issuer to meet interest or principal
payments or both as they become due. Interest rate risk refers to the
fluctuations in market value of fixed-income securities resulting solely
from the inverse relationship between the price and yield of these
securities. An increase in interest rates will tend to reduce the market
value of fixed-income investments, and a decline in interest rates will
tend to increase their value. As interest rates decline, the Fund may
invest in bonds to attempt to generate capital appreciation. The
foregoing ratings are not dispositive as to the Fund's investments in
convertible debt. In making its investments on behalf of the Fund in
convertible debt, the Manager looks primarily to the conversion feature
and treats such convertible securities as equity securities. The Fund may
invest in convertible debt rated as low as "C" by Moody's or "D" by
Standard & Poor's. Such ratings indicate that the obligations are
speculative to a high degree and may be in default. Risks of lower-rated
securities include (i) limited liquidity and secondary market support,
(ii) the possibility that earnings of the issuer may be insufficient to
meet its debt service, and (iii) the issuer's low creditworthiness and
potential for insolvency during periods of rising interest rates and
economic downturn.
The Fund is intended for investors seeking capital appreciation over
the long term and who are willing to accept greater risks of loss in the
hopes of greater gains. It is not intended for investors whose principal
objective is assured income, short-term gains or conservation of capital.
Current income is not an objective of the Fund. Investments in securities
having appreciation possibilities also involve risks of loss, and there
is no assurance that the Fund will achieve its objective.
Environmental Companies
The Fund's investment objective is based upon the belief that there
is a growing public and political awareness of the importance of the need
for a clean and healthy environment, and that increasingly strict
government regulation is propelling the growth of the environmental/waste
management industry. In recent years, Environmental Companies have been
rapidly expanding and, in the opinion of the Manager, will likely continue
to do so in the future. Such companies often provide new products or
services which enable them to capture a dominant or important market
position, or have a special area of expertise, or are able to take
advantage of changes in demographic factors in a way that is more
profitable than that of other companies. Environmental Companies are the
beneficiaries of recent trends toward greater regulatory control in the
environmental area, which the Manager believes will create investment
opportunities.
Foreign Securities
The Manager also believes that investment opportunities in
Environmental Companies exist outside the United States. The Fund may
invest without limit in "foreign securities," which include securities
issued by companies organized under the laws of countries other than the
United States that are traded on foreign securities exchanges or in
foreign over-the-counter markets. Securities of foreign issuers (i)
represented by American Depositary Receipts, (ii) traded in the U.S. over-
the-counter markets, or (iii) listed on a U.S. securities exchange are not
considered "foreign securities" because they are not subject to many of
the special considerations and risks (discussed below) that apply to
investments in foreign securities traded and held abroad. The Fund is
required to have at least one investment in securities of a U.S. company.
The relative amount of foreign securities held by the Fund may change from
time to time. No more than 25% of the Fund's total assets, at the time
of purchase, will be invested in securities of issuers organized under the
laws of any one foreign country. The Fund may invest in any country where
the Manager believes there is a potential to achieve the Fund's investment
objective. Investments in securities of issuers in non-industrialized
countries generally involve more risk and may be considered highly
speculative. Foreign securities that the Fund may purchase may be
denominated in U.S. dollars or in non-U.S. currencies. The Fund may
convert U.S. dollars into foreign currency, but only to effect securities
transactions and not to hold such currency as an investment. If the
Fund's portfolio investments are held abroad, the countries in which such
investments may be held and the sub-custodians holding them must be, in
most cases, approved by the Fund's Board of Trustees under applicable SEC
rules. Investment in foreign securities involves considerations and risks
not associated with investment in securities of U.S. issuers. For
example, foreign issuers are not required to use accounting methods that
correspond to generally-accepted accounting principles. If foreign
securities are not registered under the Securities Act of 1933, as amended
(the "Securities Act"), the issuer may not have to comply with the
disclosure requirements of the Securities Exchange Act of 1934, as
amended. The values of foreign securities investments will be affected
by a variety of factors, including, among others, incomplete or inaccurate
information available as to foreign issuers, changes in currency rates,
exchange control regulations or currency blockage, expropriation or
nationalization of assets, application of foreign tax laws (including
withholding taxes), changes in governmental administration or economic or
monetary policy in the U.S. or abroad, or changed circumstances in
dealings between nations. In addition, it is generally more difficult to
obtain court judgments outside the U.S. Additional costs may be incurred
in connection with investments in foreign securities because of generally
higher foreign commissions and the additional custodial costs associated
with monitoring foreign securities. See "Investment Objective and
Policies - Investment in Foreign Securities" in the Additional Statement
as to additional possible rewards and risks of investing in foreign
securities.
Warrants and Rights
The Fund may invest up to 5% of its total assets in warrants and
rights (other than those that have been acquired in units or attached to
other securities). Of such 5%, no more than 2% of the Fund's total assets
may be invested in warrants and rights that are not listed on The New York
Stock Exchange or The American Stock Exchange. Warrants are options to
purchase equity securities at specified prices valid for a specific period
of time. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its shareholders.
For further details, see "Investment Objective and Policies - Warrants and
Rights" in the Additional Statement.
Temporary Investments
Under normal circumstances, the Fund may hold a portion of its assets
in cash equivalents (commercial paper, Treasury bills and U.S. Government
securities maturing in one year or less) for liquidity purposes. Under
unusual market or economic conditions (including drastic market
fluctuations), for temporary defensive purposes, the Fund may invest up
to 100% of its assets in (i) obligations issued or guaranteed by the U.S.
Government, its instrumentalities or agencies, (ii) certificates of
deposit, (iii) bankers' acceptances, time deposits, and letters of credit
if they are payable in the U.S. or London, England and are issued or
guaranteed by a domestic or foreign bank having total assets in excess of
$1 billion, (iv) commercial paper rated in the three highest categories
by Standard & Poor's or Moody's, and/or (v) short-term debt securities
(i.e., those maturing in one year or less from the date of purchase),
including rated or unrated bonds, debentures and preferred stocks.
Special Risk Considerations - Investments in Environmental Companies and
Emerging Growth Companies
The operations of Environmental Companies are subject to extensive
federal, state, local and foreign regulation. Risks associated with such
companies include (i) substantial opposition by groups and government
officials to the location and operation of waste treatment and disposal
facilities, (ii) possible adverse effects on public health and the
environment attributable to waste disposal, (iii) increased costs
resulting from changing regulations involving, among other things,
securing of permits, groundwater monitoring requirements and adherence to
prescribed methods of operation, (iv) the imposition of strict, joint and
several liability on both the generators of hazardous waste and the owners
and operators of facilities that treat or dispose of hazardous waste, and
(v) a change in the political or regulatory climate that may decrease both
public and private focus on, and funding of, Environmental Companies or
efforts to clean the environment nationally or abroad. Environmental
Companies may be insulated from certain conventional economic forces
because their products and services are required by government
regulations. However, any relaxation of environmental protection laws or
the degree of their enforcement could cause a decline in the demand for
the products and services of these companies.
Certain of the issuers in which the Fund may invest may be considered
start-up or emerging growth companies with a limited operating history.
Investors in the Fund should consider and carefully evaluate the special
risk factors inherent in investing in equity securities of companies
characterized by a rapid rate of growth. The Fund currently intends to
invest no more than 5% of its total assets in securities of small,
unseasoned issuers, but reserves the right to invest up to 25% of its
total assets in securities of such issuers. Additional discussion of the
risks of investments in emerging growth companies is contained in
"Investment Objective and Policies - Risks of Investment in Emerging
Growth Companies" in the Additional Statement.
Special Investment Methods
Borrowing
From time to time, the Fund may increase its ownership of securities
by borrowing up to 10% of the value of its total assets from banks on an
unsecured basis and investing the borrowed funds (on which the Fund will
pay interest), subject to the 300% asset coverage requirement of the
Investment Company Act. Purchasing securities with borrowed funds is a
speculative investment method known as leverage. There are risks
associated with leveraging purchases of portfolio securities by borrowing,
including a possible reduction of income and increased fluctuation of net
asset value per share. For further discussion, see "Special Investment
Methods - Borrowing" in the Additional Statement.
Repurchase Agreements
The Fund may acquire securities subject to repurchase agreements to
generate income for liquidity purposes to meet anticipated redemptions,
or pending the investment of proceeds from sales of Fund shares or
settlement of purchases of portfolio investments. The Fund's repurchase
agreements will be fully collateralized. However, if the seller of the
securities fails to pay the agreed-upon repurchase price on the delivery
date, the Fund's risks may include the costs of disposing of the
collateral for the agreement and losses that might result from any delays
in foreclosing on the collateral. The Fund will not enter into a
repurchase agreement that will cause more than 10% of the Fund's net
assets to be subject to repurchase agreements maturing in more than seven
days. There is no limit on the amount of the Fund's net assets that may
be subject to repurchase agreements maturing in seven days or less. See
"Special Investment Methods - Repurchase Agreements" in the Additional
Statement for more details.
Illiquid and Restricted Securities
The Fund will not purchase or otherwise acquire any securities that
may be illiquid by virtue of the absence of a readily-available market or
because their disposition would be subject to legal restrictions
("restricted securities") if, as a result, more than 15% of the Fund's net
assets would be invested in securities that are illiquid (including
repurchase agreements maturing in more than seven days). This policy does
not limit the acquisition of restricted securities eligible for resale to
qualified institutional buyers pursuant to Rule 144A under the Securities
Act that are determined to be liquid by the Fund's Board of Trustees or
by the Manager under Board-approved guidelines. Such guidelines take into
account, among other factors, trading activity for such securities and the
availability of reliable pricing information. If there is a lack of
trading interest in particular Rule 144A securities, the Fund's holdings
of those securities may be illiquid. There may be undesirable delays in
selling such securities at prices representing their fair value. See
"Special Investment Methods - Illiquid and Restricted Securities" in the
Additional Statement for further details. The Fund currently intends to
invest no more than 10% of its net assets in illiquid or restricted
securities, excluding securities eligible for resale pursuant to Rule
144A.
Loans of Portfolio Securities
To attempt to increase its income for liquidity purposes, the Fund
may lend its portfolio securities (other than in repurchase transactions)
to qualified borrowers if the loan is collateralized in accordance with
applicable regulatory requirements and if, after any loan, the value of
the securities loaned does not exceed 25% of the value of the Fund's total
assets. The Fund presently does not intend that the value of securities
loaned in the coming year will exceed 5% of the value of the Fund's total
assets. See "Special Investment Methods - Loans of Portfolio Securities"
in the Additional Statement for further information on securities loans.
Covered Calls, Puts and Hedging
The Fund may write (i.e., sell) covered call options on securities to
generate income for liquidity purposes. It may purchase puts and calls
on securities to seek capital appreciation. For hedging purposes, the
Fund may purchase and sell certain Stock Index Futures (defined below),
foreign currency futures, Forward Contracts (defined below), and call and
put options on Stock Index Futures, broadly-based stock indices and
foreign currencies, all of which are referred to as "Hedging Instruments."
In general, the Fund may use Hedging Instruments (i) to attempt to protect
against declines in the market value of the Fund's portfolio securities
or Stock Index Futures, and thus protect the Fund's net asset value per
share against downward market trends or (ii) to establish a position in
the equity securities markets as a temporary substitute for purchasing
particular equity securities. The Fund will not use Hedging Instruments
for speculation. The Fund's strategy of hedging with futures and options
on futures will be incidental to the Fund's activities in the underlying
cash market. The covered options and Hedging Instruments the Fund may use
are described below and in greater detail under "Special Investment
Methods - Covered Calls, Puts and Hedging" in the Additional Statement.
-Writing Covered Call and Put Options. The Fund may write call
options ("calls") on securities and futures if (i) the calls are traded
on a domestic or foreign securities exchange or in the over-the-counter
market, and (ii) the calls are "covered" (i.e., the Fund owns the
securities or futures subject to the call or other securities acceptable
for applicable escrow arrangements) while the call is outstanding. Calls
on futures must be covered by deliverable securities or by liquid assets
segregated to satisfy the futures contract. If a call written by the Fund
is exercised, the Fund foregoes any possible profit from an increase in
the market price of the underlying security over the exercise price plus
the premium received. The Fund may write call options on up to 100% of
its total assets. The Fund may write put options ("puts") if (i) the put
is traded on a domestic or foreign securities exchange or over-the-counter
market, and (ii) any put written is covered by segregated liquid assets
with not more than 50% of the Fund's total assets segregated to cover puts
at the time of investment. In writing puts, there is a risk that the Fund
may be required to take delivery of the underlying security at a
disadvantageous price.
-Purchasing Puts and Calls. The Fund may purchase put options
("puts") which relate to securities or Stock Index Futures (whether or not
it holds such securities or Stock Index Futures in its portfolio) or to
broadly-based stock indices, or to effect a "closing sale transaction" to
terminate its obligation on a put it has previously written. The Fund may
purchase calls (a) as to securities, Stock Index Futures or broadly-based
stock indices, or (b) to effect a "closing purchase transaction" to
terminate its obligation on a call it has previously written. A call or
put may be purchased only if, after such purchase, the value of all put
and call options held by the Fund would not exceed 5% of the Fund's total
assets.
-Stock Index Futures. The Fund may buy and sell futures contracts
only if they relate to broadly-based stock indices ("Stock Index
Futures"). A stock index is "broadly-based" if it includes stocks that
are not limited to issuers in any particular industry or group of
industries. Stock Index Futures 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 underlying stocks in
the index is made.
-Foreign Currency Options. The Fund may purchase and write puts and
calls on foreign currencies that are traded on a securities or commodities
exchange or an over-the-counter market or quoted by major recognized
dealers in such options, for the purpose of protecting against declines
in the dollar value of foreign securities owned by the Fund or in the
dollar value of payments on such securities and against increases in the
dollar cost of foreign securities to be acquired.
-Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. The Fund may enter into a
Forward Contract in order to "lock in" the U.S. dollar price of a security
denominated in a foreign currency that it has purchased or sold but that
has not yet settled, or to protect against a possible loss resulting from
an adverse change in the relationship between the U.S. dollar and a
foreign currency. There is a risk that use of Forward Contracts may
reduce the gain that would otherwise result from a change in the
relationship between the U.S. dollar and a foreign currency. Forward
Contracts include standardized foreign currency futures contracts that are
traded on exchanges and are subject to procedures and regulations
applicable to other Futures. The Fund may also enter into a Forward
Contract to sell a foreign currency denominated in a currency other than
that in which the underlying security is denominated. This is done in the
expectation that there is a greater correlation between the foreign
currency of the Forward Contract and the foreign currency of the
underlying investment than between the U.S. dollar and the currency of the
underlying investment. This technique is referred to as "cross hedging".
The Fund may also cross-hedge by entering into a Forward Contract to sell
a foreign currency and receive a second foreign currency, both of which
differ from the foreign currency in which the underlying security is
denominated. This is done in the expectation that there is a greater
correlation between the foreign currency of the Forward Contract and the
foreign currency of the underlying investment than between the U.S. dollar
and the foreign currency of the underlying investment. The success of
cross hedging is dependent on many factors, including the ability of the
Manager to correctly identify and monitor the correlation between foreign
currencies and the U.S. dollar. To the extent that the correlation is not
identical, the Fund may experience losses or gains on both the underlying
security and the cross currency hedge.
The Fund will not speculate in foreign currency exchange contracts.
There is no limitation as to the percentage of the Fund's assets that may
be committed to foreign currency exchange contracts. The Fund does not
enter into such Forward Contracts or maintain a net exposure in such
contracts to the extent that the Fund would be obligated to deliver an
amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency, or 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.
- Risks of Options and Futures Trading. "Special Investment
Methods-Covered Calls, Puts and Hedging" in the Additional Statement
contains more information about options and futures, Forward Contracts,
segregation arrangements for Forward Contracts, the payment of premiums
for option trades, the tax effects, risks and possible benefits to the
Fund from options trading, and information as to the Fund's other
limitations relating to investment in futures and options thereon. There
are certain risks in writing calls. If a call written by the Fund is
exercised, the Fund foregoes any profit from any increase in the market
price above the call price of the underlying investment on which the call
was written. In writing puts, there is the risk that the Fund may be
required to buy the underlying security at a disadvantageous price. The
principal risks are (i) possible imperfect correlation between movements
in the price of options, currencies or futures contracts and movements in
the prices of the securities or currencies hedged or used for cover, (ii)
lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or any forward currency contract at
any particular time, (iii) the need for additional skills and techniques
beyond those required for normal portfolio management, (iv) losses on
futures resulting from market movements not anticipated by the Manager,
and (v) possible need to defer closing out certain options or futures
contracts in order to continue to qualify for beneficial tax treatment
afforded "regulated investment companies" under the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code").
Portfolio Turnover
Generally, the Fund will not trade in securities for short-term
profits. However, when circumstances warrant, to take advantage of
differences in securities prices and yield or of fluctuations in interest
rates consistent with its investment objectives, the Fund may sell
securities without regard to the length of time held. The degree of
portfolio activity will affect brokerage costs of the Fund. If the Fund
derives 30% or more of its gross income from the sale of securities held
less than three months, the Fund may fail to qualify under the Internal
Revenue Code as a regulated investment company and thereupon would lose
certain beneficial tax treatment of its income. See "Dividends,
Distributions and Taxes" below.
Short Sales Against-the-Box
The Fund may not sell securities short except in transactions
referred to as "short sales against-the-box." No more than 15% of the
Fund's net assets will be held as collateral for such short sales at any
one time.
Investment Restrictions
The Fund has certain investment restrictions that, together with its
investment objective, are fundamental policies changeable only by the vote
of a "majority" (as defined in the Investment Company Act) of the Fund's
outstanding voting securities. Under certain of those restrictions, the
Fund cannot: (i) purchase securities issued or guaranteed by any one
issuer (except the U.S. Government or its agencies or instrumentalities),
if the Fund would then own more than 10% of that issuer's voting
securities or, with respect to 75% of its total assets, if more than 5%
of the Fund's total assets would be invested in securities of that issuer;
(ii) borrow money in excess of 10% of the value of its total assets,
subject to the restrictions set forth under "Special Investment Methods--
Borrowing"; (iii) concentrate investments to the extent that more than 25%
of the value of its total assets is invested in securities of issuers in
the same industry (other than securities of the U.S. Government, its
agencies or instrumentalities, and securities of Environmental Companies
in which the Fund will normally invest at least 65% of its total assets);
(iv) make loans, except by purchasing debt obligations in accordance with
its investment objective and policies, or by entering into repurchase
agreements, or as described in "Special Investment Methods - Loans of
Portfolio Securities"; or (v) deviate from the percentage restrictions
listed under "The Fund and Its Investment Policies - Warrants and Rights"
and "Special Investment Methods - Loans of Portfolio Securities" and
"Short Sales Against-the-Box" or from the restrictions listed under
"Special Investment Methods - Covered Calls, Puts and Hedging" as to the
types of options that may be purchased or sold, or from the restrictions
under "The Fund and Its Investment Policies - Foreign Securities" as to
the types of foreign securities that may be purchased. The percentage
restrictions described above and in the Additional Statement apply only
at the time of investment and require no action by the Fund as a result
of subsequent changes in value of the investment or the size of the Fund.
A supplementary list of investment restrictions is contained in the
Additional Statement.
Management of the Fund
The Fund's Board of Trustees has overall responsibility for the
management of the Fund under the laws of Massachusetts governing the
responsibilities of trustees of business trusts. Subject to the authority
of the Fund's Board of Trustees, the Manager is responsible for the day-
to-day management of the Fund's business, supervises the investment
operations of the Fund and the composition of its portfolio and furnishes
the Fund advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities pursuant to
an investment advisory agreement with the Fund (the "Agreement"). The
Agreement contains provisions relating to the selection of brokers and
dealers for the Fund's portfolio transactions. Subject to the Agreement,
the Manager may 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 or dealers for the Fund's portfolio transactions.
Under the Agreement, the Fund pays a monthly management fee to the
Manager at the following annual rates, computed on the net assets of the
Fund at the close of business each day, which rates are higher than those
paid by most other investment companies: 0.75% of the first $200 million
of net assets, 0.72% of the next $200 million, 0.69% of the next $200
million and 0.66% of average net assets over $600 million. See
"Investment Management Services" in the Additional Statement for further
information about the Agreement, including a discussion of expense
reimbursement arrangements and exculpation provisions.
John Wallace is a Vice President of the Manager who serves as the
Portfolio Manager and a Vice President of the Fund. Since December, 1991,
he has been the person principally responsible for the day-to-day
management of the Fund's portfolio. During the past five years, Mr.
Wallace has also served as an officer of other OppenheimerFunds, prior to
which he was a securities analyst and assistant portfolio manager for the
Manager.
The Manager has operated as an investment adviser since April 30,
1959. The Manager and its affiliates currently advise U.S. investment
companies with assets aggregating $25 billion as of September 30, 1993,
and having 1.8 million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company owned in part by senior
management of the Manager and ultimately controlled by Massachusetts
Mutual Life Insurance Company, a mutual life insurance company that also
advises pension plans and investment companies.
How to Buy Shares
The Fund's shares may be purchased through any dealer or broker which
has a sales agreement with the Fund's distributor, Oppenheimer Funds
Distributor, Inc. (the "Distributor"), a subsidiary of the Manager. There
are two ways to make an initial investment: either (i) complete an
OppenheimerFunds New Account Application and mail it with payment to the
Distributor at P.O. Box 5270, Denver, Colorado 80217 (if no dealer or
broker is named in the Application, the Distributor will be listed as the
dealer of record); or (ii) order the shares through your dealer or broker.
Minimum Investment
The minimum initial investment is $1,000, except as otherwise
described in this Prospectus. Subsequent purchases must be at least $25
and may be made (i) through authorized dealers or brokers, (ii) by
forwarding payment to the Distributor at the address above with the names
of all account owners, the account number and the name of the Fund, or
(iii) automatically through Asset Builder Plans or by telephone using
AccountLink, described below. Under an Asset Builder Plan, military
allotment plan, 403(b)(7) custodial plan or Automatic Exchange Plan,
initial and subsequent investments must be at least $25. The minimum
initial and subsequent purchase requirements are waived on purchases made
by reinvesting dividends from any of the "Eligible Funds" listed in "Right
of Accumulation," below, or by reinvesting distributions from unit
investment trusts for which reinvestment arrangements have been made with
the Distributor. No share certificates will be issued for shares of the
Fund unless specifically requested in writing by a purchaser or the dealer
or broker.
Shares are sold at their offering price, which (as used in this
Prospectus and the Additional Statement) is net asset value per share plus
a sales charge, except that as to certain purchases described below that
are not subject to a front-end sales charge, the offering price is net
asset value. The offering price (and net asset value) is determined as
of 4:00 P.M. (all references to time in this Prospectus mean New York
time) each day The New York Stock Exchange is open (a "regular business
day"). Net asset value per share is determined by dividing the value of
the Fund's net assets by the number of shares outstanding. The Fund's
Board of Trustees has established procedures for valuing the Fund's
securities. In general, those valuations are based on market value, with
special provisions for: (i) securities not having readily-available market
quotations; (ii) short-term debt securities; and (iii) covered calls and
Hedging Instruments. Further details are in "Purchase, Redemption and
Pricing of Shares" in the Additional Statement.
Sales Charge Table
The following table shows the regular sales charge rates for a
"single purchaser" (defined below), together with the dealer discounts
paid to authorized dealers and the agency commissions paid to authorized
brokers (collectively, "commissions"):
Front-End
Front-End Sales Charge as
Sales Charge as Approximate Commission
Percentage of Percentage of Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ------------------ ---------------- ---------------- --------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more
but less than $50,00 5.50% 5.82% 4.75%
$50,000 or more
but less than $100,000 4.75% 4.99% 4.00%
$100,000 or more
but less than $250,000 3.75% 3.90% 3.00%
$250,000 or more
but less than $500,000 2.50% 2.56% 2.00%
$500,000 or more
but less than $1 million 2.00% 2.04% 1.60%
$1 million or more None* None* None*
- -------------------------------
* See "Contingent Deferred Sales Charge," below.
Under certain circumstances, commissions up to the amount of the
entire sales charge may be reallowed to dealers or brokers, who might then
be deemed to be "underwriters" under the Securities Act. Commission rates
may vary among the funds for which the Manager and its affiliates act as
investment advisers.
The Distributor may advance up to 13 months' commissions to dealers
that have entered into special arrangements with the Distributor as to
purchases made by their clients under Oppenheimer Asset Builder Plans.
The Distributor may, from time to time, enter into arrangements with
specific dealers whereby the Distributor may make additional payments to
that dealer based, in part, on that dealer meeting certain sales criteria.
Such additional payments may be based on sales for a specific period of
time, shares of certain or all of the Eligible Funds (defined below) held
by the dealer and/or its customers, or some combination thereof. If a
registered representative of a securities dealer sells more than $2.5
million of shares of Eligible Funds other than "Money Market
Funds"(defined below) in a calendar year, the dealer firm is eligible to
send such representative, with a guest, to a three-day sales conference
(generally held in a resort), if one is sponsored and held by the
Distributor; or in lieu of sending such representative that firm may, at
its option, receive the equivalent cash value of such award as additional
commission.
Dealers whose sales of Class A shares of Eligible Funds other than
Money Market Funds (defined below) under OppenheimerFunds-sponsored
403(b)(7) custodial plans (which must be held in accounts registered in
the name of a custodian for such plans) exceed a rate of $5 million per
year, calculated per calendar quarter, will receive monthly one-half of
the Distributor's retained commission on such sales. Dealers whose sales
of such plans exceed a rate of $10 million per year, calculated per
calendar quarter, will receive the Distributor's entire retained
commission on such sales.
All purchase orders received by the Distributor at its address in
Denver, Colorado, prior to 4:00 P.M. on a regular business day are
processed at that day's offering price. However, an order received by the
Distributor from a dealer or broker after the offering price is determined
that day will receive such offering price if the order was received by
the dealer or broker from its customer prior to 4:00 P.M. and was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Purchase orders received on other
than a regular business day will be executed on the next succeeding
regular business day. The Distributor, in its sole discretion, may accept
or reject any order for the purchase of the Fund's shares. The sale of
shares will be suspended during any period in which the determination of
net asset value is suspended and may be suspended by the Fund's Board of
Trustees whenever the Board judges it in the best interest of the Fund to
do so.
Contingent Deferred Sales Charge
On purchases of Class A shares of one or more of the Eligible Funds
by a "single purchaser" (defined below in "Right of Accumulation")
aggregating $1.0 million or more, the Distributor will pay authorized
dealers an amount equal to 1.0% of the first $2.5 million of such
purchases, plus 0.50% of the next $2.5 million, plus 0.25% of such
purchases in excess of $5 million. A contingent deferred sales charge
(the "CDSC") will be deducted from the redemption proceeds of shares as
to whose purchase the Distributor has made such payments to dealers if the
shares are redeemed within 18 months of the end of the calendar month of
their purchase. The CDSC will be in an amount equal to 1.0% of the lesser
of the aggregate net asset value of the redeemed shares (not including
shares purchased by reinvestment of dividends or capital gains) or the
original cost of such shares. However, the total CDSC paid on such shares
will not exceed the aggregate commissions paid to dealers on all shares
of Eligible Funds purchased subject to a CDSC by that "single purchaser".
The CDSC does not apply to purchases at net asset value described in
"Other Circumstances" and will be waived in the case of redemptions of
shares made for: (i) retirement distributions (or loans) to participants
or beneficiaries from retirement plans qualified under Section 401(a) of
the Internal Revenue Code or from Individual Retirement Accounts ("IRAs"),
403(b)(7) plans, deferred compensation plans created under Section 457 of
the Internal Revenue Code or other employee benefit plans (collectively,
"Retirement Plans"); (ii) returns of excess contributions to such
Retirement Plans; (iii) Automatic Withdrawal Plan payments limited to no
more than 12% of the original account value annually; and (iv) involuntary
redemptions of shares by operation of law or under procedures set forth
in the Fund's Declaration of Trust or as adopted by the Fund's Board of
Trustees.
Some or all of the proceeds of redeemed shares on which a CDSC was
paid on redemption and which are subsequently reinvested under the
"Reinvestment Privilege" (described below) may be reinvested within six
months of redemption without sales charge at net asset value on the
reinvestment date if the investor notifies the Distributor that the
privilege applies. Additionally, no CDSC is charged on exchanges,
pursuant to the Fund's Exchange Privilege (described below), of shares
purchased subject to a CDSC, except that if the shares acquired by
exchange are redeemed within 18 months of the end of the calendar month
of the initial purchase of the exchanged shares, the CDSC will apply. In
determining whether a CDSC is payable, and the amount of any such CDSC,
shares not subject to a CDSC are redeemed first, including shares
purchased by reinvestment of dividends and capital gains distributions,
and then other shares are redeemed in the order of purchase.
AccountLink
OppenheimerFunds AccountLink is a means to link a shareholder's Fund
account with an account at a U.S. bank or other financial institution
that is an Automated Clearing House ("ACH") member. AccountLink can be
used to transmit funds by electronic funds transfers for account
transactions, including subsequent share purchases. The minimum investment
by AccountLink is $25. Purchases of up to $250,000 may be made by
telephone using AccountLink (the maximum is $100,000 if the transaction
is done by PhoneLink, described below). To speak to service operators to
initiate such purchases, call the Distributor at 1-800-852-8457. To
initiate such purchases automatically using PhoneLink, call 1-800-533-
3310. All such calls will be recorded. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the ACH
transfer to buy the shares. Dividends will begin to accrue on such shares
on the day the Fund receives Federal Funds for such purchase through the
ACH system before 4:00 P.M., which is normally three days after the ACH
transfer is initiated. If such Federal Funds are received after that
time, dividends will begin to accrue on the next regular business day
after such Federal Funds are received.
AccountLink may also be used as a means of transmitting redemption
proceeds to a designated bank account (see "How to Redeem Shares") or to
transmit distributions paid by the Fund directly to a bank account (see
"Dividends and Distributions"). AccountLink privileges must be requested
on the application used to buy shares or the dealer settlement
instructions establishing the account, or on subsequent signature-
guaranteed instructions to the Transfer Agent, from all shareholders of
record for an account, and such privileges thereupon apply to each
shareholder of record and the dealer representative of record unless and
until the Transfer Agent receives written instructions from a shareholder
of record canceling such privileges. Changes of bank account information
must be made by signature-guaranteed instructions to the Transfer Agent
by all shareholders of record for an account. The Distributor, the
Transfer Agent and the Fund have adopted reasonable procedures to confirm
that telephone instructions under AccountLink, and under PhoneLink,
Telephone Redemptions, and Exchange Privileges (described below) are
genuine, by requiring callers to provide tax identification number(s) and
other account data and by recording calls and confirming such transactions
in writing. If the Transfer Agent and the Distributor do not use such
procedures, they may be liable for losses due to unauthorized
transactions, but otherwise they will not be liable for losses or expenses
arising out of telephone instructions reasonably believed to be genuine.
The Fund reserves the right to amend, suspend or discontinue AccountLink
privileges at any time without prior notice.
PhoneLink
PhoneLink is the OppenheimerFunds automated telephone system which
enables shareholders of the Fund to initiate account transactions
automatically by telephone, including exchanges between existing accounts
(see "Exchange Privilege," below), redemptions (see "How To Redeem Shares
- - Telephone Redemptions," below) and purchases (see "AccountLink," above).
Certain PhoneLink transactions may be done automatically using a touchtone
telephone provided that the shareholder uses a Personal Identification
Number ("PIN") which may be obtained through PhoneLink by calling 1-800-
533-3310. If an account has multiple owners, the Transfer Agent or the
Distributor may rely on any instructions initiated through PhoneLink using
a PIN. The Distributor, the Transfer Agent and the Fund will not be
responsible for any damages, losses or expenses arising out of such
instructions. The Fund reserves the right to amend, suspend or
discontinue PhoneLink privileges at any time without prior notice.
Reduced Sales Charges
The sales charge rates in the table above may be reduced as follows:
-Right of Accumulation. In calculating the sales charge rate
applicable to current purchases of Fund shares, a single purchaser is
entitled to cumulate current purchases with the greater of (1) amounts
previously paid for, or (2) the current value (at offering price) of,
shares of the Fund and certain other Eligible Funds if sold subject to an
initial sales charge and if the investment is still held in one of the
Eligible Funds. The Eligible Funds are those for which the Distributor
or an affiliate acts as the distributor and include the following: (i) the
Fund, Oppenheimer Discovery Fund, Oppenheimer Target Fund, Oppenheimer
Tax-Free Bond Fund, Oppenheimer New York Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund, Oppenheimer Pennsylvania Tax-Exempt Fund,
Oppenheimer High Yield Fund, Oppenheimer Florida Tax-Exempt Fund,
Oppenheimer Champion High Yield Fund, Oppenheimer Total Return Fund, Inc.,
Oppenheimer Mortgage Income Fund, Oppenheimer Time Fund, Oppenheimer U.S.
Government Trust, Oppenheimer Government Securities Fund, Oppenheimer
Insured Tax-Exempt Bond Fund, Oppenheimer Intermediate Tax-Exempt Bond
Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer Main Street
Income & Growth Fund, Oppenheimer Main Street California Tax-Exempt Fund,
Oppenheimer Global Bio-Tech Fund, Oppenheimer Investment Grade Bond Fund,
Oppenheimer Value Stock Fund, Oppenheimer Fund, Oppenheimer Global Fund,
Oppenheimer Asset Allocation Fund, Oppenheimer Special Fund, Oppenheimer
Equity Income Fund, Oppenheimer Gold & Special Minerals Fund, Oppenheimer
Strategic Income Fund, Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond Fund, and Oppenheimer
Strategic Short-Term Income Fund, and (ii) the following "Money Market
Funds": Centennial Tax Exempt Trust, Centennial Money Market Trust,
Centennial America Fund, L.P., Centennial Government Trust, Centennial
California Tax Exempt Trust, Centennial New York Tax Exempt Trust,
Oppenheimer Money Market Fund, Inc., Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves and Oppenheimer Tax-Exempt Cash Reserves. There
is an initial sales charge on the purchase of shares of each Eligible Fund
except the Money Market Funds (under certain circumstances described
above, redemption proceeds of Money Market Fund shares may be subject to
a CDSC). The reduced sales charge applies only to current purchases.
The term "single purchaser" refers to: (i) an individual; (ii) an
individual and spouse purchasing shares of the Fund for their own account
or for trust or custodial accounts for their minor children; or (iii) a
fiduciary purchasing for any one trust, estate or fiduciary account,
including employee benefit plans created under Sections 401 or 457 of the
Internal Revenue Code, including related plans of the same employer. To
be entitled to a reduced sales charge under the Right of Accumulation, at
the time of purchase the purchaser must ask the Distributor for such
entitlement and provide the account number(s) for shares of Eligible Funds
owned by the single purchaser, and the age of any minor children for whom
shares are held.
-Letter of Intent. By initially investing at least $1,000 and
submitting a Letter of Intent (the "Letter") to the Distributor, a single
purchaser may purchase shares of the Fund and other Eligible Funds (other
than the Money Market Funds) during a 13-month period at the reduced sales
charge rates or at net asset value but subject to the CDSC (described
above), if applicable, applying to the aggregate amount of the intended
purchases stated in the Letter. The Letter may apply to purchases made
up to 90 days before the date of the Letter. The Fund and the Distributor
reserve the right to amend or terminate such program at any time. For
further details, including escrow requirements, see "Letters of Intent"
in the Additional Statement.
-Other Circumstances. No sales charge is imposed on shares of the
Fund: (i) sold to the Manager or its affiliates, or to present or former
officers, trustees or directors and employees (and their "immediate
families," as defined in "Reduced Sales Charges" in the Additional
Statement) of the Fund, the Manager and its affiliates, and to retirement
plans established by them for employees; (ii) issued in plans of
reorganization, such as mergers, asset acquisitions and exchange offers,
to which the Fund is a party; (iii) sold to registered investment
companies or to separate accounts of insurance companies having an
agreement with the Manager or the Distributor; (iv) sold to dealers or
brokers that have a sales agreement with the Distributor, for their own
account or for retirement plans for their employees, or sold to employees
(and their spouses) of such dealers or brokers, or of banks, savings and
loan associations or credit unions that have entered into a sales
agreement with such dealer or broker or the Distributor (and are
identified to the Distributor by such dealer or broker); the purchasers
must certify to the Distributor at the time of purchase that such purchase
is for their own account (or for the benefit of such employees' spouses
or minor children); (v) sold to dealers, brokers or registered investment
advisers that have entered into an agreement with the Distributor
providing specifically for the use of Fund shares in particular investment
products made available to clients of the dealer, broker or registered
investment adviser; and (vi) purchased by the reinvestment of (a) loan
repayments by a participant in a retirement plan for which the Manager or
its affiliates act as sponsor, or (b) dividends or other distributions
reinvested from the Fund or other Eligible Funds (other than the Cash
Reserves Funds) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor. "Purchase, Redemption
and Pricing of Shares - Reduced Sales Charges" in the Additional Statement
discusses this policy.
Asset Builder Plans
Investors may purchase shares of the Fund (and up to four other
Eligible Funds) automatically under Asset Builder Plans. With
AccountLink, Asset Builder Plans may be used to make regular monthly
investments ($25 minimum) from the investor's account at a bank or other
financial institution. See "AccountLink" above for details. To establish
an Asset Builder Plan from a bank account, a check (minimum $25) for the
initial purchase must accompany the application. Shares purchased by
Asset Builder Plan payments from bank accounts are subject to the
redemption restrictions for recent purchases described below in "How To
Redeem Shares."
Asset Builder Plans also enable shareholders of Oppenheimer Tax-
Exempt Cash Reserves or Oppenheimer Cash Reserves to use those accounts
for monthly automatic purchases of shares of up to five other Eligible
Funds. There is a sales charge on the purchase of certain of the Eligible
Funds, and an application should be obtained from the Transfer Agent and
completed and a prospectus of the selected fund(s) (available from the
Distributor) should be obtained before initiating payments. The amount
of the Asset Builder investment may be changed or the automatic
investments terminated at any time by writing to the Transfer Agent. A
reasonable period (approximately 15 days) is required after receipt of
such instructions to implement them. The Fund reserves the right to
amend, suspend, or discontinue offering such plans at any time without
prior notice.
Service Plan
The Fund has adopted a service plan (the "Plan") pursuant to Rule
12b-1 of the Investment Company Act under which the Fund will reimburse
the Distributor for all or a portion of its costs incurred in connection
with the personal service and maintenance of accounts that hold Fund
shares. The Distributor will use the fees received from the Fund: (i) to
compensate dealers, brokers, banks, and other institutions ("Recipients")
each quarter for providing personal service and maintenance of accounts
that hold Fund shares; and (ii) to reimburse itself (to the extent
authorized by the Board of Trustees) for its other expenditures under the
Plan and for its direct costs for personal service and maintenance of
accounts. The services to be provided under the Plan include, but shall
not be limited to, the following: answering routine inquiries from the
Recipient's customers concerning the Fund, providing such customers with
information on their investment in Fund shares, assisting in the
establishment and maintenance of accounts or sub-accounts in the Fund,
making the Fund's investment plans and dividend payment options available,
and providing such other information and customer liaison services and the
maintenance of accounts as the Distributor or the Fund may reasonably
request. The Board has not authorized any payments to the Distributor
under (ii), above. The Distributor will pay each Recipient a quarterly
fee for its services at a rate not to exceed .0625% (0.25% annually) of
the average net asset value of Fund shares owned by the Recipient or its
customers. Any reimbursed expenses incurred during any quarter by the
Distributor may not be recovered in later periods. The Fund will not be
charged for any interest expense, carrying charges or other financial
costs, or allocation of overhead by the Distributor.
The Plan has the effect of increasing Fund expenses by up to 0.25% of
its average annual net assets. In addition, the Manager and the
Distributor may, under the Plan, from time to time from their own
resources (which, as to the Manager, may include profits derived from the
advisory fee it receives from the Fund) make payments to Recipients for
distribution and administrative services they perform. For further
details, see "Service Plan" in the Additional Statement.
How to Redeem Shares
Regular Redemption Procedures
To redeem some or all shares in an account (whether or not
represented by certificates) under the Fund's regular redemption
procedures, a shareholder must send the following to the Transfer Agent,
Oppenheimer Shareholder Services, P.O. Box 5270, Denver, Colorado 80217
[send courier or Express Mail deliveries to 10200 E. Girard Avenue,
Building D, Denver, Colorado 80231]: (i) a written request for redemption
signed by all registered owners exactly as the shares are registered,
including fiduciary titles, if any, and specifying the account number and
the dollar amount or number of shares to be redeemed; (ii) a guarantee of
the signatures of all registered owners on the redemption request or on
the endorsement on the share certificate or accompanying stock power, by
a U.S. bank, credit union or savings association, or a foreign bank having
a U.S. correspondent bank, or by a U.S.-registered dealer or broker in
securities, municipal securities or government securities, or by a U.S.
national securities exchange, registered securities association or
clearing agency; (iii) any share certificates issued for any of the shares
to be redeemed; and (iv) any additional documents which may be required
by the Transfer Agent for redemption by corporations, partnerships or
other organizations, executors, administrators, trustees, custodians,
guardians, or from an OppenheimerFunds-sponsored retirement plan, or if
the redemption is requested by anyone other than the shareholder(s) of
record. Transfers of shares are subject to similar requirements.
A signature guarantee is not required for redemptions of $50,000 or
less, requested by and payable to all shareholders of record, to be sent
to the address of record for that account. To avoid delay in redemption
or transfer, shareholders having questions about these requirements should
contact the Transfer Agent in writing or by calling 1-800-525-7048 before
submitting a request. From time to time the Transfer Agent in its
discretion may waive any or certain of the foregoing requirements in
particular cases. Redemption or transfer requests will not be honored
until the Transfer Agent receives all required documents in the proper
form.
Telephone Redemptions
In addition to the regular redemption procedures set forth above, the
Fund permits shareholders and the dealer representative of record for an
account to redeem shares by telephone. Redemption proceeds may either be
sent to the address of record for the account or, if AccountLink
privileges have been established, wired to an account at a financial
institution. To redeem shares by telephone through a service
representative, call the Transfer Agent at 1-800-852-8457. To use
PhoneLink to redeem shares automatically without a service representative,
call 1-800-533-3310. Under either method, redemption proceeds may be paid
by check or through AccountLink as described below. The Transfer Agent
may record any calls. Telephone redemptions may not be available if all
lines are busy, and shareholders would have to use the Fund's regular
redemption procedure described above. Requests received by the Transfer
Agent prior to 4:00 P.M. on a regular business day will be processed at
the net asset value per share determined that day. Telephone redemption
privileges are not available for newly-purchased (within the prior 15
days) shares, for OppenheimerFunds-sponsored retirement plans, or for
shares represented by certificates.
Telephone redemption privileges apply automatically to each
shareholder and the dealer representative of record unless the Transfer
Agent receives cancellation instructions from a shareholder of record.
If an account has multiple owners, the Transfer Agent may rely on the
instructions of any one owner. Telephone redemption privileges may be
amended, suspended or discontinued by the Fund at any time without prior
notice.
-Telephone Redemptions Paid by Check. If redemption proceeds are
paid by check, up to $50,000 may be redeemed by telephone, once in every
seven-day period, and the check must be payable to the shareholder(s) of
record and sent to the address of record for the account. Telephone
redemptions paid by check are not available within 30 days of a change of
the address of record.
-Redemptions Paid Through AccountLink. If AccountLink privileges
have been established for an account, any amount may be redeemed by
telephone, wire or written instructions to the Transfer Agent, and the ACH
transfer of the redemption proceeds to the designated bank account
normally will be initiated by the Transfer Agent on the next bank business
day after the redemption. There are no dollar or frequency limitations
on telephone redemptions sent to a designated bank account through
AccountLink. No dividends are paid on the proceeds of redeemed shares
awaiting transmittal by ACH transfer. See "AccountLink" under "How To Buy
Shares" for instructions on establishing this privilege.
Distributions From Retirement Plans
Requests for distributions from OppenheimerFunds-sponsored IRAs,
403(b)(7) custodial plans, or pension or profit-sharing plans for which
the Manager or its affiliates act as sponsors should be addressed to
"First Interstate Bank of Denver, N.A., c/o Oppenheimer Shareholder
Services" at the above address, and must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the
plan and the Fund's redemption requirements above. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request redemption of their
accounts; the employer or plan administrator must sign the request.
Distributions from such plans are subject to additional requirements
under the Internal Revenue Code and certain documents (available from the
Transfer Agent) must be completed before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P (available
from the Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless the
shareholder has provided the Transfer Agent with a certified tax
identification number, the Internal Revenue Code requires that tax be
withheld from any distribution even if the shareholder elects not to have
tax withheld. The Trustee, the Fund, the Manager, the Distributor and the
Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not
be responsible for any penalties assessed.
Automatic Withdrawal and Exchange Plans
Investors owning shares of the Fund valued at $5,000 or more can
authorize the Transfer Agent to redeem shares (minimum $50) automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior to the
date requested by the shareholder for receipt of the payment. Automatic
withdrawals of up to $1,500 per month may be requested by telephone if
payments are by check payable to all shareholders of record and sent to
the address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored Retirement Plans may not be arranged on this
basis. Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account
designated on the OppenheimerFunds New Account Application or signature-
guaranteed instructions. The Fund cannot guarantee receipt of the payment
on the date requested and reserves the right to amend, suspend or
discontinue offering such plans at any time without prior notice. Because
of the sales charge assessed on share purchases, shareholders should not
make regular additional purchases while participating in an Automatic
Withdrawal Plan. For further details, refer to "Automatic Withdrawal Plan
Provisions" in the Additional Statement.
Shareholders can also authorize the Transfer Agent to exchange a pre-
determined amount of shares of the Fund for shares of up to five other
Eligible Funds (minimum $25 per fund account) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange Plan.
Exchanges made pursuant to such Plans are otherwise subject to the
conditions and terms applicable to exchanges described in "Exchange
Privilege" below.
Repurchase
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price will be the net asset
value next computed after the receipt of an order placed by such dealer
or broker, except that an order received by the Distributor from dealers
or brokers after 4:00 P.M. on a regular business day will be processed at
that day's net asset value if such order was received by the dealer or
broker from its customer prior to 4:00 P.M. and was transmitted to and
received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Payment ordinarily will be made within seven days
after the Distributor's receipt of the required documents, with
signature(s) guaranteed as described above.
Reinvestment Privilege
Within six months of a redemption, a shareholder may reinvest all or
part of the redemption proceeds in shares of the Fund or any of the
Eligible Funds into which shares of the Fund are exchangeable as described
below, at the net asset value next computed after receipt by the Transfer
Agent of the reinvestment order. The shareholder must ask the Distributor
for such entitlement at the time of reinvestment. A realized gain on the
redemption is taxable, and the reinvestment will not alter any capital
gains tax payable on that gain. If there has been a loss on the
redemption, some or all of the loss may not be tax deductible, depending
on the timing and amount of the reinvestment in the Fund. Under the
Internal Revenue Code, if the redemption proceeds of shares on which sales
charges were paid are reinvested in shares of the Fund or another Eligible
Fund within 90 days of payment of the sales charge, the shareholder's
basis in the Fund shares redeemed may not include the amount of the sales
charge paid, thereby reducing the loss or increasing the gain recognized
from the redemption. The Fund may amend, suspend or cease offering this
reinvestment privilege at any time as to shares redeemed after the date
of such amendment, suspension or cessation.
General Information on Redemptions
The redemption price will be the Fund's net asset value per share
next determined after the Transfer Agent receives all redemption
instructions in proper form. The market value of the securities in the
Fund's portfolio is subject to daily fluctuations and the net asset value
of the Fund's shares will fluctuate accordingly. Therefore, the
redemption value may be more or less than the investor's cost. Under
certain unusual circumstances, shares may be redeemed in kind (i.e., by
payment in portfolio securities). The Fund may involuntarily redeem small
accounts (if the account has fallen below $200 in value for reasons other
than market value fluctuations) and may redeem shares in amounts
sufficient to compensate the Distributor for any loss due to cancellation
of a share purchase order; for details, see "Purchase, Redemption and
Pricing of Shares" in the Additional Statement. Under the Internal
Revenue Code, the Fund may be required to impose "backup" withholding of
Federal income tax at the rate of 31% from dividends, distributions and
redemption proceeds (including exchanges), if the shareholder has not
furnished the Fund a certified tax identification number or has not
complied with provisions of the Internal Revenue Code relating to
reporting dividends.
Payment for redeemed shares is made ordinarily in cash and forwarded
within seven days of the Transfer Agent's receipt of redemption
instructions in proper form, except under unusual circumstances as
determined by the SEC. The Transfer Agent may delay forwarding a
redemption check for recently purchased shares only until the purchase
payment has cleared, which may take up to 15 or more days from the
purchase date. Such delay may be avoided if the shareholder arranges
telephone or written assurance satisfactory to the Transfer Agent from the
bank upon which the purchase payment was drawn. The Fund makes no charge
for redemption. Dealers or brokers may charge a fee for handling
redemption transactions, but such charge can be avoided by requesting the
redemption directly by the Fund through the Transfer Agent. Under certain
circumstances, the CDSC described above under "How to Buy Shares--
Contingent Deferred Sales Charge" may apply to the proceeds of
redemptions.
Exchanges of Shares and Retirement Plans
Exchange Privilege
Shares of the Fund and of the other Eligible Funds listed in "Right
of Accumulation" may be exchanged at net asset value per share at the time
of exchange, without sales charge, if all of the following conditions are
met: (i) shares of the fund selected for exchange are available for sale
in the shareholder's state of residence; (ii) the respective prospectuses
of the funds whose shares are to be exchanged and acquired offer the
Exchange Privilege to the investor; (iii) newly-purchased (by initial or
subsequent investment) shares are held in an account for at least seven
days and all other shares at least one day prior to the exchange; and (iv)
the aggregate net asset value of shares surrendered for exchange is at
least equal to the minimum investment requirement of the fund whose shares
are to be acquired.
In addition to the conditions stated above, shares of Eligible Funds
may be exchanged for shares of any Money Market Fund; shares of any Money
Market Fund purchased without a sales charge may be exchanged for shares
of Eligible Funds offered with a sales charge upon payment of the sales
charge or, if applicable, may be used to purchase shares of Eligible Funds
subject to a CDSC; and shares of the Fund acquired by reinvestment of
dividends or distributions from any Eligible Fund or from any unit
investment trust for which reinvestment arrangements have been made with
the Distributor may be exchanged at net asset value for shares of any
Eligible Fund. No CDSC is imposed on exchanges of shares purchased
subject to a CDSC, except that if the shares acquired by exchange are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged shares, the CDSC will apply (see "Contingent
Deferred Sales Charge," above).
-How to Exchange Shares. An exchange may be made by either: (i)
submitting an OppenheimerFunds Exchange Authorization Form to the Transfer
Agent, signed by all registered owners, or (ii) telephone exchange
instructions to the Transfer Agent by a shareholder or the dealer
representative of record for an account. The Fund may modify, suspend or
discontinue either of these exchange privileges at any time, and will do
so on 60 days' notice if such notice is required by regulations adopted
under the Investment Company Act. The Fund reserves the right to reject
telephone or written requests submitted in bulk on behalf of 10 or more
accounts. Telephone and written exchange requests must be received by the
Transfer Agent by 4:00 P.M. on a regular business day to be effected that
day. The number of shares exchanged may be less than the number requested
if the number requested would include shares subject to a restriction
cited above or shares covered by a certificate that is not tendered with
such request. Only the shares available for exchange without restriction
will be exchanged.
-Telephone Exchanges. Telephone exchange requests may either be
placed through a service representative by calling the Transfer Agent at
1-800-852-8457 or automatically by PhoneLink by calling 1-800-533-3310.
If all telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), shareholders might not be
able to request telephone exchanges and would have to submit written
exchange requests. Telephone exchange calls may be recorded by the
Transfer Agent. Telephone exchanges are subject to the rules described
above. By exchanging shares by telephone, the shareholder is
acknowledging receipt of a prospectus of the fund to which the exchange
is made and that for full or partial exchanges, any special account
features such as Asset Builder Plans, Automatic Withdrawal or Exchange
Plans and retirement plan contributions will be switched to the new
account unless the Transfer Agent is otherwise instructed. Telephone
exchange privileges automatically apply to each shareholder of record and
the dealer representative of record unless and until the Transfer Agent
receives written instructions from a shareholder of record canceling such
privileges. If an account has multiple owners, the Transfer Agent may
rely on the instructions of any one owner. The Transfer Agent and the
Fund will not be responsible for the authenticity of telephone exchange
instructions and will not be responsible for any loss, damage, cost or
expense arising out of any telephone instructions received for an account
that the Transfer Agent reasonably believes to be authentic. The Transfer
Agent reserves the right to require shareholders to confirm in writing
their election of telephone exchange privileges for an account. Shares
acquired by telephone exchange must be registered exactly as the account
from which the exchange was made. Certificated shares are not eligible
for telephone exchange.
-General Information on Exchanges. Shares to be exchanged are
redeemed on the regular business day the Transfer Agent receives an
exchange request in proper form (the "Redemption Date"). Normally, shares
of the fund to be acquired are purchased on the Redemption Date, but such
purchases may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer of the
redemption proceeds. The Fund in its discretion reserves the right to
refuse any exchange request that will disadvantage it (for example, if the
receipt of multiple exchange requests from a dealer might require the
disposition of securities at a time or price disadvantageous to the Fund).
No sales commissions are paid by the Distributor on exchanges of shares
unless a front-end sales charge is assessed on the exchange.
The Eligible Funds have different investment objectives and policies.
For complete information, including charges and expenses, a prospectus of
the fund into which the exchange is being made should be read prior to an
exchange. A $5 service charge will be deducted from the account to which
the exchange is made to help defray administrative costs. That charge is
waived for telephone exchanges made by PhoneLink. Dealers or brokers who
process exchange orders on behalf of their customers may charge for their
services. Those charges may be avoided by requesting the Fund directly
to exchange shares. For Federal tax purposes, an exchange is treated as
a redemption and purchase of shares (see "How to Redeem Shares -
Reinvestment Privilege" for a discussion of certain tax effects of
exchanges).
Retirement Plans
The Distributor has available forms of: (i) pension and profit-
sharing plans for corporations and self-employed individuals, (ii)
Individual Retirement Accounts (IRAs) for salaried and self-employed
individuals, including Simplified Employee Pension Plans (SEP-IRAs) and
Rollover IRAs, and (iii) 403(b)(7) custodial plans for employees of
qualified employers. The minimum initial investment for pension and
profit-sharing plans is $250, and for IRAs also unless made under an Asset
Builder Plan. When completing a plan application, include the name(s) of
the fund(s) selected for investment and if selecting more than one fund,
the desired allocation. For further details, including the administrative
fees, the appropriate retirement plan should be requested from the
Distributor. The Fund reserves the right to discontinue offering its
shares to such plans at any time without prior notice.
Dividends, Distributions and Taxes
This discussion relates solely to Federal tax laws and is not
exhaustive; a qualified tax advisor should be consulted. The Fund's
dividends and distributions may also be subject to state and local
taxation. See "Tax Aspects of Covered Calls and Hedging Instruments" in
the Additional Statement for more information on tax aspects of the Fund's
investment in Hedging Instruments and other tax matters.
Dividends and Distributions
The Fund intends to declare dividends on an annual basis in December
each year, on a date set by the Board of Trustees. As current income is
not an objective of the Fund, the amount of dividends from net investment
income, if any, will likely be small. In addition, distributions may be
declared annually in December out of any net short-term or long-term
capital gains realized from the sale of securities, premiums from expired
calls written by the Fund, and net profits from hedging transactions
realized in the twelve months ending October 31st of that year. The Fund
may make a supplemental distribution of capital gains and ordinary income
following the end of its fiscal year. Any long-term capital gains
distribution and any non-taxable return of capital will be separately
identified when tax information is distributed by the Fund. There is no
fixed dividend rate and there can be no assurance as to the payment of any
dividends or the realization of any capital gains.
All dividends and capital gains distributions are automatically
reinvested in Fund shares at net asset value, as of a date selected by the
Fund's Board of Trustees, unless the shareholder asks the Transfer Agent
in writing to pay dividends and capital gains distributions in cash, or
to reinvest them in another Eligible Fund, as described in "Performance,
Dividend and Tax Information" in the Additional Statement. That request
must be received prior to the record date for a dividend to be effective
as to that dividend. Under AccountLink, dividends and distributions may
be automatically transferred to a designated account at a financial
institution. See "AccountLink" in "How To Buy Shares" and the
OppenheimerFunds New Account Application for more details. For existing
accounts, such privilege may be established only by signature-guaranteed
instructions of all shareholders to the Transfer Agent. 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 are reinvested in shares of Oppenheimer Money Market
Fund, Inc., as promptly as possible after the return of such checks to the
Transfer Agent, to enable the investor to earn a return on otherwise idle
funds.
Tax Status of the Fund's Dividends and Distributions
Dividends paid by the Fund derived from net investment income or net
short-term capital gains are taxable to shareholders as ordinary income,
whether received in cash or reinvested. Long-term capital gains
distributions, if any, are taxable as long-term capital gains whether
received in cash or reinvested and regardless of how long Fund shares have
been held. An investor purchasing Fund shares immediately prior to the
declaration of a dividend or capital gains distribution will receive a
distribution subject to income tax, and the distribution will have the
effect of reducing the Fund's net asset value per share by the amount of
the distribution. For information as to "backup" withholding on
dividends, see "How to Redeem Shares."
If more than 50% of the Fund's assets are invested in securities of
foreign issuers at the end of any fiscal year in which it qualifies as a
regulated investment company, the Fund may elect the application of
Section 853 of the Internal Revenue Code to permit shareholders to take
a credit (or a deduction) for foreign income taxes paid by the Fund. Such
foreign tax credit or deduction is subject to certain limitations under
the Internal Revenue Code. See "Performance, Dividends and Tax
Information - Tax Status of the Fund's Dividends and Distributions" in the
Additional Statement for further discussion of this provision.
Tax Status of the Fund
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distributions. The Fund qualified
during its last fiscal year, and intends to so qualify in the current and
future fiscal years, but reserves the right not to do so. The Internal
Revenue Code contains a number of complex tests relating to qualification
which the Fund might not meet in any particular year. For example, if the
Fund derives 30% or more of its gross income from the sale of securities
held for less than three months, it may fail to qualify. See "Special
Investment Methods - Tax Aspects of Covered Calls and Hedging Instruments"
in the Additional Statement for more 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 dividends and distributions
made to shareholders.
Fund Performance Information
Total Return Information
From time to time, the "average annual total return," "total return"
and "total return at net asset value" of an investment in the Fund may be
advertised. The Fund's "average annual total return" for a particular
period is computed by determining the average annual compounded rate of
return over the period, using the initial amount invested at the beginning
of the period and the redeemable value of the investment at the end of the
period. "Total return" is the change in value of a hypothetical
investment in shares of the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested. The cumulative
total return measures the change in value over the entire period (for
example, ten years). An "average annual total return" shows the average
rate of return for each year in a period that would produce the cumulative
total return over the entire period. However, average annual total
returns do not show the actual year-by-year performance. When total
returns are quoted, they reflect the payment of the maximum initial sales
charge. Total returns may be quoted at "net asset value," without
considering the sales charge, and those returns would be reduced if sales
charges were deducted. All total returns are based on historical earnings
and are not intended to predict future performance. The Additional
Statement contains more information about the calculation of the Fund's
performance data.
Management's Discussion of Performance. During the Fund's fiscal year
ended September 30, 1993, the Manager emphasized investment in domestic
and foreign companies that inhibit the creation of pollution and waste,
and diversified outside that sector. A number of economic factors
influenced the performance of the environmental securities market during
the Fund's fiscal year, including low trading prices relative to earnings
growth of domestic and foreign environmental stocks.
Oppenheimer Global Environment Fund and S&P 500 Index
Comparison of Change in Value of $10,000 Hypothetical Investment
Average Annual Total Return at 9/30/93
1 Year Life of Fund*
2.13% (3.65%)
*Since March 2, 1990
[Chart comparing average annual total return of Oppenheimer Global
Environment Fund to performance of S&P 500 index]
Past performance is not predictive of future performance.
The S&P 500 index is an unmanaged index of common stocks widely used
as a measure of general stock market performance, and includes
reinvestment of dividends but does not reflect initial or ongoing expenses
of such stocks. The Fund's return reflects deduction of the current
maximum sales charge of 5.75% and includes reinvestment of all dividends
and capital gains distributions, but does not consider taxes.
Additional Information
Description of the Fund and its Shares
The Fund's shares are of one class, are transferable without
restriction and have equal rights and privileges. Each shareholder is
entitled to one vote per share held (and a fractional vote for each
fractional share), and to participate pro rata in dividends and
distributions and in the net distributable assets of the Fund on
liquidation. When issued, such shares are fully-paid and (except as
described in "Additional Information" in the Additional Statement)
nonassessable, and have no preemptive, subscription or cumulative voting
rights. The Fund's Board of Trustees is empowered to issue additional
"series" of shares of the Fund, which may have separate assets and
liabilities, and additional "classes" of shares, which would represent
interests in the same portfolio of investments. Although the Fund has
been granted exemptive relief to permit it to offer two classes of shares,
it has no present intention to do so. The Fund does not anticipate
holding annual meetings. Under certain circumstances, shareholders of the
Fund have the right to remove a Trustee and may be personally liable as
"partners" for the Fund's obligations; however, the risk of a shareholder
incurring any financial loss is limited to the relatively remote
circumstances in which the Fund is unable to meet its obligations. See
"Additional Information" in the Additional Statement for details.
The Custodian and the Transfer Agent
The Custodian of the assets of the Fund is The Bank of New York. The
Manager and its affiliates have banking relationships with the Custodian.
See "Additional Information" in the Additional Statement for further
details. The Fund's cash balances in excess of $100,000 held by the
Custodian are not protected by Federal deposit insurance. Such uninsured
balances may at times be substantial.
The Transfer Agent, Oppenheimer Shareholder Services, a division of
the Manager, acts as transfer agent and shareholder servicing agent on an
at-cost basis for the Fund and certain other open-end funds advised by the
Manager, and as transfer agent for unit investment trusts for the
accumulation of shares of one of such funds. Shareholders should direct
inquiries to the Transfer Agent at the address or toll-free phone number
listed on the back cover of this Prospectus.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER GLOBAL ENVIRONMENT FUND
Graphic material included in Prospectus of Oppenheimer Global
Environment Fund: "Comparison of Total Return of Oppenheimer Global
Environment Fund and the S&P 500 Index - Change in Value of a $10,000
Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer
Global Environment Fund (the "Fund") depicting the initial account value
and subsequent account value of a hypothetical $10,000 investment in the
Fund since March 2, 1990 to the end of each of the Fund's most recently
completed four fiscal years and comparing such values with the same
investments over the same time periods in the S&P 500 Index. Set forth
below are the relevant data points that will appear on the linear graph.
Additional information with respect to the foregoing, including
descriptions of the S&P 500 Index, is set forth in the Prospectus under
"Fund Performance Information - Management's Discussion of Performance."
Oppenheimer
Fiscal Year Global
(Period) Ended Environment Fund S&P 500 Index
-------------- ------------------ -----------------
03/02/90 $9,425 $10,000
09/30/90* 8,576 9,412
09/30/91 9,442 12,338
09/30/92 8,078 13,700
09/30/93 8,753 15,477
- ---------------------------
For the period from March 2, 1990 (commencement of operations) to
September 30, 1990.
<PAGE>
Investment Adviser Prospectus
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent OPPENHEIMER
Oppenheimer Shareholder Services Global Environment Fund
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 Effective February 1, 1994
Independent Auditors
KPMG Peat Marwick
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th Street
New York, New York 10036 OppenheimerFunds
No dealer, salesperson or any other person
has been authorized to give any information
or to make any representations other than
those contained in this Prospectus or the
Additional Statement, and if given or made,
such information and representation must not
be relied upon as having been authorized by
the Fund, Oppenheimer Management Corporation,
Oppenheimer Funds Distributor, Inc., or any
affiliate thereof. This Prospectus does not
constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered
hereby in any state to any person to whom it is
unlawful to make such offer in such state.
PR250.0194.N * Printed on recycled paper
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
OPPENHEIMER GLOBAL ENVIRONMENT FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
This Statement of Additional Information (the "Additional Statement")
is not a Prospectus. This Additional Statement should be read together
with the Prospectus (the "Prospectus") of Oppenheimer Global Environment
Fund (the "Fund") dated February 1, 1994, which may be obtained upon
written request to Oppenheimer Shareholder Services (the "Transfer
Agent"), P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer
Agent at the toll-free number shown above.
TABLE OF CONTENTS
Page
Investment Objective and Policies
Special Investment Methods
Investment Restrictions
Trustees and Officers
Investment Management Services
Brokerage
Purchase, Redemption and Pricing of Shares
Service Plan
Performance, Dividend and Tax Information
Additional Information
Automatic Withdrawal Plan Provisions
Letters of Intent
Independent Auditors' Report
Financial Statements
This Additional Statement is effective February 1, 1994.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are discussed in the
Prospectus. Supplemental information about those policies is set forth
below. Certain capitalized terms used in this Additional Statement and
not otherwise defined herein are defined in the Prospectus.
Environmental Companies are the beneficiaries of increasingly strict
government regulation. Annual U.S. spending on waste management and
environmental technology is expected to increase substantially over this
decade. The Environmental Protection Agency estimates that at least $450
billion will be needed during the 1990's to upgrade and construct water-
and sewage-treatment plants. In addition, environmental concerns are
shared on an international level.
The Fund's investments in securities of issuers in the biotechnology
industry, one type of Environmental Company in which the Fund may invest,
may include investments in companies that produce genetically-engineered
agricultural and veterinary products (certain of which are designed for
consumer use) with industrial and chemical applications (e.g., work with
hydrocarbons for conversion into fibers or plastics or for use in
dissolving oil spills). The Fund may invest in Environmental Companies
that contribute to a cleaner and healthier food supply, including those
manufacturing bioherbicides (which leave no residue in the soil or in
foods) or non-chemical fertilizers, or that process or package foods in
a cleaner and more responsible manner (e.g., biodegradable packaging).
Risks of Investment in Emerging Growth Companies. Emerging growth
companies often have products and management personnel that have not been
thoroughly tested by time or the marketplace. In addition, the financial
resources of these companies may not be as substantial as those of more
established companies. Emerging growth companies may be thinly
capitalized and, as a result, may be more susceptible to general market
fluctuations than companies with greater capitalization. The revenue flow
of such companies may be erratic. The results of operations may fluctuate
widely from quarter to quarter and may contribute to greater stock price
volatility. The Fund may balance its investments in the stocks of
emerging growth companies with those of well-established companies. The
Fund varies its investments on three levels: industry segment, company
size, and country.
Risks of Investment in Environmental Companies. Environmental Companies
presently face intense competition. Confusion over new government
regulations can inhibit a company's performance, and it may take years to
translate environmental legislation into sales and profits. Losses may
result from large product development or expansion costs, unprotected
marketing or distribution systems, erratic revenue flows and low profit
margins. Additional problems facing Environmental Companies include
difficulty in financing the high costs of technological development,
uncertainties in developing technology, high capital costs, increased
competition due to low barriers to entry (once technology has been
developed and is in place), and difficulty in finding experienced
employees in this young industry. Regardless of whether the securities
of such issuers are listed on a national securities exchange, their
principal trading market may be the over-the-counter market.
Consequently, whether there is a liquid trading market for such securities
may depend on whether there are dealers making a market in such
securities. If there is limited liquidity of such securities, their
prices may be subject to greater fluctuations when large numbers of shares
are purchased or sold.
Investment in Foreign Securities. Investing in foreign securities
involves considerations and possible risks not typically associated with
investing in securities of issuers traded in the U.S. The values of
foreign securities will be affected by changes in currency rates or
exchange control regulations or currency blockage, application of foreign
tax laws, including withholding taxes, changes in governmental
administration or economic or monetary policy (in the U.S. or abroad) or
changed circumstances in dealings between nations. Costs will be incurred
in connection with conversions between various currencies. Foreign
brokerage commissions are generally higher than commissions in the U.S.,
and foreign securities markets may be less liquid, more volatile and less
subject to governmental regulation than in the U.S. Investments in foreign
countries could be affected by other factors not generally thought to be
present with trading in the U.S., including expropriation or
nationalization, confiscatory taxation and potential difficulties in
enforcing contractual obligations, and could be subject to extended
settlement periods.
Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S.
dollar will result in a change in the U.S. dollar value of the Fund's
assets. In buying foreign securities, the Fund may convert U.S. dollars
into foreign currency, but only to effect securities transactions on
foreign securities exchanges and not to hold such currency as an
investment. In addition, although a portion of the Fund's investment
income, if any, may be received or realized in foreign currencies, the
Fund will be required to compute and distribute its income in U.S.
dollars, and absorb the cost of currency fluctuations (however, the Fund
does not invest to seek income). The Fund may engage in foreign currency
exchange transactions for hedging purposes to protect against changes in
future exchange rates. See "Special Investment Methods-Covered Calls,
Puts and Hedging" and "Forward Contracts" below.
The values of foreign securities may also be affected unfavorably by
changes in currency exchange control regulations. Although the Fund will
invest only in securities denominated in foreign currencies that at the
time of investment do not have significant government-imposed restrictions
on conversion into U.S. dollars, there can be no assurance against
subsequent imposition of currency controls. In addition, the values of
foreign securities will fluctuate in response to changes in U.S. and
foreign interest rates.
Investments in foreign securities offer potential benefits not
available from investments solely in securities of domestic issuers by
offering 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 investing in foreign stock markets that
do not move in a manner parallel to U.S. markets. From time to time, U.S.
government policies have discouraged certain investments abroad by U.S.
investors, through taxation or other restrictions, and it is possible that
such restrictions could be reimposed.
Warrants and Rights. The Fund may, to the extent described in the
Prospectus, invest in warrants and rights. Warrants are options to
purchase equity securities at specific prices valid for a specific period
of time. Their prices do not necessarily move in a manner parallel to the
prices of the underlying securities. If the warrant is not exercised
prior to expiration, the purchase price will not be able to be recouped
by the Fund. Rights are similar to warrants, but normally have a short
duration and are distributed by the issuer to its shareholders. Warrants
and rights have no voting rights, receive no dividends and have no rights
with respect to the assets of the issuer.
SPECIAL INVESTMENT METHODS
Borrowing. From time to time, the Fund may increase its ownership of
securities by borrowing from banks on an unsecured basis and investing the
borrowed funds (on which the Fund will pay interest), subject to the
restrictions stated in the Prospectus. Any such borrowing will be made,
pursuant to the requirements of the Investment Company Act, only to the
extent that the value of the Fund's assets, less its liabilities other
than borrowings, is equal to at least 300% of all borrowings including the
proposed borrowing. If the value of the Fund's assets so computed should
fail to meet the 300% asset coverage requirement, the Fund is required
within three days to reduce its bank debt to the extent necessary to meet
such requirement and may have to sell a portion of its investments at a
time when independent investment judgment would not dictate such sale.
Interest on money borrowed is an expense the Fund would not otherwise
incur, so that it may have little or no net investment income during
periods of substantial borrowings. Borrowing for investment increases
both investment opportunity and risk. Since substantially all of the
Fund's assets fluctuate in value, whereas borrowing obligations are fixed,
when the Fund has outstanding borrowings, its net asset value per share
will tend to increase and decrease more when its portfolio assets
fluctuate in value than would otherwise be the case.
Repurchase Agreements. In a repurchase transaction, the Fund acquires a
security from, and simultaneously resells it to, an approved vendor (a
U.S. commercial bank or the U.S. branch of a foreign bank having total
domestic assets of at least $1 billion or a broker-dealer with a net
capital of at least $50 million and that has been designated a primary
dealer in government securities) for delivery on an agreed-on future date.
The resale price exceeds the purchase price by an amount that reflects an
agreed-upon interest rate effective for the period during which the
repurchase agreement is in effect. The majority of these transactions run
from day to day, and delivery pursuant to the resale typically will occur
within one to five days of the purchase. Repurchase agreements are
considered "loans" under the Investment Company Act, collateralized by the
underlying security. The Fund's repurchase agreements require that at all
times while the repurchase agreement is in effect, the value of the
collateral must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Manager will
impose creditworthiness requirements to confirm that the vendor is
financially sound and will continuously monitor the collateral's value.
Illiquid and Restricted Securities. The expenses of registration of
restricted securities that are illiquid (excluding securities that may be
resold by the Fund pursuant to Rule 144A, as explained in the Prospectus)
may be negotiated at the time such securities are purchased by the Fund.
When registration is required before such securities may be sold, a
considerable period may elapse between the decision to sell the securities
and the time the sale would be permitted. Thus, the Fund may not be able
to obtain as favorable a price as that prevailing at the time of the
decision to sell. The Fund also may acquire, through private placements,
securities having contractual resale restrictions, which restrictions
might lower the amount realizable upon the sale of such securities.
Loans of Portfolio Securities. Subject to the restrictions stated in the
Prospectus, the Fund may lend its portfolio securities to qualified
borrowers if the loan is collateralized in accordance with applicable
regulatory guidelines. Under the present guidelines, the Fund may lend
its portfolio securities if: (i) such loans are secured continuously by
collateral consisting of (a) cash or U.S. Government securities maintained
on a daily basis at an amount or of a market value at least equal at all
times to the market value of the securities loaned, or (b) letters of
credit issued by a bank (other than a bank acting as borrower under such
loan) at the request of the borrower under which the bank is obligated to
pay directly to the Fund amounts demanded by the Fund if the demand meets
the terms of the letter of credit; (ii) the Fund may at any time call such
loans and obtain the loaned securities on five days' notice; (iii) the
Fund will receive an amount at least equal to the interest paid by the
issuer of the loaned securities during the existence of such loan (less
any finders' or administrative fees the Fund pays in arranging the loan);
(iv) the Fund will be entitled to the interest paid upon investment of any
cash collateral in its permitted investments and may share a portion of
the interest earned with the borrower; and (v) the gross income received
by the Fund from all such loans will not exceed the maximum percentage
(currently 10%) that will allow the Fund to qualify as a "regulated
investment company" under the Internal Revenue Code. The Fund may pay
reasonable finder's, custodian, and administrative fees when lending
securities.
Covered Calls, Puts and Hedging. As described in the Prospectus, the Fund
may write covered calls or employ one or more types of Hedging
Instruments, including the futures identified in the Prospectus
("Futures"). When hedging to attempt to protect against declines in the
market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons,
the Fund may (i) sell Futures, (ii) purchase puts, or (iii) write covered
calls. When hedging to permit the Fund to establish a position in the
equities market as a temporary substitute for purchasing individual equity
securities (which the Fund will normally purchase, and then terminate that
hedging position), the Fund may (a) purchase Futures, or (b) purchase
calls on such Futures or on securities. When hedging to protect against
declines in the dollar value of a foreign currency-denominated security
or in a payment on such security, the Fund may (1) purchase puts on that
foreign currency or on foreign currency Futures, (2) write calls on that
currency or on such Futures, or (3) enter into Forward Contracts at a
lower rate than the spot ("cash") rate. Additional information about the
Hedging Instruments the Fund may use is provided below. At present, the
Fund does not intend to purchase or sell Futures or related options if,
after any such purchase, the sum of initial margin deposits on Futures and
premiums paid for related options exceeds 5% of the value of the Fund's
total assets. Certain options on foreign currencies are considered
related options for this purpose. The Fund may in the future employ
hedging instruments and strategies that are not presently contemplated to
the extent such investment methods are consistent with the Fund's
investment objective, are legally permissible and are adequately
disclosed.
Writing Call Options. When the Fund writes a call on a security, it
receives a premium and agrees to sell the underlying security to a
purchaser of a corresponding call on the same security during the call
period (usually not more than nine months) at a fixed exercise price
(which may differ from the market price of the underlying security),
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 the
option transaction costs and the premium received on the call written was
more or less than the price of the call subsequently purchased. A profit
may also be realized if the call expires unexercised, because the Fund
retains the underlying security and the premium received. Any such
profits are considered short-term capital gains for Federal income tax
purposes, and when distributed by the Fund are taxable as ordinary income.
If the Fund could not effect a closing purchase transaction due to lack
of a market, it would have to hold the callable securities until the call
expired or was exercised.
The Fund may write (and purchase) calls on foreign currencies. 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 written by the Fund on a foreign
currency is for cross-hedging purposes if it is not covered, but is
designed to provide a hedge against a decline (due to an 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 that is denominated in the
currency underlying the option. In such circumstances, the Fund
collateralizes the option by maintaining, in a segregated account with the
Fund's custodian, collateral consisting of 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.
The Fund may also write calls on Futures without owning a futures
contract, provided that at the time the call is written, the Fund covers
the call by segregating in escrow an equivalent dollar amount of 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 require the Fund to deliver
a futures contract; it would simply put the Fund in a short futures
position, which is permitted by the Fund's hedging policies.
Writing Put Options. 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 foregoes
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 has no control over when it may be required to purchase the
underlying security, since it may be assigned an exercise notice at any
time prior to the termination of its obligation as the writer of the put.
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.
Purchasing Calls and Puts. When the Fund purchases a call (other than
in a closing purchase transaction), it pays a premium and has the right
to buy the underlying investment from a seller of a corresponding call on
the same investment during the call period at a fixed exercise price. The
Fund benefits only if the call is sold at a profit or if, during the call
period, the market price of the underlying investment is above the sum of
the call price plus the transaction costs and the premium paid for the
call and the call is exercised. If the call is not exercised or sold
(whether or not at a profit), it will become worthless at its expiration
date and the Fund will lose its premium payment and the right to purchase
the underlying investment.
When the Fund purchases a put, it pays a premium and has the right to
sell the underlying investment to a seller of a put on a corresponding
investment during the put period at a fixed exercise price. Buying a put
on securities or Futures the Fund owns enables the Fund to attempt to
protect itself during the put period against a decline in the value of the
underlying investment below the exercise price by selling the underlying
investment at the exercise price to a seller of a corresponding put. If
the market price of the underlying investment is equal to or above the
exercise price and, as a result, the put is not exercised or resold, the
put will become worthless at its expiration date and the Fund will lose
its premium payment and the right to sell the underlying investment; the
put may, however, be sold prior to expiration (whether or not at a
profit).
Purchasing a put on either Futures or on securities it does not own
permits the Fund either to resell the put or, if applicable, to 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 its 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. When the Fund purchases a put on a Future or
security not held by it, the put protects the Fund to the extent that the
prices of the underlying Future or securities move in a similar pattern
to the prices of the securities in the Fund's portfolio.
Futures. A stock index, which cannot be purchased or sold directly,
assigns relative values to the common stocks included in the index and
fluctuates with the changes in the market value of those stocks. No
payment will be made or received by the Fund on the purchase or sale of
a Stock Index Future. Stock Index Futures 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 underlying
stocks in the index is made. Generally, contracts are closed out with
offsetting transactions prior to the expiration date of the contract.
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 specified conditions. As the
Future is marked to market 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 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. Although Stock Index Futures by their terms call for settlement
by the delivery of cash, in most cases the obligation is fulfilled by
entering into an offsetting transaction. All Futures transactions are
effected through a clearing house associated with the exchange on which
the contracts are traded.
Foreign Currency Options. 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 either lose the premium it paid and incur
transactions costs, or purchase or sell the foreign currency at a
disadvantageous price.
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 traded in the interbank
market conducted directly among currency traders (usually large commercial
banks) and their customers.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase. The Fund will not speculate with Forward Contracts or foreign
currency exchange rates.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are
made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross-hedge").
The Fund will not enter into such Forward Contracts or maintain a net
exposure to such contracts where the consummation of the contracts would
obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's portfolio securities denominated in that currency.
The Fund, however, in order to avoid excess transactions and transaction
costs, may maintain a net exposure to Forward Contracts in excess of the
value of the Fund's portfolio securities denominated in that currency
provided the excess amount is "covered" by liquid, high-grade debt
securities, denominated either in that foreign currency or in U.S.
dollars, at least equal at all times to the amount of such excess. 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.
The precise matching of the Forward Contract amounts and the value of
the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense of
such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and incur
transaction costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars,
it does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
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.
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 (for a put) or
above (for a call) the market price of the underlying security (that is,
the extent to which the option is "in-the-money"). When the Fund writes
an OTC option, it will treat as illiquid (for purposes of the limit on its
assets that may be invested in illiquid securities, stated in the
Prospectus) an amount of assets used to cover written OTC options, equal
to the formula price for the repurchase of the OTC option less the amount
by which the OTC option is "in-the-money." The Fund will also treat as
illiquid any OTC option held by it. The Securities and Exchange
Commission is evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.
An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for any particular
option. The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate in a manner beyond the Fund's control. The exercise by the
Fund of puts on securities or Futures may cause the sale of related
investments, also increasing portfolio turnover. Although such exercise
is within the Fund's control, holding a put might cause the Fund to sell
the related investments for reasons which would not exist in the absence
of the put. The Fund will pay a brokerage commission each time it buys
or sells a put, a call, or an underlying investment in connection with the
exercise of a put or call. Such commissions may be higher than those
which would apply to direct purchases or sales of the underlying
investments. Premiums paid for options are small in relation to the
market value of such investments, and consequently, put and call options
offer large amounts of leverage. The leverage offered by trading in
options could result in the Fund's net asset value being more sensitive
to changes in the value of the underlying investments.
Regulatory Aspects of Hedging Instruments. The Fund must operate
within certain restrictions as to its long and short positions in Futures
and options thereon under a rule (the "CFTC Rule") adopted by the
Commodity Futures Trading Commission (the "CFTC") under the Commodity
Exchange Act (the "CEA"), which excludes the Fund from registration with
the CFTC as a "commodity pool operator" (as defined in the CEA) if it
complies with the CFTC Rule. Under these restrictions the Fund will not,
as to any positions, whether short, long or a combination thereof, enter
into Futures and related options for which the aggregate initial margins
and premiums exceed 5% of the fair market value of its total assets, with
certain exclusions as defined in the CFTC Rule. Under the restrictions,
the Fund also must, as to its short positions, use Futures and options
thereon solely for bona-fide hedging purposes within the meaning and
intent of the applicable provisions under the CEA. Certain options on
foreign currencies are considered related options for this purpose.
Transactions in options by the Fund are subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more exchanges or brokers. Thus, the
number of options which the Fund may write or hold may be affected by
options written or held by other entities, including other investment
companies having the same or an affiliated investment adviser. Position
limits also apply to Futures. An exchange may order the liquidation of
positions found to be in violation of those limits and may impose certain
other sanctions. Due to requirements under the Investment Company Act,
when the Fund purchases a Future, the Fund will maintain, in a segregated
account or accounts with its custodian bank, cash or readily-marketable,
short-term (maturing in one year or less) debt instruments in an amount
equal to the market value of the securities underlying such Future, less
the margin deposit applicable to it.
Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. One of the tests for such qualification is that less than
30% of its gross income (irrespective of losses) must be derived from
gains realized on the sale of securities held for less than three months.
Due to this limitation, the Fund will limit the extent to which it engages
in the following activities, but will not be precluded from them: (i)
selling investments, including Futures, held for less than three months,
whether or not they were purchased on the exercise of a call held by the
Fund; (ii) purchasing calls or puts that expire in less than three months;
(iii) effecting closing transactions with respect to calls or puts
purchased less than three months previously; (iv) exercising puts or calls
held by the Fund for less than three months; and (v) writing calls on
investments held for less than three months.
Certain foreign currency exchange contracts (Forward Contracts) in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this 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 of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position
making up a straddle is allowed only to the extent such loss exceeds any
unrecognized gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund
accrues interest or other receivables, or accrues expenses or other
liabilities denominated in a foreign currency, and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
Possible Risk Factors in Hedging. In addition to the risks with
respect to options discussed in the Prospectus and above, there is a risk
in using short hedging by (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 that
the prices of the Futures or applicable index (thus the prices of the
Hedging Instruments) 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 depend on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures
markets could be reduced, thus producing distortion. Third, from the
point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. The Fund's policy of investing at least 65% of its total assets
in securities of Environmental Companies may accentuate this risk since
there are no futures contracts or stock indices based on an index of
"environmental companies." 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 such equity securities being hedged is more than the historical
volatility of the applicable index. It is also possible that where 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 this occurred, the Fund would lose money on the Hedging
Instruments and also experience a decline in value in its equity
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 particular
equity securities (long hedging) by buying 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 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.
INVESTMENT RESTRICTIONS
The Fund's significant investment restrictions are described in the
Prospectus. The following investment restrictions are also fundamental
policies of the Fund and, together with the Fund's fundamental policies
and investment objective described in the Prospectus, cannot be changed
without the approval of a "majority" of the Fund's outstanding voting
securities. Under the Investment Company Act, a "majority" vote is
defined as the vote, at an annual or special meeting of the shareholders
of the Fund, of the lesser of (i) 67% or more of the shares present or
represented by proxy at such meeting if the holders of more than 50% of
the outstanding shares are present or represented by proxy, or (ii) more
than 50% of the outstanding shares of the Fund.
Under these additional restrictions, the Fund cannot: (1) buy or sell
real estate, or commodities or commodity contracts; however, the Fund may
invest in debt securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts, which invest
in real estate or interests therein, and the Fund may buy and sell any of
the Hedging Instruments which it may use as permitted by any of its other
investment policies, whether or not such Hedging Instrument is considered
to be a commodity or a commodity contract; (2) buy securities on margin,
except that the Fund may make margin deposits in connection with any of
the Hedging Instruments which it may use; (3) underwrite securities issued
by other persons except to the extent that, in connection with the
disposition of its portfolio investments, it may be deemed to be an
underwriter for purposes of the Securities Act of 1933; (4) buy and retain
securities of any issuer if those officers, trustees or directors of the
Fund or the Manager who beneficially own more than .5% of the securities
of such issuer together own more than 5% of the securities of such issuer;
(5) invest in oil, gas, or other mineral exploration or development
programs; (6) buy the securities of any company for the purpose of
exercising management control; (7) invest more than 5% of total assets
through open-market purchases in other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets; (8) mortgage or pledge any of its assets; however, this does not
prohibit the Fund from pledging its assets for collateral arrangements or
entering into the escrow arrangements contemplated in connection with the
use of Hedging Instruments; or (9) lend money, but the Fund may enter into
repurchase agreements or invest in all or a portion of an issue of bonds,
debentures, commercial paper, or other similar corporate obligations of
the types that are usually purchased by institutions, whether or not
publicly distributed, provided that such obligations which are not
publicly distributed will be subject to the percentage limits set forth
in the Prospectus under the caption "Illiquid and Restricted Securities."
TRUSTEES AND OFFICERS
The Fund's Trustees and officers and their principal occupations and
business affiliations during the past five years are set forth below. The
address for each, except as noted, is Two World Trade Center, New York,
New York 10048-0203. With the exception of John L. Wallace, each serves
in similar capacities with Oppenheimer Fund, Oppenheimer Gold & Special
Minerals Fund, Oppenheimer Global Fund, Oppenheimer Time Fund, Oppenheimer
Special Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer Money Market
Fund, Inc., Oppenheimer Target Fund, Oppenheimer U.S. Government Trust,
Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt
Fund, Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset
Allocation Fund, Oppenheimer Discovery Fund, Oppenheimer Mortgage Income
Fund, Oppenheimer Global Bio-Tech Fund, Oppenheimer Global Growth & Income
Fund, Oppenheimer Multi-Government Trust and Oppenheimer Multi-Sector
Income Trust (collectively, the "New York-based OppenheimerFunds"). As
of December 31, 1993, the Trustees and officers of the Fund as a group
beneficially owned less than 1% of the Fund's outstanding shares.
LEON LEVY, Chairman of the Board of Trustees
General Partner of Odyssey Partners, L.P. (investment partnership);
Chairman of Avatar Holdings, Inc. (real estate development).
LEO CHERNE, Trustee
386 Park Avenue South, New York, New York 10016
Chairman Emeritus of the International Rescue Committee
(philanthropic organization); formerly Executive Director of The
Research Institute of America.
EDMUND T. DELANEY, Trustee
5 Gorham Road, Chester, Connecticut 06412
Attorney-at-law; formerly a member of the Connecticut State
Historical Commission and Counsel to Copp, Berall & Hempstead (a law
firm).
ROBERT G. GALLI, Trustee*
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC") the Manager's parent holding
company; formerly he held the following positions: a director of the
Manager and Oppenheimer Funds 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, an officer of other OppenheimerFunds and Executive
Vice President and General Counsel of the Manager and the
Distributor.
_______________________
*Denotes a Trustee who is an "interested person" of the Fund as defined
in the Investment Company Act.
BENJAMIN LIPSTEIN, Trustee
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University.
ELIZABETH B. MOYNIHAN, Trustee
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the American Schools
of Oriental Research and of the Freer Gallery of Art, Smithsonian
Institution; a member of the Indo-U.S. Sub-Commission on Education
and Culture; a trustee of the Institute of Fine Arts, New York
University, and a trustee of the Preservation League of New York
State.
KENNETH A. RANDALL, Trustee
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Northeast Bancorp, Inc. (bank holding company),
Dominion Resources, Inc. (electric utility holding company), and
Kemper Corporation (insurance and financial services company);
formerly Chairman of the Board of ICL, Inc. (information systems).
EDWARD V. REGAN, Trustee
40 Park Avenue, New York, New York 10016
President of Jerome Levy Institute, Bard College; member of the U.S.
Competitiveness Policy Council; formerly New York State Comptroller.
RUSSELL S. REYNOLDS, JR., Trustee
200 Park Avenue, New York, NY 10166
Founder and Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Historical Society and Greenwich Hospital.
SIDNEY M. ROBBINS, Trustee
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions,
Graduate School of Business, Columbia University; Visiting Professor
of Finance, University of Hawaii; a director of The Korea Fund, Inc.
and The Malaysia Fund, Inc.(closed-end investment companies); a
member of the Board of Advisors, Olympus Private Placement Fund,
L.P.; Professor Emeritus of Finance, Adelphi University.
DONALD W. SPIRO, President and Trustee*
Chairman Emeritus and a Director of the Manager; formerly Chairman of
the Manager and the Distributor.
_______________________
*Denotes a Trustee who is an "interested person" of the Fund as defined
in the Investment Company Act.
PAULINE TRIGERE, Trustee
550 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
CLAYTON K. YEUTTER, Trustee
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), FMC
Corp. (chemicals and machinery), Lindsay Manufacturing Co. and Texas
Instruments Inc. (electronics); formerly (in descending chronological
order) Deputy Chairman, Bush/Quayle Presidential Campaign; Counsellor
to the President (Bush) for Domestic Policy; Chairman of the
Republican National Committee; Secretary of the U.S. Department of
Agriculture; and U.S. Trade Representative, Executive Office of the
President.
ANDREW J. DONOHUE, Secretary
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor; Partner in, Kraft & McManimon (a law firm); an officer
of First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser);
director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
JOHN L. WALLACE, Vice President and Portfolio Manager
Vice President of the Manager; an officer of other OppenheimerFunds;
formerly a securities analyst and assistant portfolio manager for the
Manager.
GEORGE C. BOWEN, Treasurer
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President
and Treasurer of the Distributor and HarbourView; Senior Vice
President, Treasurer, Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and SFSI;
an officer of other OppenheimerFunds; formerly Senior Vice
President/Comptroller and Secretary of Oppenheimer Asset Management
Corporation, a former investment advisory subsidiary of the Manager.
ROBERT G. ZACK, Assistant Secretary
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
LYNN M. COLUCCY, Assistant Treasurer
3410 South Galena Street, Denver, Colorado 80231
Vice President and Assistant Treasurer of the Manager; an officer of
other OppenheimerFunds; formerly Vice President/Director of Internal
Audit of the Manager.
Remuneration of Trustees. The officers of the Fund (including Mr. Spiro)
are affiliated with the Manager and receive no salary or fee from the
Fund. During the Fund's fiscal year ended September 30, 1993, the
remuneration (including expense reimbursements) paid by the Fund to all
Trustees of the Fund (excluding Mr. Spiro) as a group, and as members of
one or more committees, totalled $5,606. The Fund has adopted a
retirement plan that provides for payment to a retired Trustee of up to
80% of the average compensation paid during that Trustee's five years of
service in which the highest compensation was received. A Trustee must
serve in that capacity for any of the New York-based OppenheimerFunds for
at least 15 years to be eligible for the maximum payment. No Trustee has
retired since the adoption of the plan and no payments by the Fund have
been made under it.
Major Shareholders. As of December 31, 1993, the only person owning of
record or known by the Fund to own of record or beneficially 5% or more
of the outstanding shares of the Fund was Merrill Lynch, Pierce, Fenner
& Smith, Inc., which was the record owner of 417,666 shares of the Fund
(approximately 10.9% of the Fund's then outstanding shares).
INVESTMENT MANAGEMENT SERVICES
The Manager is wholly-owned by OAC, a holding company ultimately
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 serve as officers of the Fund, and two of whom (Messrs. Spiro and
Galli) serve as Trustees of the Fund.
The management fee is payable monthly to the Manager under the terms
of the investment advisory agreement (the "Agreement"), and is computed
on the aggregate net assets of the Fund as of the close of business each
day. The Agreement requires the Manager, at its expense, to provide the
Fund with adequate office space, facilities and equipment, and to provide
and supervise the activities of all administrative and clerical personnel
required to provide effective administration for the Fund, including the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and composition of proxy
materials and registration statements for continuous public sale of shares
of the Fund. Expenses not expressly assumed by the Manager under the
Agreement or by the Distributor are paid by the Fund. The Agreement lists
examples of expenses paid by the Fund, the major categories of which
relate to interest, taxes, brokerage commissions, fees to unaffiliated
trustees, legal, and audit expenses, custodian and transfer agent
expenses, share issuance costs, certain printing and registration costs
and non-recurring expenses, including litigation. For the fiscal years
ended September 30, 1991, 1992 and 1993, management fees paid by the Fund
to the Manager were $435,115, $429,094, and $352,888, respectively.
The Agreement contains no expense limitation. However, independently
of the Agreement, the Manager has undertaken that the total expenses of
the Fund in any fiscal year (including the management fee but excluding
taxes, interest, brokerage commissions, distribution assistance payments
and extraordinary expenses such as litigation costs) will not exceed (and
the Manager undertakes to pay or refund to the Fund any amount by which
such expenses will exceed) the most stringent state regulatory limitation
on fund expenses applicable to the Fund. The payment of the management
fee at the end of any month will be reduced or eliminated so that there
will not be any accrued but unpaid liability under the above expense
limitation. The Manager reserves the right to terminate or amend the
undertaking at any time. Any assumption of the Fund's expenses under this
undertaking would lower the Fund's overall expense ratio and increase its
total return during any period in which expenses are limited.
The Agreement provides that the Manager is not liable for any loss
sustained by reason of good faith errors or omissions in connection with
matters to which the Agreement relates, except loss resulting by reason
of its willful misfeasance, bad faith, gross negligence or reckless
disregard for its obligations thereunder. The Agreement permits the
Manager to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with other
investment companies for which it may act as investment adviser or general
distributor. If the Manager or one of its affiliates no longer acts as
investment adviser to the Fund, the right of the Fund to use the name
"Oppenheimer" as part of its name may be withdrawn.
BROKERAGE
Provisions of the Investment Advisory Agreement. One of the duties of the
Manager under the Agreement is to arrange the portfolio transactions of
the Fund. In doing so, the Manager is authorized by the Agreement to
employ broker-dealers ("brokers"), including "affiliated" broker-dealers
(as that term is defined in the Investment Company Act), as may, in its
best judgment based on all relevant factors, implement the policy of the
Fund to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable price obtainable) of such
transactions. The Manager need not seek competitive commission bidding
or base its selection on "posted" rates, but is expected to be aware of
the current rates of most eligible brokers and to minimize the commissions
paid to the extent consistent with the provisions of the Agreement and the
interests and policies of the Fund as established by its Board of
Trustees.
Under the Agreement, the Manager is authorized to select brokers that
provide brokerage and/or research services for the Fund and/or the other
accounts over which the Manager or its affiliates have investment
discretion. The commissions paid to such brokers may be higher than
another qualified broker would have charged, if a good faith determination
is made by the Manager that the commission is reasonable in relation to
the services provided. Subject to the foregoing considerations, the
Manager may also consider sales of shares of the Fund and other funds
managed by the Manager and its affiliates as a factor in the selection of
brokers for the Fund's portfolio transactions.
Description of Brokerage Practices. Subject to the provisions of the
Agreement, allocations of brokerage are made by portfolio managers under
the supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities and otherwise only if it appears likely that a better price or
execution can be obtained. When the Fund engages in an option
transaction, ordinarily the same broker will be used for the purchase or
sale of the option and any transactions in the securities to which the
option relates. When possible, concurrent orders to purchase or sell the
same security by more than one of the accounts managed by the Manager or
it affiliates are combined. Transactions effected pursuant to such
combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply to
direct purchases and sales of portfolio securities.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of those
other accounts may be useful both to the Fund and one or more of such
other accounts. Such research, which may be supplied by a third party at
the instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The 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 Fund's
Board of Trustees, including the independent Trustees of the Fund,
annually reviews information furnished by the Manager relative to the
commissions paid to brokers furnishing such services in an effort to
ascertain that the amount of such commissions was reasonably related to
the value or the benefit of such services.
During the Fund's fiscal years ended September 30, 1991, 1992 and
1993, total brokerage commissions paid by the Fund (not including spreads
or concessions on principal transactions on a net trade basis) were
$135,193, $247,261 and $416,080, respectively. During the fiscal year
ended September 30, 1993, $158,802 was paid to brokers as commissions in
return for research services (including special research, statistical
information and execution); the aggregate dollar amount of those
transactions was $42,756,378. The transactions giving rise to those
commissions were allocated in accordance with the internal allocation
procedures described above.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Net Asset Value Per Share. The net asset value per share
of the Fund is determined each day The New York Stock Exchange (the
"NYSE") is open as of 4:00 P.M. (all references to time mean New York
time) that day by dividing the value of the Fund's net assets by the total
number of Fund shares outstanding. The NYSE's most recent annual holiday
schedule (which is subject to change) states that it will close New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. It may also close on other days.
The Fund may invest a substantial portion of its assets in foreign
securities primarily listed on foreign exchanges that may trade on
Saturdays or other customary U.S. business holidays on which the NYSE is
closed. Because the Fund's offering price and net asset value will not
be calculated on those days, if foreign securities held in the Fund's
portfolio are traded on those days, the Fund's net asset value per share
may be significantly affected on such days when shareholders may not
purchase or redeem shares. Trading in securities on European and Asian
exchanges and over-the-counter markets is normally completed before the
close of the NYSE. Events affecting the values of foreign securities
traded in such markets that occur between the time their prices are
determined and the close of the NYSE will not be reflected in the Fund's
calculation of its net asset value unless the Fund's Board of Trustees,
or the Manager under procedures established by the Board, determines that
the particular event would materially affect the Fund's net asset value,
in which case an adjustment would be made.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on the NASDAQ are valued at
the last sale prices on their primary exchange or the NASDAQ that day (or,
in the absence of sales that day, at values based on the last sale prices
of the preceding trading day or closing bid and asked prices); (ii) NASDAQ
and other unlisted equity securities for which last sale prices are not
regularly reported but for which over-the-counter market quotations are
readily available are valued at the highest closing bid price at the time
of valuation or, if no closing bid price is reported, on the basis of a
closing bid price obtained from a dealer who maintains an active market
in that security; (iii) securities (including restricted securities) not
having readily-available market quotations are valued at fair value under
the Board's procedures; (iv) unlisted debt securities having a remaining
maturity in excess of 60 days are valued at the mean between the asked and
bid prices determined by a portfolio pricing service approved by the
Fund's Board of Trustees or obtained from active market makers in the
security based upon reasonable inquiry; (v) short-term debt securities
having a remaining maturity of 60 days or less are valued at cost,
adjusted for amortization of premiums and accretion of discounts; and (vi)
securities traded on foreign exchanges or in foreign over-the-counter
markets are valued as determined by a portfolio pricing service, approved
by the Board, based upon last sales prices reported on a principal
exchange or, if none, at the mean between closing bid and asked prices and
reflect prevailing rates of exchange to convert their values to U.S.
dollars. Foreign currency will be valued as close to the time fixed for
the valuation date as is reasonably practicable. The value of securities
denominated in foreign currency will be converted to U.S. dollars at the
prevailing rates of exchange at the time of valuation.
In the case of U.S. Government Securities, mortgage-backed securities,
foreign securities, and corporate bonds, when last sale information is not
generally available, such pricing procedures may include "matrix"
comparisons to the prices for comparable instruments on the basis of
quality, yield, maturity, and other special factors involved. The Fund's
Board of Trustees has authorized the Manager to employ a pricing service
to price U.S. Government Securities, mortgage-backed securities, foreign
government securities and corporate bonds. The Trustees will monitor the
accuracy of such pricing services by comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Calls, puts and Futures are valued at the last sale prices on the
principal exchanges or the NASDAQ on which they are traded, or, if there
are no sales that day, in accordance with (i) above. When the Fund writes
an option, an amount equal to the premium received by the Fund is included
in its Statement of Assets and Liabilities as an asset, and an equivalent
deferred credit is included in the liability section. The deferred credit
is adjusted ("marked-to-market") to reflect the current market value of
the option.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained under Right of Accumulation and Letters of
Intent because of the economies of sales efforts and reduction in expenses
realized by the Distributor, dealers and brokers making such sales. No
sales charge is imposed in certain circumstances described in the
Prospectus because the Distributor incurs little or no selling expenses.
The term "immediate family" refers to one's spouse, children,
grandchildren, parents, grandparents, parents-in-law, siblings, a
sibling's spouse and a spouse's siblings.
Redemptions. Information on how to redeem shares of the Fund is stated
in the Prospectus. The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, if the Fund's Board
of Trustees determines that it would be detrimental to the best interests
of the remaining shareholders of the Fund to make payment wholly or partly
in cash, 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 Securities and Exchange
Commission rules. 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 of the Fund 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 converting the assets to cash.
Any shares distributed by the Fund pursuant to an "in-kind" redemption
will be readily marketable. The method of valuing securities used to make
redemptions in kind will be the same as the method of valuing portfolio
securities described above under "Determination of Net Asset Value Per
Share," and such valuation will be made as of the same time the redemption
price is determined.
The Fund's Board of Trustees has the right to cause the involuntary
redemption of the shares held in any account if the value has fallen below
$200 or such lesser amounts as the Board may decide. The Board of
Trustees will not cause the involuntary redemption of shares in an account
if the aggregate net asset value of such shares has fallen below the
stated minimum solely as a result of market fluctuations. Should the
Board elect to exercise the right to redeem small accounts, it may also
fix, in accordance with the Investment Company Act, the requirements for
any notice to be given to the shareholders in question (not less than 30
days), or may set requirements for permission to allow the shareholder to
increase the investment so that the shares would not be involuntarily
redeemed.
Cancellation of Purchase Orders. Cancellation of purchase orders for Fund
shares (for example, when a check to purchase shares is returned to the
Fund unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date;
that loss is equal to the difference in net asset value times the number
of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the
Distributor will do so. The Fund may reimburse the Distributor for that
amount by redeeming shares from any account registered in that investor's
name, or by seeking other redress.
SERVICE PLAN
The Fund has adopted a Service Plan (the "Plan") under Rule 12b-1 of
the Investment Company Act, as described in the Prospectus. The Plan
provides that the Fund will reimburse the Distributor for a portion of its
costs incurred the servicing of the Fund's shares, as described in the
Prospectus. The Plan has been approved by a vote of (i) the Board of
Trustees of the Fund including a majority of the "independent Trustees"
(trustees who are not "interested persons" as defined in the Investment
Company Act and who have no direct or indirect financial interest in the
operation of the Plan or in any agreements relating to the Plan), cast in
person at a meeting called for the purpose of voting on the Plan, and (ii)
the holders of a "majority" (as defined in the Investment Company Act) of
the Fund's shares.
Under the Plan, no payment will be made by the Distributor to any
Recipient if the aggregate net asset value of the Fund shares held by it
or its customers at the end of a calendar quarter is less than the minimum
amount, if any, set from time to time by Trustees who are not "interested
persons" (as defined in the Investment Company Act) of the Fund and have
no direct or indirect financial interest in the operation of the Plan or
in any agreements related to the Plan ("Independent Trustees").
Currently, no minimum asset requirement has been fixed by the Fund's Board
of Trustees. For the fiscal year ended September 30, 1993, reimbursement
payments under the Plan by the Fund to the Distributor totaled $114,385
for Plan payments by the Distributor to Recipients, including $2,296 to
an affiliate of the Distributor, as reimbursement for service-related
expenses.
Unless terminated as described below, the Plan continues in effect
from year to year only so long as such continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. The Plan may be terminated at any
time by the vote of a majority of the Independent Trustees or by the vote
of the holders of a "majority" (as defined in the Investment Company Act)
of the Fund's outstanding voting securities. Without shareholder
approval, the Plan may not be amended to increase materially the amount
of payments to be made and all material amendments must be approved by a
vote of the Fund's Board of Trustees, including a majority of the
Independent Trustees. The Plan will have the effect of increasing the
Fund's expenses from what they would otherwise be, but by no more than
0.25% of average annual net assets.
While the Plan is in effect, the Treasurer of the Fund will provide
a written report to the Fund's Board of Trustees at least quarterly on the
amount of all payments made pursuant to the Plan, the identity of each
Recipient that received any such payment, and the purpose of the payments.
The Plan further provides that while it is in effect, the selection or
replacement 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 as to the selection
or nomination is approved by a majority of such Independent Trustees.
The Glass-Steagall Act and other applicable laws and regulations,
among other things, generally prohibit Federally-chartered or supervised
banks from engaging in the business of underwriting, selling or
distributing securities as principals. Accordingly, the Distributor may
pay banks only for sales made on an agency basis or for performance of
administrative and shareholder servicing functions. In addition, certain
banks and financial institutions may be required to register as dealers
under state law. While the matter is not free from doubt, the Manager
understands that such laws do not preclude a bank from performing services
required of a Recipient. However, judicial or administrative decisions
or interpretations of such laws, as well as changes in either Federal or
state statutes or regulations relating to the permissible activities of
banks or their subsidiaries or affiliates, could prevent certain banks
from continuing to perform all or a part of these services. The Fund's
Board of Trustees will consider appropriate modifications to the Fund's
operations, including discontinuance of payments under the Plan to such
institutions, in the event of any future change in such laws or
regulations which may adversely affect the ability of such institutions
to provide these services. If a bank were so prohibited, shareholders of
the Fund who were clients of such bank would be permitted to remain as
shareholders, and if that bank could no longer provide those service
functions, alternate means for continuing the servicing of such
shareholders would be sought. In such event, shareholders serviced by
such bank might no longer be able to avail themselves of any automatic
investment or other services then being provided by such bank. It is not
expected that shareholders would suffer any adverse financial consequences
as a result of any of those occurrences.
PERFORMANCE, DIVIDEND AND TAX INFORMATION
Total Return Information. As described in the Prospectus, from time to
time the "average annual total return", "total return" and "total return
at net asset value" of the Fund may be advertised. An explanation of how
average annual total return and total return are calculated and the
components of those calculations are set forth below.
The Fund's "average annual total return" is an average annual
compounded rate of return. It is the rate of return based on factors
which include a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") with an Ending Redeemable
Value ("ERV") of that investment, according to the following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
The "total return" uses some of the same factors as "average annual
total return", but does not average the rate of return on an annual basis.
Total return measures the cumulative (rather than average) change in value
of a hypothetical investment over a stated period. Total return is
determined as follows:
ERV - P
- ------- = Total Return
P
Both formulas assume the payment of the Fund's maximum sales charge
of 5.75% (as a percentage of the offering price) on the initial investment
("P"). They also assume that all dividends and capital gains
distributions during the period are reinvested at net asset value per
share, and that the investment is redeemable at the end of the period.
The "average annual total returns" on an investment in the Fund (using the
method described above) for the fiscal year ended September 30, 1993 and
for the period from March 2, 1990 (commencement of operations) through
September 30, 1993 were 2.13% and (3.65%), respectively. The "total
return" for the period from March 2, 1990 through September 30, 1993 was
(12.47)%.
From time to time the Fund may also quote a "total return at net asset
value" to describe the rate of return on an investment in the Fund. It
is based on the difference in net asset value per share at the beginning
and the end of the period (without considering sales charge) and takes
into consideration the reinvestment of dividends and capital gains (as
with total return, described above). The Fund's return at net asset value
for the fiscal year ended September 30, 1993 was 8.36%.
Total return information may be useful to investors in reviewing the
Fund's performance. However, certain factors should be considered before
using such information as a basis for comparison with alternative
investments. No adjustment is made for taxes payable on distributions.
An investment in the Fund is not insured; its total return is not
guaranteed and will fluctuate over time. The total return for any given
past period is not an indication or representation by the Fund of future
rates of return on its shares. The Fund's total return is affected by
portfolio quality, portfolio maturity, type of investments held and
operating expenses. When comparing the Fund's total return with that of
other investment instruments, investors should understand that certain
other investment alternatives such as money market instruments,
certificates of deposit, U.S. Government securities or bank accounts
provide a return which remains relatively constant over time and also that
bank accounts may be insured. Investors should also understand, when
comparing the Fund's total return and risk to capital with that of other
investment alternatives, that since the Fund is an equity fund seeking
capital appreciation, its shares are subject to greater market risks than
certain other investments.
The total return on an investment made in shares of the Fund may be
compared with performance for the same period of either the Dow Jones
Industrial Average ("Dow") or the Standard & Poor's 500 Index ("S&P 500"),
both of which are widely-recognized indices of stock market performance.
Both indices consist of unmanaged groups of common stocks; the Dow
consists of thirty such issues. The performance of both indices includes
a factor for the reinvestment of income dividends. Neither index reflects
reinvestment of capital gains or takes sales charges or taxes into
consideration as these items are not applicable to indices.
From time to time the return on an investment in the Fund may be
compared to the returns on other investments at specified fixed rates of
return over a 10-year period. The chart below illustrates the returns on
hypothetical investments having the fixed rates of return illustrated,
assuming (i) there is no sales charge on the investment, (ii) earnings are
reinvested at the end of each year and (iii) each investment is made on
the first day of each year in the periods shown:
Value on September 30, 1993
Investment Assumed Average Annual Return
5% 10% 15% 20%
Single $1,000 $ 1,629 $ 2,594 $ 4,046 $ 6,192
Annual $1,000 $13,208 $17,533 $23,350 $31,151
From time to time the Fund may publish the ranking of its share
performance by Lipper Analytical Services, Inc. ("Lipper"), a widely-
recognized independent service that monitors the performance of regulated
investment companies, including the Fund, and ranks their performance for
various periods based on categories relating to investment objectives.
The performance of the Fund is ranked against: (i) all other funds, (ii)
all other growth funds, and (iii) all other growth funds in a specific
size category. The Lipper performance analysis includes the reinvestment
of capital gains distributions and income dividends but does not take
sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of its share
performance by Morningstar, Inc. ("Morningstar"), an independent mutual
fund monitoring service that ranks mutual funds, including the Fund, by
a quantitative system based upon the Fund's three, five and ten-year
average annual total returns (when available) and a risk factor that
reflects fund performance relative to three-month U.S. Treasury bill
monthly returns. Such returns are adjusted for fees and sales loads. The
ranking categories represent a fund's historical risk/reward ratio
relative to other funds in its class. There are five rankings with a
corresponding number of stars: highest (5), above average (4), neutral
(3), below average (2) and lowest (1). Morningstar ranks the Fund in
relation to other equity funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect
to reinvest all dividends and/or distributions in shares of any of the
funds listed in the Prospectus as "Eligible Funds," at net asset value
without sales charge. To elect this option, a shareholder must notify the
Transfer Agent in writing, and either must have an existing account in the
fund selected for investment or must obtain a prospectus for that fund and
application from the Transfer Agent to establish an account. The
investment will be made at the net asset value per share in effect at the
close of business on the payable date of the dividend or distribution.
Dividends and distributions from other Eligible Funds may be invested in
shares of the Fund on the same basis.
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and distributions is explained in the
Prospectus under the caption "Dividends, Distributions and Taxes."
Special provisions of the Internal Revenue Code govern 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 (generally,
dividends from domestic corporations) that the Fund derives from its
portfolio investments held for a minimum period, usually 46 days. A
corporate shareholder will not be eligible for the deduction on dividends
paid on shares held by the shareholder for 45 days or less. To the extent
the Fund's dividends are derived from gross income from option premiums,
interest income, short-term capital gains from the sale of securities, or
dividends from foreign corporations, its dividends will not qualify for
the deduction.
Under the Internal Revenue Code, by December 31 of each year the Fund,
in general, must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its capital
gains realized in the period from November 1 of the prior year through
October 31 of that year or else the Fund must pay an excise tax on the
amounts not distributed. While it is presently anticipated that the Fund
will meet those requirements, the Fund's Board and the Manager may
determine that in a particular year it would be in the best interest of
the Fund not to make such distributions at the required levels and to pay
the excise tax, which would reduce the amount available for distribution
to shareholders.
If the Fund has more than 50% of its assets invested in securities of
foreign issuers at the end of its fiscal year, it may elect the
application of Section 853 of the Internal Revenue Code to permit
shareholders to take a credit (or a deduction) for foreign taxes paid by
the Fund. Under Section 853, shareholders would include in gross income
both cash dividends received from the Fund and the income taxes paid by
the Fund with respect to, or withheld from, interest and dividends paid
to the Fund from its foreign investments. Shareholders would generally
be entitled to treat the foreign taxes withheld as a credit on their
Federal income taxes. In effect, a portion of the shareholder's Federal
income taxes would be paid to other governments. As an alternative,
shareholders could, if to their advantage, treat the foreign tax withheld
as a deduction from gross income in computing taxable income rather than
as a tax credit. In substance, the Fund's election would enable
shareholders to benefit from the same foreign tax credit or deduction that
would be received if they had been the record owners of the Fund's foreign
securities and had paid foreign income taxes on the income received.
ADDITIONAL INFORMATION
Description of the Fund. The Fund's Declaration of Trust contains an
express disclaimer of shareholder or Trustee liability for the Fund's
obligations, and provides for indemnification and reimbursement of
expenses out of its property for any shareholder held personally liable
for its obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume a defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any judgment
thereon. Thus, while Massachusetts law permits a shareholder of a trust
(such as the Fund) to be held personally liable as a "partner" under
certain circumstances, the risk of a Fund shareholder incurring financial
loss on account of shareholder liability is limited to the relatively
remote circumstances in which the Fund itself would be unable to meet the
obligations described above. Any person doing business with the Fund, and
any shareholder of the Fund, agrees under the Fund's Declaration of Trust
that he shall 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 the law.
It is not contemplated that regular meetings of shareholders will be
held. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding 1% or more of the Fund's outstanding shares,
whichever is less, that they wish to communicate with other shareholders
to request a meeting to remove a Trustee, the Trustees will then either
make the Fund's shareholder list available to the applicants or mail their
communication to all other shareholders at the applicants' expense, or the
Trustees may take such other action as is permitted by Section 16(c) of
the Investment Company Act.
The Custodian and the Transfer Agent. The Custodian's responsibilities
include safeguarding and controlling the Fund's portfolio securities and
handling the delivery of portfolio securities to and from the Fund. The
Manager has represented to the Fund that its banking relationships with
the Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian. It
will be the practice of the Fund to deal with the Custodian in a manner
uninfluenced by any banking relationship the Custodian may have with the
Manager and its affiliates.
The Transfer Agent is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
General Distributor's Agreement. Under the Distribution Agreement between
the Fund and the Distributor, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's shares, but
is not obligated to sell a specific number of shares. Expenses normally
attributable to sales other than those paid under the Plan of
Distribution, including advertising and the cost of printing and mailing
prospectuses (other than those furnished to existing shareholders), are
borne by the Distributor. During the fiscal years ended September 30,
1991, 1992 and 1993, the aggregate amount of sales charges on sales of the
Fund's shares was $966,560, $576,290 and $279,673, respectively, of which
the Distributor and an affiliated broker-dealer retained in the aggregate
$203,798, $149,353 and $61,218 in those respective periods.
Independent Auditors. The independent auditors of the Fund examine the
Fund's financial statements and perform other related audit services.
They also serve as auditors for certain other funds advised by the
Manager.
AUTOMATIC WITHDRAWAL PLAN PROVISIONS
As discussed in the Prospectus, a shareholder who owns shares of the
Fund valued at $5,000 or more at the current offering price may establish
an Automatic Withdrawal Plan to receive a monthly or quarterly check in
a requested amount of not less than $50. Shares will be redeemed three
business days prior to the date requested for receipt of the check (which
is an approximate date).
Fund shares will be redeemed as necessary to meet withdrawal payments.
Shares acquired without a sales charge will be redeemed first and
thereafter shares acquired with reinvested dividends and distributions
followed by shares acquired with a sales charge will be redeemed to the
extent necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made to
shareholders under such plans should not be considered as a yield or
income on investment. Purchases of additional shares concurrently with
withdrawals are undesirable because of sales charges on purchases.
Accordingly, a shareholder may not maintain an Automatic Withdrawal Plan
while simultaneously making regular purchases. The Fund reserves the
right to amend, suspend or cease the offering of such plans at any time
without prior notice.
By requesting an Automatic Withdrawal Plan, the applicant agrees to
the terms and conditions applicable to such plans, as stated below and
elsewhere in the Application for such Plans, the Prospectus and this
Additional Statement as they may be amended from time to time by the Fund
and/or the Distributor. When adopted, such amendments will automatically
apply to existing plans.
1. The Transfer Agent will administer the Automatic Withdrawal Plan
(the "Withdrawal Plan") as agent for the person (the "Planholder") who
executed the Withdrawal Plan authorization and application submitted to
the Transfer Agent.
2. Certificates will not be issued for shares of the Fund purchased
for and held under the Withdrawal 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 now held by the Planholder may be
surrendered unendorsed to the Transfer Agent with the Withdrawal Plan
application so that the shares represented by the certificate may be held
under the Withdrawal Plan. Those shares will be carried on the
Planholder's Withdrawal Plan Statement.
3. Distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends may be paid in cash or reinvested.
4. Redemptions of shares in connection with disbursement payments
will be made at the net asset value per share determined on the redemption
date.
5. Checks or ACH payments will be transmitted three business days
prior to the date selected for receipt of the monthly or quarterly payment
(the date of receipt is approximate), according to the choice specified
in writing by the Planholder.
6. The amount and the interval of disbursement payments and the
address to which checks are to be mailed may be changed at any time by the
Planholder on written notification to the Transfer Agent. The Planholder
should allow at least two weeks' time in mailing such notification before
the required change can be put in effect.
7. The Planholder may, at any time, instruct the Transfer Agent by
written notice (in proper form in accordance with the requirements of the
then-current Prospectus of the Fund) to redeem all, or any part of, the
shares held under the Withdrawal Plan. In such case, the Transfer Agent
will redeem the number of shares requested at the net asset value per
share in effect in accordance with the Fund's usual redemption procedures
and will mail a check for the proceeds of such redemption to the
Planholder.
8. The Withdrawal Plan may, at any time, be terminated by the
Planholder on written notice to the Transfer Agent, or by the Transfer
Agent upon receiving directions to that effect from the Fund. the
Transfer Agent will also terminate the Withdrawal Plan upon receipt of
evidence satisfactory to it of the death or legal incapacity of the
Planholder. Upon termination of the Withdrawal Plan by the Transfer Agent
or the Fund, shares remaining unredeemed will be held in an uncertificated
account in the name of the Planholder, and the account will continue as
a dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder, his or her executor or
guardian, or as otherwise appropriate.
9. For purposes of using shares held under the Withdrawal Plan as
collateral, the Planholder may request the issuance of a portion of his
or her shares in certificated form. Upon written request from the
Planholder, the Transfer Agent will determine the number of shares as to
which a certificate may be issued, so as not to cause the withdrawal
checks to stop because of exhaustion of uncertificated shares needed to
continue payments. Should such uncertificated shares become exhausted,
Withdrawal Plan withdrawals will terminate.
10. The Transfer Agent shall incur no liability to the Planholder for
any action taken or omitted by the Transfer Agent in good faith.
11. In the event that the Transfer Agent shall cease to act as
transfer agent for the Fund, the Planholder will be deemed to have
appointed any successor transfer agent to act as his agent in
administering the Withdrawal Plan.
LETTERS OF INTENT
In submitting a Letter of Intent to purchase shares of the Fund and
Class A shares of other OppenheimerFunds at a reduced sales charge, the
investor agrees to the terms of the Prospectus, the Application used to
buy such shares, and the language in this Additional Statement as to
Letters of Intent, as they may be amended from time to time by the Fund.
Such amendments will apply automatically to existing Letters of Intent.
A Letter of Intent ("Letter") is the investor's statement of intention
to purchase shares of the Fund (and Class A shares of other eligible
OppenheimerFunds sold with a sales charge) during the 13-month period from
the investor's first purchase pursuant to the Letter (the "Letter of
Intent period"), which may, at the investor's request, include purchases
made up to 90 days prior to the date of the Letter. The investor states
the intention to make the aggregate amount of purchases (excluding any
reinvestments of dividends or distributions or purchases made at net asset
value without sales charge), which together with the investor's holdings
of such funds (calculated at their respective public offering prices
calculated on the date of the Letter) will equal or exceed the amount
specified in the Letter to obtain the reduced sales charge rate (as set
forth in "How To Buy Shares" in the Prospectus) applicable to purchases
of shares in that amount (the "intended amount"). Each purchase under the
Letter will be made at the public offering price applicable to a single
lump-sum purchase of shares in the intended amount, as described in the
applicable prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of such fund shares on the last day of that period,
do not equal or exceed the intended amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow" below, as those terms may be amended from time
to time. The investor agrees that shares equal in value to 5% of the
intended amount will be held in escrow by the Fund's transfer agent
subject to the Terms of Escrow.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual total purchases. If total eligible purchases during
the Letter of Intent period exceed the intended amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to refer to the Letter in placing any
purchase orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended amount specified in the Letter shall be held in escrow by the
Fund's transfer agent. For example, if the intended 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 13-month Letter of Intent period, the escrowed shares
will be promptly released to the investor.
3. If, at the end of the 13-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended amount
specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid
if the total amount purchased had been made at a single time. Such sales
charge adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is not paid
within 20 days after a request from the Distributor or the dealer, the
Distributor will, within 60 days of the expiration of the Letter, redeem
the number of escrowed shares necessary to realize such difference in
sales charges. Full and fractional shares remaining after such redemption
will be released from escrow. If a request is received to redeem escrowed
shares prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the transfer agent of the Fund as attorney-in-fact to surrender
for redemption any or all escrowed shares.
5. The funds whose shares are eligible for purchase under the Letter
(or the holding of which may be counted toward completion of the Letter)
do not include any fund whose shares are sold without a sales charge
(including a contingent deferred sales charge) unless (for the purpose of
determining completion of the obligation to purchase shares under the
Letter) the shares were acquired in exchange for shares of a fund
(described as an "Eligible Fund" in the Prospectus) whose shares were
acquired by payment of a sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders of Oppenheimer Global Environment
Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Global Environment Fund as of September 30,
1993, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year
period then ended and the financial highlights for each of the years in
the three-year period then ended and the period from March 2, 1990
(commencement of operations) to September 30, 1990. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of September 30,
1993, by correspondence with the custodian and brokers; and where
confirmations were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Oppenheimer Global Environment Fund as of September 30, 1993, the
results of its operations for the year then ended, the changes in its net
assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the three-year period then
ended and the period from March 2, 1990 (commencement of operations) to
September 30, 1990, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick
Denver, Colorado
October 21, 1993
Statement of Investments September 30, 1993
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C> <C>
Repurchase Agreements -- 2.8%
Repurchase agreement with Morgan Guaranty Trust Co.,
3.30%, dated 9/30/93 and maturing 10/1/93, collateralized
by U.S. Treasury Bills, 2.92%, 12/30/93, with a value of
$1,230,847 (Cost $1,200,000) $1,200,000 $1,200,000
Convertible Corporate Bonds
and Notes -- 10.8%
Air & Water Technologies Corp., 8% Cv. Sub. Debs., 5/15/15 700,000
684,250
HIH Capital Ltd., 7.50% Gtd. Cv. Sub. Capital Bonds, 9/25/06 500,000
432,500
(1)
OHM Corp., 8% Cv. Sub. Debs., 10/1/06 1,000,000
950,000
Thermo Electron Corp., 4.625% Cv. Sr. Debs., 8/1/97 (1) 1,000,000
1,430,000
USA Waste Services, Inc., 8.50% Cv. Sub. Debs., 10/15/02 1,000,000
1,172,500
Total Convertible Corporate Bonds and Notes (Cost 4,669,250
$3,856,410)
Units
Rights, Warrants and
Certificates -- .0%
Degremont Wts., Exp. 7/95 (Cost $6,362) 325 9,124
Shares
Common Stocks -- 83.7%
Basic Materials -- 1.2%
Gold -- 1.2% Minerals Technologies, Inc. 17,500 503,125
Consumer Cyclicals -- 11.1%
Airlines -- 1.6% Atlantic Southeast Airlines, Inc. 25,000 700,000
Hotels/Motels -- 1.7% Promus Cos., Inc. (The)* 10,000 755,000
Household Furnishings Battery Technologies, Inc.* 95,000 568,983
and Appliances -- 2.3% Maytag Corp. 25,000 418,750
987,733
Publishing -- 2.5% American Greetings Corp., Cl. A 20,000 625,000
Marvel Entertainment Group, Inc. 10,000 442,500
1,067,500
Retail Stores - Department Dollar General Corp. 12,500 381,250
Stores -- .9%
Retail - Specialty -- 1.5% CML Group, Inc. 22,500 649,688
Toys -- .6% Mattel, Inc. 10,000 276,250
Consumer Non-Cyclicals --
5.8%
Food Processing -- 2.5% Pioneer Hi-Bred International, Inc. 20,000 665,000
Wholesome & Hearty Foods 35,000 437,500
1,102,500
Healthcare - Genentech, Inc.* 10,000 428,750
Miscellaneous -- 1.0%
Medical Products -- 2.3% Thermedics, Inc.* 40,000 975,000
Energy -- 2.7%
Oil and Gas Drilling -- .1% Noble Drilling Corp. 5,000 45,625
Shares See Note 1
Common Stocks (continued)
Energy (continued)
Oil Well Services and Matrix Service Co.* 55,000 $ 563,750
Equipment -- 2.6% McDermott International, Inc. 20,000 565,000
1,128,750
Financial -- 3.6%
Financial Services - Home State Holdings, Inc.* 25,000 425,000
Miscellaneous -- 1.0%
Major Banks - Central Fidelity Banks, Inc. 15,000 461,250
Regional -- 2.6% Gateway Financial Corp.* 70,000 682,500
1,143,750
Industrial -- 21.0%
Commercial Services -- 2.7% Ogden Corp. 20,000 502,500
Patterson Dental Co.* 20,000 655,000
1,157,500
Conglomerates -- 1.3% Compagnie Generale des Eaux 1,270
574,460
Engineering and Destec Energy, Inc.* 30,000 510,000
Construction -- 4.1% Foster Wheeler Corp. 15,000 468,750
IHC Caland NV 20,000 399,967
Rust International, Inc.* 20,000 410,000
1,788,717
Machinery - Powerscreen International PLC 75,000 415,279
Diversified -- 3.9% Schweizerische Industrie GmbH 450 692,662
Thermo Power Corp.* 55,000 563,750
1,671,691
Manufacturing - Diversified Duriron Co., Inc. 20,000 467,500
Industrials -- 6.5% Harsco Corp. 10,000 433,750
Safety 1st, Inc.* 30,000 607,500
Stewart & Stevenson Services, Inc. 10,000 467,500
Trinity Industries, Inc. 22,500 835,313
2,811,563
Transportation - Kirby Corp.* 50,000 1,087,500
Miscellaneous -- 2.5%
Pollution Control -- 33.5%
Air Pollution -- 1.4% BHA Group, Inc., Cl. A 30,000 420,000
Fuel-Tech, Inc. NV 20,000 170,000
590,000
Alternative Energies -- 2.8% Kenetech Corp.* 25,000 375,000
Wheelabrator Technologies, Inc. 25,000 440,626
Zurn Industries, Inc. 12,500 401,562
1,217,188
Statement of Investments (continued)
Market Value
Shares See Note 1
Common Stocks (continued)
Pollution Control
(continued)
Engineering and Geraghty & Miller, Inc. 40,000 $ 455,000
Consulting -- 4.9% TETRA Tech, Inc.* 55,000 1,072,500
TRC Cos., Inc. 75,000 581,250
2,108,750
Hazardous Waste -- 7.2% Chemical Waste Management 40,000
340,000
Clean Harbors, Inc.* 90,000 742,500
Envirosource, Inc.* 100,000 300,000
GNI Group, Inc.* 57,000 406,125
Mid-American Waste Systems, Inc. 40,000 355,000
Rollins Environmental Services, Inc. 90,000 540,000
Sanifill, Inc.* 25,000 415,625
3,099,250
Recycling -- 1.0% Molten Metal Technology, Inc.* 20,000 450,000
Solid Waste -- 8.8% Attwoods PLC ADR 65,000 650,000
Browning-Ferris Industries, Inc. 20,000 460,000
SITA 10,800 1,241,191
Waste Management International PLC, Sponsored ADR* 30,000
528,750
WMX Technology, Inc. 30,000 915,000
3,794,941
Water Pollution -- 1.8% Degremont 9,000 797,457
Other Pollution GEA AG Preference 2,800 760,577
Control -- 5.6% Omega Environmental, Inc.* 140,000 1,120,000
TETRA Technologies, Inc.* 75,000 525,000
2,405,577
Technology -- 4.2%
Computer Software and SHL Systemhouse, Inc.* 75,000
721,875
Services -- 1.7%
Electronics - Aurora Electronics, Inc.* 60,000 457,500
Instrumentation -- 2.5% Thermo Instrument Systems, Inc.* 22,500
635,625
1,093,125
Utilities -- .6%
Electric Companies -- .6% Sithe Energies, Inc. 20,000 265,000
Total Common Stocks (Cost $31,000,690) 36,204,515
Total Investments, at Value (Cost $36,063,462) 97.3% 42,082,889
Other Assets Net of Liabilities 2.7 1,188,652
Net Assets 100.0% $43,271,541
<FN>
*Non-income producing security.
(1) Restricted security -- See Note 5 of notes to financial statements.
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
Statement of Assets and Liabilities September 30, 1993
<TABLE>
<S> <C> <C>
Assets Investments, at value (cost $36,063,462) - see accompanying statement $
42,082,889
Receivables:
Investments sold 3,382,477
Dividends and interest 161,347
Shares of beneficial interest sold 75,184
Deferred organization costs 3,939
Other 8,438
Total assets 45,714,274
Liabilities Bank overdraft 48,440
Payables and other liabilities:
Investments purchased 1,915,450
Shares of beneficial interest redeemed 347,098
Distribution assistance - Note 4 27,537
Other 104,208
Total liabilities 2,442,733
Net Assets $ 43,271,541
Composition of Net Assets Paid-in capital $ 52,524,448
Accumulated net investment loss (50,066)
Accumulated net realized loss from investment transactions (15,222,268)
Net unrealized appreciation of investments - Note 3 6,019,427
Net Assets -- Applicable to 4,119,629 shares of beneficial interest outstanding $ 43,271,541
Net Asset Value and Redemption Price Per Share $ 10.50
Maximum Offering Price Per Share (net asset value plus sales charge of 5.75% of offering price) $
11.14
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statement of Operations For the Year Ended September 30, 1993
<TABLE>
<S> <C> <C>
Investment Income Interest $ 449,257
Dividends (including $172,762 from foreign securities less $29,170
of foreign tax withheld at source) 396,608
Total income 845,865
Expenses Management fees - Note 4 352,886
Transfer and shareholder servicing agent fees - Note 4 167,925
Distribution assistance - Note 4 114,385
Shareholder reports 50,471
Custodian fees and expenses 26,044
Legal and auditing fees 23,550
Trustees' fees and expenses 5,606
Other 33,614
Total expenses 774,481
Net Investment Income 71,384
Realized and Net realized loss on investments (1,132,242)
Unrealized Gain (Loss) Net change in unrealized appreciation of investments:
on Investments Beginning of year 1,341,686
End of year - Note 3 6,019,427
Net change 4,677,741
Net Realized and Unrealized Gain on Investments 3,545,499
Net Increase in Net Assets Resulting From Operations $ 3,616,883
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992
<S> <C> <C> <C>
Operations Net investment income (loss) $ 71,384 $ (129,801)
Net realized loss on investments (1,132,242) (10,556,184)
Net change in unrealized appreciation or depreciation of investments 4,677,741 1,837,770
Net increase (decrease) in net assets resulting from operations 3,616,883 (8,848,215)
Dividends to Dividends from net investment income
Shareholders ($.022 per share) -- (115,357)
Beneficial Interest Net decrease in net assets resulting from beneficial
Transactions interest transactions - Note 2 (10,355,967) (3,633,244)
Net Assets Total decrease (6,739,084) (12,596,816)
Beginning of year 50,010,625 62,607,441
End of year (including accumulated net investment losses
of $50,066 and $121,450, respectively) $ 43,271,541 $ 50,010,625
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Year Ended September 30,
1993 1992 1991 1990+
<S> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $ 9.69 $ 11.35 $ 10.40 $ 11.43
Income (loss) from investment operations:
Net investment income (loss) .01 (.03) .06 .04
Net realized and unrealized
gain (loss) on investments .80 (1.61) .99 (1.07)
Total income (loss) from
investment operations .81 (1.64) 1.05 (1.03)
Dividends and distributions to shareholders:
Dividends from net investment income -- (.02) (.08) --
Distributions from net realized gain
on investments -- -- (.02) --
Total dividends and
distributions to shareholders -- (.02) (.10) --
Net asset value, end of period $ 10.50 $ 9.69 $ 11.35 $ 10.40
Total Return,
at Net Asset Value** 8.36% (14.44)% 10.10% (9.01)%
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $43,272 $50,011 $62,607 $45,050
Average net assets (in thousands) $47,040 $57,224 $58,025 $26,638
Number of shares outstanding
at end of period (in thousands) 4,120 5,161 5,514 4,332
Ratios to average net assets:
Net investment income (loss) .15% (.23)% .57% 1.18%*
Expenses 1.65% 1.68)% 1.57% 1.89%*
Portfolio turnover rate*** 141.6% 134.7)% 33.4% 7.9%
<FN>
</TABLE>
+ For the period from March 2, 1990 (commencement of operations) to
September 30, 1990.
* Annualized.
** Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns.
*** The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at
the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding
short-term securities) for the year ended September 30, 1993 were
$64,504,041 and $74,339,309, respectively.
See accompanying notes to financial statements.
<PAGE>
Notes to Financial Statements
1. Significant Accounting Policies
Oppenheimer Global Environment Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment adviser is
Oppenheimer Management Corporation (the Manager). The following is a
summary of significant accounting policies consistently followed by the
Fund.
Investment Valuation -- Portfolio securities are valued at 4:00 p.m. (New
York time) on each trading day. Listed and unlisted securities for which
such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid
or asked price or the last sale price on the prior trading day. Long-term
debt securities are valued by a portfolio pricing service approved by the
Board of Trustees. Long-term debt securities which cannot be valued by the
approved portfolio pricing service are valued by averaging the mean
between the bid and asked prices obtained from two active market makers
in such securities. Short-term debt securities having a remaining maturity
of 60 days or less are valued at cost (or last determined market value)
adjusted for amortization to maturity of any premium or discount.
Securities for which market quotes are not readily available are valued
under procedures established by the Board of Trustees to determine fair
value in good faith.
Foreign Currency Translation -- The accounting records of the Fund are
maintained in U.S. dollars. Prices of securities denominated in non-U.S.
currencies are translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of securities and
investment income are translated at the rates of exchange prevailing on
the respective dates of such transactions.
The Fund generally enters into forward currency exchange contracts as a
hedge, upon the purchase or sale of a security denominated in a foreign
currency. Risks may arise from the potential inability of the counterparty
to meet the terms of the contract and from unanticipated movements in the
value of a foreign currency relative to the U.S. dollar.
The effect of changes in foreign currency exchange rates is not separately
identified in the Fund's results of operations. Gains and losses on
foreign currency transactions are accounted for with the transactions that
gave rise to the exchange gain or loss.
Repurchase Agreements -- The Fund requires the custodian to take
possession, to have legally segregated in the Federal Reserve Book Entry
System or to have segregated within the custodian's vault, all securities
held as collateral for repurchase agreements. If the seller of the
agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
Federal Income Taxes -- The Fund intends to continue to comply with
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including any net
realized gain on investments not offset by loss carryovers, to
shareholders. Therefore, no federal income tax provision is required. At
September 30, 1993, the Fund had available for federal income tax purposes
an unused capital loss carryover of approximately $13,568,000, $3,512,000
of which will expire in 2000 and $10,056,000 in 2001.
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. The
accumulated liability for the Fund's projected benefit obligations was
$27,807 at September 30, 1993. No payments have been made under the plan.
Organization Costs -- The Manager advanced $13,603 for organization and
start-up costs of the Fund. Such expenses are being amortized over a
five-year period from the date operations commenced. In the event that all
or part of the Manager's initial investment in shares of the Fund is
withdrawn during the amortization period, the redemption proceeds will be
reduced to reimburse the Fund for any unamortized expenses, in the same
ratio as the number of shares redeemed bears to the number of initial
shares outstanding at the time of such redemption.
Distributions to Shareholders -- Dividends and distributions to
shareholders are recorded on the ex-dividend date.
Other -- Investment transactions are accounted for on the date the
investments are purchased or sold (trade date) and dividend income is
recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with
federal income tax requirements. Realized gains and losses on investments
and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes.
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were
as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1993 Year Ended September 30, 1992
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Sold 728,378 $ 7,206,866 1,644,994 $ 18,225,707
Distributions reinvested -- -- 10,327 107,726
Redeemed (1,770,153) (17,562,833) (2,007,952) (21,966,677)
Net decrease (1,041,775) $(10,355,967) (352,631) $ (3,633,244)
</TABLE>
3. Unrealized Gains and Losses on Investments
At September 30, 1993, net unrealized appreciation of investments of
$6,019,427 was composed of gross appreciation of $7,066,767, and gross
depreciation of $1,047,340.
4. Management Fees and Other Transactions with Affiliates Management fees
paid to the Manager were in accordance with the investment advisory
agreement with the Fund which provides for an annual fee of .75%
on the first $200 million of net assets with a reduction of .03% on each
$200 million thereafter, to .66% on net assets in excess of $600 million.
The Manager has agreed to reimburse the Fund if aggregate expenses (with
specified exceptions) exceed the most stringent applicable regulatory
limit on Fund expenses.
For the year ended September 30, 1993, commissions (sales charges paid by
investors) on sales of Fund shares totaled $279,673, of which $61,218 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of
the Manager, as general distributor, and by an affiliated broker-dealer.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the
transfer and shareholder servicing agent for the Fund, and for other
registered investment companies. OSS's total costs of providing such
services are allocated ratably to these companies.
Under an approved plan of distribution, the Fund may expend up to .25% of
its net assets annually to reimburse OFDI for costs incurred in
distributing shares of the Fund, including amounts paid to brokers,
dealers, banks and other institutions. During the year ended September 30,
1993, OFDI paid $2,296 to an affiliated broker-dealer as reimbursement for
distribution-related expenses.
Restricted Securities
The Fund owns securities purchased in private placement transactions,
without registration under the Securities Act of 1933 (the Act). The
securities are valued under methods approved by the Board of Trustees as
reflecting fair value. The Fund intends to invest no more than 10% of its
net assets (determined at the time of purchase) in restricted and illiquid
securities, excluding securities eligible for resale pursuant to Rule 144A
of the Act that are determined to be liquid by the Board of Trustees or
by the Manager under Board-approved guidelines.
<TABLE>
<CAPTION>
Valuation
Per Unit as of
Security Acquisition Date Cost Per Unit September 30, 1993
<S> <C> <C> <C>
HIH Capital Ltd.,
7.50% Gtd. Cv. Sub.
Capital Bonds, 9/25/06+ 1/28/93-2/3/93 $ 92.00 $ 86.50
Thermo Electron Corp.,
4.625% Cv. Sr. Debs., 8/1/97+ 7/15/92-8/25/92 $ 100.00 $ 143.00
<FN>
+Transferable under Rule 144A of the Act.
</TABLE>
<PAGE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 300
Denver, Colorado 80201
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
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
