OPPENHEIMER GLOBAL GROWTH &
INCOME FUND
Prospectus dated October 10, 1995
Oppenheimer Global Growth & Income Fund (the "Fund") is a mutual
fund with the investment objective of seeking capital appreciation
consistent with preservation of principal while providing current
income. The Fund may invest in common stocks, convertible securities
and fixed income securities. It may emphasize one or more of those
types of securities at any one time, or invest in a combination of
them, depending on market conditions. The Fund will normally invest in
at least four countries (including the United States) and expects to
invest a substantial amount of its assets in foreign securities. The
Fund may also write covered calls and use certain hedging instruments.
The Fund is not intended for investors whose principal objective is
assured income.
Some investment techniques the Fund uses may be considered to be
speculative investment methods that may increase the risks of investing
in the Fund and may also increase the Fund's operating costs. You
should carefully review the risks associated with an investment in the
Fund. Please refer to "Investment Objective and Policies" for more
information about the types of securities the Fund invests in, its
investment methods and the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep
it for future reference. You can find more detailed information about
the Fund in the October 10, 1995 Statement of Additional Information.
For a free copy, call Oppenheimer Shareholder Services, the Fund's
Transfer Agent, at 1-800-525-7048, or write to the Transfer Agent at
the address on the back cover. The Statement of Additional Information
has been filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference (which means that it is
legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, and are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible loss
of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services,
and those expenses are subtracted from the Fund's assets to calculate
the Fund's net asset value per share. All shareholders therefore pay
those expenses indirectly. Shareholders pay other expenses directly,
such as sales charges and account transaction charges. The following
tables are provided to help you understand your direct expenses of
investing in the Fund and your share of the Fund's business operating
expenses that you will bear indirectly. The numbers below are based on
the Fund's expenses during its last fiscal year ended September 30,
1994.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to "About Your Account," from
pages __ through __, for an explanation of how and when these charges
apply.
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
______________ ______________ ______________
<S> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 5% in the first 1.0% if shares
year, declining are redeemed
to 1% in the within 12 months
sixth year and of purchase(2)
eliminated
thereafter(2)
Exchange Fee None None None
<FN>
_______________________
(1) If you invest $1 million or more ($500,000 or more for purchases
by OppenheimerFunds prototype 401(k) plans), in Class A shares,
you may have to pay a sales charge of up to 1% if you sell your
shares within 18 calendar months from the end of the calendar
month during which you purchased those shares. See "How to Buy
Shares - Class A Shares," below.
(2) See "How to Buy Shares - Class B Shares" and "How to Buy Shares -
Class C Shares," for more information on the contingent deferred
sales charges.
</TABLE>
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For
example, the Fund pays management fees to its investment adviser,
Oppenheimer Management Corporation (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are set
forth in "How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds its portfolio securities, audit fees and legal
expenses. Those expenses are detailed in the Fund's Financial
Statements in the Statement of Additional Information.
The numbers in the table below are projections of the Fund's
business expenses based on the Fund's expenses in its last fiscal year.
These amounts are shown as a percentage of the average net assets of
each class of the Fund's shares for that year. The management fees
payable by the Fund to the Manager were increased, effective June 27,
1994. Therefore, the management fees in the table below have been
restated to reflect the increase in the management fees as if those
increased rates had been in effect for the entire fiscal year ended
September 30, 1994. Had the new management fee rates not been in
effect during a portion of that fiscal year, the management fees would
have been 0.75% of average net assets for each of Class A and Class C.
For further information, see "How the Fund is Managed - The Manager and
Its Affiliates - Fees and Expenses." The "12b-1 Distribution Plan
Fees" for Class A Shares are service plan fees. For Class B and Class
C shares, the Distribution Plan Fees are the service plan fees and
asset-based sales charge. The service fee for each class is 0.25% of
average annual net assets of the class and the asset-based sales charge
for Class B and Class C shares is 0.75%. These plans are described in
greater detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may be
more or less than the numbers in the table, depending on a number of
factors, including the actual value of the Fund's assets represented by
each class of shares. Class C shares were not publicly sold before
December 1, 1993. Therefore, the Annual Fund Operating Expenses shown
for Class C shares are based only on expenses for the period from
December 1, 1993 through September 30, 1994. The Annual Fund Operating
Expenses shown for Class B shares are estimates based on amounts that
would have been payable in that period assuming that Class B shares
were outstanding during such fiscal year.
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
______________ ______________ ______________
<S> <C> <C> <C>
Management Fees (Restated) 0.80% 0.80% 0.80%
12b-1 Distribution or Service Plan Fees 0.25% 1.00% 1.00%
Other Expenses 0.48% 0.68% 0.68%
Total Fund Operating Expenses
(Restated) 1.53% 2.48% 2.48%
</TABLE>
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make $1,000 investments in each class of shares
of the Fund, and the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses chart above (as restated). If you were to redeem your shares
at the end of each period shown below, your investment would incur the
following expenses by the end of 1, 3, 5 and 10 years:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years*
______ _______ _______ ________
<S> <C> <C> <C> <C>
Class A Shares $72 $103 $136 $229
Class B Shares $75 $107 $152 $237
Class C Shares $35 $ 77 $132 $282
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $72 $103 $136 $229
Class B Shares $25 $77 $132 $237
Class C Shares $25 $ 77 $132 $282
<FN>
___________________________
* The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your
Class B shares into Class A shares after 6 years. Because of the
asset-based sales charge and the contingent deferred sales charge on
Class B and Class C shares, long-term Class B and Class C shareholders
could pay the economic equivalent of an amount greater than the maximum
front-end sales charge allowed under applicable regulatory
requirements. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the likelihood
that this will occur. Please refer to "How to Buy Shares" for more
information.
</TABLE>
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.
<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with
references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire
Prospectus before making a decision about investing in the Fund. Keep
the Prospectus for reference after you invest, particularly for
information about your account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek capital appreciation consistent with preservation
of principal while providing current income.
- What Does the Fund Invest In? The Fund may invest in common
stocks, convertible securities and debt securities, such as debentures
or bonds. To seek growth, the Fund will emphasize common stocks and
convertible securities. For income, the Fund will invest in debt
securities and dividend-paying stocks. The Fund may emphasize one or
more different types of securities or a combination of securities from
time to time, depending on market conditions. The Fund will normally
invest in at least four countries (including the United States). The
Fund may also write covered calls and use derivative investments to
enhance income, and may use hedging instruments, including some
derivative investments, to try to manage investment risks. These
investments and investment methods are more fully explained in
"Investment Objective and Policies," starting on page __.
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation. The Manager
(including a subsidiary) manages investment company portfolios having
over $35 billion in assets. The Manager is paid an advisory fee by the
Fund, based on its net assets. The Fund has a portfolio manager, Mr.
Frank Jennings, who is employed by the Manager. He is primarily
responsible for the selection of the Fund's securities. The Fund's
Board of Trustees, elected by shareholders, oversees the investment
adviser and the portfolio manager. Please refer to "How the Fund is
Managed" starting on page __ for more information about the Manager and
its fees.
- How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in stocks and bonds are subject to
changes in their value from a number of factors such as changes in
general bond and stock market movements, or the change in value of
particular stocks or bonds because of an event affecting the issuer.
Changes in interest rates can affect bond prices. These changes affect
the value of the Fund's investments and its price per share. The
Fund's investment in foreign securities involves additional risks not
associated with investment in domestic securities, including risks
associated with changes in currency rates.
Certain of the Fund's investment techniques and strategies, such as
purchasing securities with borrowed funds, may subject an investment in
the Fund to relatively greater risks and costs than a mutual fund that
does not utilize these practices. While the Manager tries to reduce
risks by diversifying investments, by carefully researching securities
before they are purchased for the portfolio, and in some cases by using
hedging techniques, there is no guarantee of success in achieving the
Fund's objective and your shares may be worth more or less than their
original cost when you redeem them. Please refer to "Investment
Objective and Policies" starting on page __ for a more complete
discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page __ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund offers the
individual investor three classes of shares. All classes have the same
investment portfolio but different expenses. Class A shares are
offered with a front-end sales charge, starting at 5.75%, and reduced
for larger purchases. Class B and C shares are offered without a
front-end sales charge, but may be subject to a contingent deferred
sales charge if redeemed within six years or 12 months, respectively,
of buying them. There is also an annual asset-based sales charge on
Class B and C shares. Please review "How to Buy Shares" starting on
page ___ for more details, including a discussion about which class may
be appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through
your dealer. Please refer to "How to Sell Shares" on page __. The
Fund also offers exchange privileges to other Oppenheimer funds,
described in "How To Exchange Shares" on page __.
- How Has the Fund Performed? The Fund measures its performance by
quoting its average annual total returns and cumulative total returns,
which measure historical performance. Those returns can be compared to
the returns (over similar periods) of other funds. Of course, other
funds may have different objectives, investments, and levels of risk.
The Fund's performance can also be compared to a broad-based market
index and a narrower market index, which we have done on page __.
Please remember that past performance does not guarantee future
results.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense ratios
and other data based on the Fund's average net assets. This
information has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, whose report on the Fund's financial statements
for the fiscal year ended September 30, 1994 is included in the
Statement of Additional Information together with the Fund's unaudited
financial statements for the six months ended March 31, 1995. Class C
shares were publicly offered only during a portion of that period,
commencing December 1, 1993. Class B shares were not publicly offered
during the periods shown. Accordingly, no information on Class B
shares is reflected in the table below or in the Fund's financial
statements.
<TABLE>
<CAPTION>
Class A Class C
------- -----------------------------------------------------------------------
Six Months Year Six Months Period
Ended Mar. 31, Ended Ended Ended
1995 Sept. 30, March 31, 1995 Sept. 30,
(Unaudited) 1994 1993 1992 1991(2) (Unaudited) 1994(1)
-------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value,
beginning of period $ 15.21 $ 14.09 $ 11.91 $ 12.43 $ 11.43 $ 15.17 $
14.85
-------- -------- ------- ------- ------- ------- -------
Income (loss) from
investment operations:
Net investment income .19 .33 .29 .26 .37 .14 .22
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions (.79) 1.62 2.17 (.47) .95 (.79) .87
-------- -------- ------- ------- ------- ------- -------
Total income (loss) from
investment operations (.60) 1.95 2.46 (.21) 1.32 (.65) 1.09
-------- -------- ------- ------- ------- ------- -------
Dividends and distributions
to shareholders:
Dividends from net
investment income (.20) (.35) (.17) (.28) (.32) (.16) (.29)
Distributions from net
realized gain on
investments and
foreign currency
transactions (.82) (.48) (.11) (.03) -- (.82) (.48)
======== ======== ======= ======= =======
======= =======
Total dividends and
distributions to
shareholders (1.02) (.83) (.28) (.31) (.32) (.98) (.77)
-------- -------- ------- ------- ------- ------- -------
Net asset value, end
of period $ 13.59 $ 15.21 $ 14.09 $ 11.91 $ 12.43 $ 13.54 $ 15.17
-------- -------- ------- ------- ------- ------- -------
Total Return, at Net
Asset Value(3) (3.85)% 13.96% 21.00% (1.76)% 11.73% (4.23)% 7.41%
-------- -------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net assets, end of
period (in thousands) $115,270 $124,017 $86,019 $49,735 $29,239 $21,642 $17,008
-------- -------- ------- ------- ------- ------- -------
Average net assets
(in thousands) $122,565 $117,164 $59,951 $37,116 $19,340 $19,216 $ 7,896
-------- -------- ------- ------- ------- ------- -------
Number of shares
outstanding at end of
period (in thousands) 8,480 8,154 6,104 4,177 2,352 1,598 1,121
-------- -------- ------- ------- ------- ------- -------
Ratios to average
net assets:
Net investment income 2.63%(4) 2.44% 2.68% 2.41% 4.05%(4) 1.85%(4) 1.85%(4)
Expenses 1.65%(4) 1.49% 1.56% 1.74% 1.94%(4) 2.42%(4) 2.44%(4)
-------- -------- ------- ------- ------- ------- -------
Portfolio turnover rate 51.9%(6) 87.4%(5) 90.6% 51.3% 23.5% 51.9%(6) 87.4%(5)
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to September
30, 1994.
2. For the period from October 22, 1990 (commencement of operations) to
September 30, 1991.
3. 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. Total returns are not
annualized for periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the year ended September 30, 1994 were $149,601,811 and $98,419,511,
respectively.
6. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the six months ended March 31, 1995 were $71,254,436 and $66,800,064,
respectively.
<PAGE>
Investment Objective and Policies
Objective. As its investment objective, the Fund seeks capital
appreciation consistent with preservation of principal while providing
current income.
Investment Policies and Strategies. In seeking its investment
objective, the Fund may invest in common stocks and securities
convertible into common stocks to seek growth, or debt securities such
as bonds, notes and debentures, and income producing stocks, to seek
current income. The Fund does not have any policy requiring that a
specific percentage of its assets be invested to seek growth or to seek
income, and the Fund may at times invest primarily for growth, or
primarily for income, or a combination of the two, depending on the
Manager's assessment of market conditions.
The Fund will invest in foreign as well as U.S. securities and
normally will invest in at least four countries (including the United
States). The Manager expects that the Fund will normally invest a
substantial portion of its assets in foreign securities (discussed in
"Foreign Securities," below). While the Fund may invest in securities
having appreciation possibilities, the Manager will select securities
which, in the view of the Manager, would not involve undue risk to
principal. However, the prices of stocks will fluctuate and the value
of the Fund's shares will also fluctuate as a result.
The Fund's portfolio manager currently uses an investment strategy
in selecting foreign and domestic securities that examines the effects
of worldwide trends on the growth of various business sectors. These
trends, or "global themes," currently include telecommunications
expansion, emerging consumer markets, infrastructure development,
natural resource use and development, corporate restructuring, capital
market development in foreign countries, healthcare expansion and
global integration. These trends, which may affect the growth of
companies having businesses in these sectors or which are affected by
their development, may suggest opportunities for investing the Fund's
assets. The Manager does not invest a fixed amount of the Fund's
assets in any one sector, and these themes and this approach may change
over time.
When investing the Fund's assets, the Manager considers many
factors, including general economic conditions abroad relative to those
in the U.S. and the trends in foreign and domestic stock markets. The
Fund may try to hedge against losses in the value of its portfolio of
securities by using hedging strategies or derivative investments,
described below.
When market or economic conditions are unstable, the Fund may
invest all or a portion of its assets in U.S. Government securities,
money market instruments, commercial paper and short-term debt
securities. See "Temporary Defensive Investments," below. It is
expected that short-term debt securities (which mature in one year or
less from the date of purchase) will be emphasized for defensive
purposes.
The Fund's portfolio manager may employ special investment
techniques in selecting securities for the Fund. These are also
described below. Additional information may be found about them under
the same headings in the Statement of Additional Information. The Fund
is not intended for investors whose principal objective is assured
income. Since market risks are inherent in all investments to varying
degrees, there can be no assurance that the Fund will meet its
investment objective.
- Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and
strategies in carrying out those investment policies. The Fund's
investment policies and techniques are not "fundamental" unless this
Prospectus or the Statement of Additional Information says that a
particular policy is "fundamental." The Fund's investment objective is
a fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's
Board of Trustees may change non-fundamental policies without
shareholder approval, although significant changes will be described in
amendments to this Prospectus.
- Stock Investment Risks. Because the Fund may invest a
substantial portion of its assets in stocks, the value of the Fund's
portfolio will be affected by changes in the stock markets. At times,
the stock markets can be volatile and stock prices can change
substantially. This market risk will affect the Fund's net asset
values per share, which will fluctuate as the values of the Fund's
portfolio securities change. Not all stock prices change uniformly or
at the same time, not all stock markets move in the same direction at
the same time, and other factors can affect a particular stock's prices
(for example, poor earnings reports by an issuer, loss of major
customers, major litigation against an issuer, and changes in
government regulations affecting an industry). Not all of these
factors can be predicted.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of the stock
of any one company and by not investing too great a percentage of the
Fund's assets in any one company. Also, the Fund does not concentrate
its investments in any one industry or group of industries. Because
changes in stock and bond market prices can occur at any time, and
because yields on debt securities available at different times will
vary, there is no assurance that the Fund will achieve its investment
objective, and when you redeem your shares, they may be worth more or
less than what you paid for them.
- Interest Rate Risks. Fixed income or debt securities are subject
to credit risks, described below, and are also subject to changes in
their value due to changes in prevailing interest rates. When
prevailing interest rates fall, the values of already-issued fixed-
income securities generally rise. When interest rates rise, the values
of already-issued fixed-income securities generally decline. The
magnitude of these fluctuations will often be greater for longer-term
fixed-income securities than shorter-term fixed-income securities.
Changes in the value of securities held by the Fund mean that the
Fund's share prices can go up or down when interest rates change
because of the effect of interest rate fluctuations on the value of the
Fund's portfolio of debt securities.
- Special Risks of Lower-Rated Securities. The Fund does not limit
its investments in bonds and debentures to issues having specific
credit ratings. The Manager does not rely solely on the ratings of
rated securities in making investment decisions but evaluates other
economic and business factors affecting the issuer as well. The Fund
may invest in bonds and debentures below "investment grade" (investment
grade securities are generally those in the four highest rating
categories of Moody's Investors Service, Inc. or Standard & Poor's
Corporation). The Fund can invest in securities rated "C" or "D,"
which indicate that the obligations are speculative in a high degree
and may be in default.
The Fund will invest no more than 25% of its total assets in non-
investment grade securities, which are those securities rated below
"BBB" by Standard & Poor's or below "Baa" by Moody's, or unrated
securities that are judged by the Manager to have comparable ratings.
They are commonly called "junk bonds." The Fund currently intends to
invest no more than 15% of its total assets in securities rated below
BBB or Baa. The Fund is not obligated to dispose of securities that
are downgraded below investment grade after the Fund buys them. The
Appendix to the Statement of Additional Information describes these
rating categories.
High yield, lower-grade securities, whether rated or unrated, often
have speculative characteristics. They may be subject to greater price
fluctuations and risk of loss of income and principal than lower
yielding, investment grade securities. There may be less of a market
for them and therefore they may be harder to sell at an acceptable
price. There is a relatively greater possibility that the issuer's
earnings may be insufficient to make the payments of interest due on
the bonds. The issuer's low creditworthiness may increase the
potential for its insolvency.
- How the Fund's Portfolio Securities Are Rated. As of June 30,
1995, the Fund's portfolio included corporate bonds in the following
S&P rating categories (if the securities were unrated they were
determined by the Manager to be comparable to the category indicated.)
The amounts shown are dollar-weighted average values of the bonds in
each category measured as a percentage of the Fund's total assets: AAA,
10.50%; AA, 0.68%; A, 2.49%; BBB, 0%; BB, 4.99%; B, 9.48%; CCC, 1.90%;
CC, 0%; C, 0%; D, 0%. The Appendix to the Statement of Additional
Information describes the rating categories. The allocation of the
Fund's assets among securities in the different rating categories will
vary over time.
- Foreign Securities. Under normal circumstances, as a matter of
fundamental policy, the Fund will invest in the United States and at
least three foreign countries. Otherwise, the Fund may invest its
assets without limit in equity and debt securities issued or guaranteed
by foreign companies or foreign governments, including foreign
government agencies. The Fund will normally invest a substantial
amount of its assets in foreign securities. The Fund may invest in
any country, whether it is developed or underdeveloped. Investments in
securities of issuers in non-industrialized countries generally involve
more risk and may be considered to be highly speculative. The Fund's
selection of foreign securities must be consistent with preservation of
capital, however, under its investment objective.
The Fund may invest in foreign securities that are U.S. dollar-
denominated debt obligations known as "Brady Bonds." They are issued
to exchange existing commercial bank loans to foreign entities for new
obligations that are generally collateralized by zero coupon U.S.
Treasury securities having the same maturity. The Fund may also buy
foreign debt obligations such as bonds (including sinking fund and
callable bonds), debentures and notes (including variable and floating
rate instruments), and preferred stocks and zero coupon securities.
The Fund may purchase foreign securities denominated in U.S. dollars or
in foreign currencies. If the Fund's securities are held abroad, the
countries in which they are held and the sub-custodians holding them
must be approved by the Fund's Board of Trustees. The Fund will hold
foreign currency only in connection with the purchase or sale of
foreign securities.
- Foreign securities have special risks. There are special risks in
investing in foreign securities. Because the Fund may buy securities
denominated in foreign currencies or traded primarily in foreign
markets, a change in the value of a foreign currency against the U.S.
dollar will result in a change in the U.S. dollar value of securities
denominated in that foreign currency.
Currency rate changes will also affect the income available to
distribute to shareholders of the Fund. Although the Fund's investment
income from foreign securities will be received in foreign currencies,
the Fund will be required to distribute its income to shareholders in
U.S. dollars. Therefore, the Fund will absorb the cost of currency
fluctuations. While the Fund may use hedging techniques to try to
reduce the risk of currency fluctuations, if the Fund suffers losses on
foreign currencies after it has distributed its income during the year,
it may find that it has distributed more income than was available from
net investment income. That could result in previously distributed
income being re-classified as a return of capital to shareholders.
Foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to. The value
of foreign investments may be affected by other factors, including
exchange control regulations, expropriation or nationalization of a
company's assets, foreign taxes, delays in settlement of transactions,
changes in governmental economic or monetary policy in the U.S. or
abroad, or other political and economic factors. Issuers of foreign
securities that are not registered for sale in the U.S. do not have to
comply with disclosure requirements that U.S. companies are subject to.
In addition, it is generally more difficult to obtain court
judgments outside the U.S. if the Fund were to sue a foreign issuer or
broker. Additional costs may be incurred because foreign brokerage
commissions are generally higher than U.S. rates, and there are
additional custodial costs associated with holding securities abroad.
More information about the risks and potential rewards of investing in
foreign securities is contained in the Statement of Additional
Information.
- Domestic Debt Securities. In addition to the bonds and
debentures described above, that the Fund can invest in, it may also
invest in other types of debt securities.
- Mortgage-Backed Securities and CMOs. The Fund may invest in
securities that represent participation interests in pools of
residential mortgage loans, including collateralized mortgage
obligations (CMOs). Some CMOs may be issued or guaranteed by agencies
or instrumentalities of the U.S. Government (for example, Ginnie Maes,
Freddie Macs and Fannie Maes). Other CMOs are issued by private
issuers, such as commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers and other
secondary market issuers.
Certain mortgage-backed securities "pass-through" to investors the
interest and principal payments generated by a pool of mortgages
assembled for sale by government agencies or private issuers. Pass-
through mortgage-backed securities are subject to the risk that the
principal value may be repaid at any time because of prepayments on the
underlying mortgages. As a result, their price and yield may be more
volatile than fixed-income securities that have a fixed maturity and
interest rate.
Mortgage-backed securities created by private issuers may be
supported by various forms of insurance or guarantees, although there
can be no assurance that private issuers will be able to meet their
obligations. As new types of mortgage-related securities are developed
and offered to investors, the Manager will, subject to the direction of
the Fund's Board of Trustees and consistent with the Fund's investment
objective and policies, consider making investment in new types of
mortgage-related securities.
The Fund may also enter into "forward roll" transactions with banks
or other buyers that provide for future delivery of the mortgage-backed
securities in which the Fund may invest. The Fund would be required to
place cash, U.S. Government securities or other high-grade debt
securities in a segregated account with its custodian bank in an amount
equal to its purchase payment obligation under the roll.
- Other Asset-Backed Securities. Asset-backed securities are
fractional interests in pools of consumer loans or other trade
receivables. They are similar to mortgage-backed securities, described
above. They are issued by trusts and special purpose corporations.
They are backed by a pool of assets, such as credit card or auto loan
receivables, which are the obligations of a number of different
parties. The income from the underlying pool is passed through to
holders of the participation interests in the pool. To try to reduce
some of the risks that the underlying debtors won't pay their loan
installments, the pools may offer a credit enhancement, such as a
letter of credit by a bank to secure the pool's obligation to repay its
investors, or a guarantee or a preference right. However, the credit
enhancement may apply only to a fraction of the security's value.
These securities present special risks. For example, in the case of
credit card receivables, the issuer of the security may have no
security interest in the underlying debt that serves as the stream of
income and collateral security for the pool.
- Warrants and Rights. Warrants basically are options to purchase
stock at set prices that are valid for a limited period of time.
Rights are options to purchase securities, normally granted to current
stockholders by the issuer. The Fund may invest up to 10% of its total
assets in warrants or rights. That 10% does not apply to warrants and
rights the Fund acquired as part of units that include other securities
or that were attached to other securities. However, the Fund has
undertaken that its investments in warrants and rights shall not exceed
5% of its net assets. In addition, the Fund has undertaken that no
more than 2% of the Fund's assets may be invested in warrants that are
not listed on the New York or American Stock Exchanges. For further
details about these investments, please refer to "Warrants and Rights"
in the Statement of Additional Information.
- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." The Fund ordinarily does not engage
in short-term trading to try to achieve its objective. As a result,
the Fund's portfolio turnover is not expected to be more than 100% each
year. The "Financial Highlights," above, show the Fund's portfolio
turnover rate during past fiscal years.
Portfolio turnover affects brokerage costs, dealer mark-ups and
other transaction costs. It may also affect the Fund's ability to
qualify as a "regulated investment company" under the Internal Revenue
Code for tax deductions for dividends and capital gains distributions
the Fund pays to shareholders. The Fund qualified in its last fiscal
year and intends to do so in the coming year, although it reserves the
right not to qualify.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more information about these practices, including limitations on their
use that may help reduce some of the risks.
- Temporary Defensive 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 day-to-day operating purposes. When stock market
prices are falling or in other unusual economic or business
circumstances, the Fund may invest all or a portion of its assets in
defensive securities. Securities selected for defensive purposes
usually may include (I) obligations issued or guaranteed by the U.S.
Government, its instrumentalities or agencies, (ii) certificates of
deposit, bankers' acceptances, time deposits, and letters of credit if
they are payable in the United States or London, England and are issued
or guaranteed by a domestic or foreign bank having total assets in
excess of $1 billion, (iii) commercial paper rated in the three highest
categories by Standard & Poor's or Moody's and (iv) short-term debt
securities (which are securities maturing in one year or less from the
date of purchase), including rated or unrated bonds, debentures and
preferred stocks.
- Special Risks - Borrowing for Leverage. The Fund may borrow up to
10% of the value of its net assets from banks on an unsecured basis to
buy securities. This is a speculative investment method known as
"leverage." This technique may subject the Fund to greater risks and
costs than funds that do not borrow. These risks may include the
possibility that the Fund's net asset values per share will fluctuate
more than funds that do not borrow, since the Fund pays interest on
borrowings and interest expense affects the Fund's share prices.
Borrowing is subject to limits under the Investment Company Act,
described in more detail in the Statement of Additional Information.
- Loans of Portfolio Securities. To attempt to increase its income
and for liquidity purposes, the Fund may lend its portfolio securities
to brokers, dealers and other financial institutions. The value of the
securities loaned may not exceed 25% of the value of the Fund's net
assets. Loans are subject to other conditions described in the
Statement of Additional Information. The Fund presently does not
intend to lend its portfolio securities, but if it does, the value of
securities loaned is not expected to exceed 5% of the value of its
total assets in the current year.
- Forward Rolls. The Fund may enter into "forward roll"
transactions with banks with respect to the mortgage-related securities
in which it can invest. These require the Fund to secure its
obligation in the transaction by segregating assets with its custodian
bank equal in amount to its obligation under the roll.
- Repurchase Agreements. The Fund may enter into repurchase
agreements. They are primarily used for liquidity purposes. In a
repurchase transaction, the Fund buys a security and simultaneously
sells it to the vendor for delivery at a future date. Repurchase
agreements must be fully collateralized. However, if the vendor fails
to pay the resale price on the delivery date, the Fund may incur costs
in disposing of the collateral and may experience losses if there is
any delay in its ability to do so. The Fund will not enter into a
repurchase agreement that causes more than 10% of its net assets to be
subject to repurchase agreements having a maturity beyond seven days.
There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Trustees, the Manager
determines the liquidity of certain of the Fund's investments.
Investments may be illiquid because of the absence of an active trading
market, making it difficult to value them or dispose of them promptly
at an acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold publicly
until it is registered under the Securities Act of 1933. The Fund will
not invest more than 10% of its net assets in illiquid or restricted
securities (that limit may increase to 15% if certain state laws are
changed or the Fund's shares are no longer sold in those states). The
Fund's percentage limitation on these investments does not apply to
certain restricted securities that are eligible for resale to qualified
institutional purchasers.
- "When-Issued" and "Delayed Delivery" Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but
which are not available for immediate delivery. There may be a risk of
loss to the Fund if the value of the security declines prior to the
settlement date.
- Loan Participation Interests. The Fund may acquire participation
interests from banks and brokers in loans that are made primarily to
U.S. or foreign companies. The value of loan participation interests
depends primarily upon the creditworthiness of the borrower and its
ability to pay interest and repay the principal. If a borrower fails
to make scheduled interest or principal payments, the Fund could
experience a reduction in its income and might experience a decline in
the net asset value of its shares. The Fund's Board of Trustees has
established quality standards for participation interests the Fund may
invest in. The Fund currently intends to invest less than 5% of its
net assets in participation interests.
- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, put and call options, forward
contracts, and options on futures and securities, or enter into
interest rate swap agreements. These are all referred to as "hedging
instruments." The Fund does not use hedging instruments for speculative
purposes, and has limits on the use of them, described below. The
hedging instruments the Fund may use are described below and in greater
detail in "Other Investment Techniques and Strategies" in the Statement
of Additional Information.
The Fund may buy and sell options, futures and forward contracts for
a number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary
substitute for purchasing individual securities. It may also use
certain kinds of hedging instruments to try to manage its exposure to
changing interest rates.
Some of these strategies, such as selling futures, buying puts and
writing covered calls, hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and
call options, tend to increase the Fund's exposure to the securities
market. Forward contracts are used to try to manage foreign currency
risks on the Fund's foreign investments. Foreign currency options are
used to try to protect against declines in the dollar value of foreign
securities the Fund owns, or to protect against an increase in the
dollar cost of buying foreign securities. Writing covered call options
may also provide income to the Fund for liquidity purposes or to raise
cash to distribute to shareholders.
- Futures. The Fund may buy and sell futures contracts that relate
to (1) broadly-based stock indices (these are referred to as Stock
Index Futures), (2) interest rates (these are referred to as Interest
Rate Futures), (3) bond indices (these are referred to as Bond Index
Futures) or (4) foreign currencies (these are called Forward Contracts
and are discussed below).
- Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls). Calls the Fund buys or
sells must be listed on a securities or commodities exchange, or traded
in the over-the-counter market. In the case of puts and calls on
foreign currency, they must be traded on a securities or commodities
exchange, or quoted by recognized dealers in those options. A call or
put option may not be purchased if the value of all of the Fund's put
and call options would exceed 5% of the Fund's total assets.
The Fund may buy calls only on securities, foreign currencies,
broadly-based stock or bond indices, Stock Index Futures, Interest Rate
Futures and Bond Index Futures.
The Fund may write (that is, sell) call options. Each call the Fund
writes must be "covered" while it is outstanding. That means the Fund
must own the investment on which the call was written or it must own
other securities that are acceptable for the escrow arrangements
required for calls. The Fund may write calls on Futures contracts it
owns, but these calls must be covered by securities or other liquid
assets the Fund owns and segregated to enable it to satisfy its
obligations if the call is exercised. When the Fund writes a call, it
receives cash (called a premium). The call gives the buyer the ability
to buy the investment on which the call was written from the Fund at
the call price during the period in which the call may be exercised. If
the value of the investment does not rise above the call price, it is
likely that the call will lapse without being exercised, while the Fund
keeps the cash premium (and the investment).
The Fund may purchase and sell put options. Buying a put on an
investment gives the Fund the right to sell the investment at a set
price to a seller of a put on that investment. The Fund can buy only
those puts that relate to securities (whether or not it holds such
securities in its portfolio), foreign currencies, Stock Index Futures,
Interest Rate Futures and Bond Index Futures. The Fund may write puts
on securities, broadly-based stock or bond indices, foreign currencies
or Stock Index Futures. Puts the Fund buys and sells must be listed on
a securities or commodities exchange or traded in the over-the-counter
market. Any put sold must be covered by segregated liquid assets with
not more than 50% of the Fund's assets subject to puts.
- Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Fund uses them to try to "lock
in" the U.S. dollar price of a security denominated in a foreign
currency that the Fund has bought or sold, or to protect against
possible losses from changes in the relative values of the U.S. dollar
and a foreign currency. The Fund limits its exposure in foreign
currency exchange contracts in a particular foreign currency to the
amount of its assets denominated in that currency or in a closely-
correlated currency. The Fund may also use "cross-hedging," where the
Fund hedges against changes in currencies other than the currency in
which a security it holds is denominated.
- Interest Rate Swaps. In an interest rate swap, the Fund and
another party exchange their right to receive, or their obligation to
pay, interest on a security. For example, they may swap a right to
receive floating rate payments for the right to receive fixed rate
payments. The Fund enters into swaps only on securities it owns. The
Fund may not enter into swaps with respect to more than 25% of its
total assets. Also, the Fund will segregate liquid assets (such as
cash or U.S. Government securities) to cover any amounts it could owe
under swaps that exceed the amounts it is entitled to receive, and it
will adjust that amount daily, as needed.
- Hedging instruments can be volatile instruments and may involve
special risks. The use of hedging instruments requires special skills
and knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular
hedging strategies. For example, if a covered call written by the Fund
is exercised on an investment that has increased in value, the Fund
will be required to sell the investment at the call price and will not
be able to realize any profit if the investment has increased in value
above the call price. In writing a put, there is a risk that the Fund
may be required to buy the underlying security at a disadvantageous
price. The use of forward contracts may reduce the gain that would
otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. Interest rate swaps are subject to
credit risks (the other party may fail to meet its obligation) and also
to interest rate risks: the Fund could be obligated to pay more under
its swap agreements that it receives under them, as a result of
interest rate changes. These risks and the hedging strategies the Fund
may use are described in greater detail in the Statement of Additional
Information.
- Derivative Investments. In general, a "derivative investment" is
a specially-designed investment. Its performance is linked to the
performance of another investment or security, such as an option,
future, index or currency. The Fund can invest in a number of
different kinds of "derivative investments." They are used in some
cases for hedging purposes, and in others because they offer the
potential for increased income and principal value. In the broadest
sense, exchange-traded options and futures contracts (please refer to
"Hedging" above) may be considered "derivative investments."
One type of derivative the Fund may invest in is an "index-linked
note." On the maturity of this type of debt security, payment is made
based on the performance of an underlying index, unlike a typical note,
where repayment of principal is based on a set face amount. Another
derivative investment the Fund may invest in is a currency-indexed
security. These are typically short-term or intermediate-term debt
securities. Their value at maturity or the rates at which they pay
income are determined by the change in value of the U.S. dollar against
one or more foreign currencies or an index. In some cases, these
securities may pay an amount at maturity based on a multiple of the
amount of the relative currency movements. This variety of index
security offers the potential for greater income but at a greater risk
of loss.
Other derivative investments the Fund may invest in include debt
exchangeable for common stock of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the debt security is exchanged
for common stock of the issuer or is payable in an amount based on the
price of the issuer's common stock at the time of maturity. In either
case there is a risk that the amount payable at maturity will be less
than the principal amount of the debt (because the price of the
issuer's common stock may not be as high as was expected).
- Derivatives may entail special risks. The company issuing the
instrument might not pay the amount due on the maturity of the
instrument. Also, the underlying investment or security on which the
derivative is based might not perform the way the Manager expected it
to perform. The performance of derivative investments may also be
influenced by interest rate changes in the U.S. and abroad. All of
these risks mean that the Fund might realize less income than expected
from its investments, or that it can lose part of the value of its
investments, which will affect the Fund's share price. Certain
derivative investments held by the Fund may trade in the over-the-
counter markets and may be illiquid. If that is the case, the Fund's
investment in them will be limited, as discussed in "Illiquid and
Restricted Securities," above.
- Special Situations. The Fund may invest in securities of
companies that are in "special situations" that the Manager believes
present opportunities for capital growth. A "special situation" may be
an event such as a proposed merger, reorganization, or other unusual
development that is expected to occur and which may result in an
increase in the value of a company's securities regardless of general
business conditions or the movement of prices in the securities market
as a whole. There is a risk that the price of the security may decline
if the anticipated development fails to occur.
- Short Sales "Against-the-Box". In a short sale, the seller does
not own the security that is sold, but normally borrows the security to
fulfill its delivery obligation. The seller later buys the securities
to repay the loan, in the expectation that the price of the security
will be lower when the purchase is made, resulting in a gain. The Fund
may not sell securities short except in collateralized transactions
referred to as short sales against-the-box," where the Fund owns an
equivalent amount of the securities sold short. This technique is
primarily used for tax purposes. No more than 15% of the Fund's net
assets will be held as collateral for such short sales at any one time.
- Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that
have been in operation for less than three years, counting the
operations of any predecessors. Securities of these companies may have
limited liquidity (which means that the Fund may have difficulty
selling them at an acceptable price when it wants to) and the prices of
these securities may be volatile. The Fund may not invest more than 5%
of its net assets in securities of small, unseasoned issuers.
Other Investment Restrictions. The Fund has certain investment
restrictions that are fundamental policies. Under these fundamental
policies, the Fund cannot do any of the following:
- With respect to 75% of its assets, the Fund cannot invest in
securities of any one issuer (other than securities issued by the U.S.
Government or any of its agencies or instrumentalities) if immediately
thereafter (a) more than 5% of the Fund's total assets would be
invested in securities of that issuer, or (b) the Fund would then own
more than 10% of that issuer's voting securities.
- The Fund cannot 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 or any of its agencies or instrumentalities).
All of the percentage restrictions described above and elsewhere in
this Prospectus (other than the regulatory percentage limits in the
Statement of Additional Information that apply to borrowing) apply only
at the time the Fund purchases a security, and the Fund need not
dispose of a security merely because the size of the Fund's assets has
changed or the security has increased in value relative to the size of
the Fund. There are other fundamental policies discussed in the
Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1990 as a
Massachusetts business trust. The Fund is an open-end, diversified
management investment company, with an unlimited number of authorized
shares of beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible
for protecting the interests of shareholders under Massachusetts law.
The Trustees periodically meet throughout the year to oversee the
Fund's activities, review its performance, and review the actions of
the Manager. "Trustees and Officers of the Fund" in the Statement of
Additional Information names the Trustees and officers of the Fund and
provides more information about them. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders have
the right to call a meeting to remove a Trustee or to take other action
described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class
A, Class B and Class C. Each class has its own dividends and
distributions and pays certain expenses, which may be different for the
different classes. Each class may have a different net asset value.
Each share has one vote at shareholder meetings, with fractional shares
voting proportionally. Only shares of a particular class vote as a
class on matters that affect that class alone. Shares are freely
transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting
the Fund's investments and handling its day-to-day business. The
Manager carries out its duties, subject to the policies established by
the Board of Trustees, under an Investment Advisory Agreement which
states the Manager's responsibilities. The Agreement sets forth the
fees paid by the Fund to the Manager and describes the expenses that
the Fund is responsible to pay to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment
companies, including other Oppenheimer funds, with assets of more than
$35 billion as of June 30, 1995, and with more than 2.6 million
shareholder accounts. The Manager is owned by Oppenheimer Acquisition
Corp., a holding company that is owned in part by senior officers of
the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
- Portfolio Manager. The Portfolio Manager of the Fund is Frank
Jennings, effective October 2, 1995. He is a Vice President of the
Manager and he is the person principally responsible for the day-to-day
management of the Fund's portfolio. Prior to joining the Manager, Mr.
Jennings was the Managing Director of Global Equities at Mitchell
Hutchins Asset Management, Inc., a subsidiary of Paine Webber, Inc.
Prior to that, Mr. Jennings was a global funds manager for AIG Global
Investors.
- Fees and Expenses. Under a new Investment Advisory Agreement,
which became effective June 27, 1994, the Fund pays the Manager the
following annual fees, which decline on additional assets as the Fund
grows: 0.80% of the first $250 million of net assets; 0.77% of the
next $250 million; 0.75% of the next $500 million; 0.69% of the next $1
billion; and 0.67% of net assets in excess of $2 billion. Prior to
June 27, 1994, the following fee rates were in effect: 0.75% of the
first $200 million of aggregate net assets, 0.72% of the next $200
million, 0.69% of the next $200 million, 0.66% of the next $200
million, and 0.60% of net assets in excess of $800 million. If the new
rates had not been in effect for a portion of the fiscal year, the
Fund's management fee for its last fiscal year would have been 0.75% of
average annual net assets for both its Class A and Class C shares.
The Fund pays expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal fees and
auditing costs. Those expenses are paid out of the Fund's assets and
are not paid directly by shareholders. However, those expenses reduce
the net asset value of shares, and therefore are indirectly borne by
shareholders through their investment. More information about the
Investment Advisory Agreement and the other expenses paid by the Fund
is contained in the Statement of Additional Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of
Additional Information. That section discusses how brokers and dealers
are selected for the Fund's portfolio transactions. When deciding
which brokers to use, the Manager is permitted by the Investment
Advisory Agreement to consider whether brokers have sold shares of the
Fund or any other funds for which the Manager serves as investment
adviser.
- The Distributor. The Fund's shares are sold through dealers,
brokers and other financial institutions that have a sales agreement
with Oppenheimer Funds Distributor, Inc., a subsidiary of the Manager
that acts as the Fund's Distributor. The Distributor also distributes
the shares of other mutual funds managed by the Manager (the
"Oppenheimer funds") and is sub-distributor for funds managed by a
subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other Oppenheimer
funds on an "at-cost" basis. Shareholders should direct inquiries
about their accounts to the Transfer Agent at the address and toll-free
number shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class will usually be
different as a result of the different kinds of expenses each class
bears. These returns measure the performance of a hypothetical account
in the Fund over various periods, and do not show the performance of
each shareholder's account (which will vary if dividends are received
in cash or shares are sold or purchased). The Fund's performance
information may help you see how well your Fund has done over time and
to compare it to other funds or market indices, as we have done below.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary
over time, depending on market conditions, the composition of the
portfolio, expenses and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming
'that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average
annual total return shows the average rate of return for each year in a
period that would produce the cumulative total return over the entire
period. However, average annual total returns do not show the Fund's
actual year-by-year performance.
When total returns are quoted for Class A shares, they reflect the
payment of the current maximum initial sales charge. When total
returns are shown for Class B shares, they reflect the effect of the
contingent deferred sales charge that applies to the period for which
total return is shown. When total returns are shown for a one-year
period for Class C shares, they reflect the effect of the contingent
deferred sales charge. Total returns may also be quoted "at net asset
value," without considering the effect of the sales charge, and those
returns would be reduced if sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of
the Fund's performance during its last fiscal year ended September 30,
1994, followed by a graphical comparison of the Fund's performance to
an appropriate broad-based market index and narrower market index.
- Management's Discussion of Performance. During the Fund's fiscal
year ended September 30, 1994, global securities markets were volatile,
and the Manager sought to increase the Fund's focus on income-producing
investments to enhance current income. The Manager also attempted to
reduce the impact of foreign currency fluctuations by maintaining
investments in high-yield U.S. corporate bonds, reducing the amount of
fixed-income investments in Latin America and Europe and building
positions in Canadian, Australian and New Zealand bonds. During this
period the Fund reduced its positions in Asian markets and Latin
America, regions in which the Manager believed securities values had
peaked. The Manager also reduced positions in financial services and
consumer stocks worldwide, and invested in companies that the Manager
believed had strong earnings potential.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in each Class
of shares of the Fund held until September 30, 1994. In the case of
Class A shares, performance is measured from the inception of the Class
on October 22, 1990, and in the case of Class C shares, from the
inception of the Class on December 1, 1993. Class B shares were not
publicly offered during the fiscal year ended September 30, 1994, and
consequently, no information on Class B shares is included in these
graphs.
The Fund's performance is compared to two indices, because the Fund
invests its assets in both stocks and debt securities, and in the
Manager's view, no one index adequately combines both types of
investments globally. Performance is compared to the performance of
the Morgan Stanley Capital International World Index, an unmanaged
index of issuers listed on the stock exchanges of 20 foreign countries
and the U.S. It is widely recognized as a measure of global stock
market performance. Because the Fund also invests in income-producing
securities, the Fund's performance is also compared to the performance
of the Lehman Brothers Aggregate Bond Index, an unmanaged index of U.S.
Government Treasury and agency issues, investment grade corporate bond
issues and fixed-rate mortgage-backed securities. That index is widely
regarded as a measure of the performance of the overall bond market.
Index performance reflects the reinvestment of dividends but does
not consider the effect of capital gains or transaction costs, and none
of the data in the graphs show the effect of taxes. Moreover, index
performance data do not reflect any assessment of the risk of the
investments included in the index. The Fund's performance reflects the
effect of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's
performance, it must be noted that the Fund's investments are not
limited to the securities in the indices shown.
Comparison of Change in Value
of $10,000 Hypothetical Investments in Oppenheimer Global Growth &
Income Fund and the Morgan Stanley Capital International World Index
and the Lehman Aggregate Bond Index
(Graphs)
Oppenheimer Global Growth & Income Fund
<TABLE>
<CAPTION>
Average Annual Total Returns of Cumulative Total Return of Class C
Class A Shares of the Fund at 9/30/94 Shares of the Fund at 9/30/94
- ------------------------------------- ----------------------------------
1-Year Life* Life:**
<S> <C> <C>
7.41% 9.44% 6.41%
<FN>
_____________________
1. The inception date of the Fund (Class A shares) was 10/22/90. The
average annual total returns and the ending account value for Class A
shares in the graph reflect reinvestment of all dividends and capital
gains distributions and are shown net of the 5.75% maximum initial
sales charge.
2. Class C shares of the Fund were first publicly offered on 12/1/93.
The cumulative total return and the ending account value for Class C
shares in the graph reflect reinvestment of all dividends and capital
gains distributions and are shown net of the applicable 1% contingent
deferred sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to the same scale.
</TABLE>
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes
of shares. The different classes of shares represent investments in the
same portfolio of securities but are subject to different expenses and
will likely have different share prices.
- Class A Shares. If you buy Class A shares, you pay an initial
sales charge on investments up to $1 million (up to $500,000 for
purchases by OppenheimerFunds prototype 401(k) plans). If you purchase
Class A shares as part of an investment of at least $1 million
($500,000 for OppenheimerFunds prototype 401(k) plans) in shares of one
or more Oppenheimer funds, you will not pay an initial sales charge,
but if you sell any of those shares within 18 months of buying them,
you may pay a contingent deferred sales charge. The amount of that
sales charge will vary depending on the amount you invested. Sales
charges are described in "Buying Class A Shares" below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years of buying them, you will normally pay a contingent deferred sales
charge. That sales charge varies depending on how long you own your
shares. It is described in "Buying Class B Shares" below.
- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred
sales charge of 1%. It is described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors
which you should discuss with your financial advisor. The Fund's
operating costs that apply to a class of shares and the effect of the
different types of sales charges on your investment will vary your
investment results over time. The most important factors are how much
you plan to invest, how long you plan to hold your investment, and
whether you anticipate exchanging your shares for shares of other
Oppenheimer funds (not all of which currently offer Class B or Class C
shares). If your goals and objectives change over time and you plan to
purchase additional shares, you should re-evaluate those factors to see
if you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, considering the effect of
the annual asset-based sales charge on Class B and Class C expenses
(which, like all expenses, will affect your investment return). For
the sake of comparison, we have assumed that there is a 10% rate of
appreciation in the investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based
on the Fund's actual investment returns and the operating expenses
borne by each class of shares, and which class you invest in. The
factors discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations are
different. The discussion below of the factors to consider in
purchasing a particular class of shares assumes that you will purchase
only one class of shares and not a combination of shares of different
classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long
you expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases
of Class A shares may, over time, offset the effect of paying an
initial sales charge on your investment (which reduces the amount of
your investment dollars used to buy shares for your account), compared
to the effect over time of higher class-based expenses on Class B or
Class C shares, for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not more
than six years), you should probably consider purchasing Class A or
Class C shares rather than Class B shares, because of the effect of the
Class B contingent deferred sales charge if you redeem in less than 7
years, as well as the effect of the Class B asset-based sales charge on
the investment return for that class in the short-term. Class C shares
might be the appropriate choice (especially for investments of less
than $100,000), because there is no initial sales charge on Class C
shares, and the contingent deferred sales charge does not apply to
amounts you sell after holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater impact on your account over the
longer term than the reduced front-end sales charge available for
larger purchases of Class A shares. For example, Class A might be more
advantageous than Class C (as well as Class B) for investments of more
than $100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or more),
Class A shares may become more advantageous than Class C (and B). If
investing $500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor
normally will not accept purchase orders of $500,000 or $1 million or
more of Class B or Class C shares, respectively, from a single
investor.
- Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be an
appropriate consideration, if you plan to invest less than $100,000. If
you plan to invest more than $100,000 over the long term, Class A
shares will likely be more advantageous than Class B shares or C
shares, as discussed above, because of the effect of the expected lower
expenses for Class A shares and the reduced initial sales charges
available for larger investments in Class A shares under the Fund's
Right of Accumulation.
Of course, these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumed performance return stated above, and therefore,
should not be relied on as rigid guidelines.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available to Class B or Class
C shareholders, or other features (such as Automatic Withdrawal Plans)
might not be advisable (because of the effect of the contingent
deferred sales charge) for Class B or Class C shareholders, you should
carefully review how you plan to use your investment account before
deciding which class of shares to buy. Also, not all Oppenheimer funds
currently offer Class B or Class C shares, limiting exchangeability
from the Fund. Share certificates are not available for Class C
shares, and if you are considering using your shares as collateral for
a loan, that may be a factor to consider.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation
for selling Fund shares may receive different compensation for selling
one class than for selling another class. It is important that
investors understand that the purpose of the Class B and Class C
contingent deferred sales charges and asset-based sales charge is the
same as the purpose of the front-end sales charge on sales of Class A
shares: that is, to compensate the Distributor for commissions it pays
to dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any
time with as little as $25. There are reduced minimum investments under
special investment plans.
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25
minimum applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer
funds (a list of them appears in the Statement of Additional
Information, or you can ask your dealer or call the Transfer Agent), or
by reinvesting distributions from unit investment trusts that have made
arrangements with the Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan
under the OppenheimerFunds AccountLink service. When you buy shares, be
sure to specify Class A, Class B or Class C shares. If you do not
choose, your investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, it is recommended that you discuss your investment
first with a financial advisor, to be sure that it is appropriate for
you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
to have the Transfer Agent send redemption proceeds, or to transmit
dividends and distributions.
Shares are purchased for your account on the regular business day
the Distributor is instructed by you to initiate the ACH transfer to
buy shares. You can provide those instructions automatically, under an
Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to
"AccountLink" below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver, Colorado. In most cases, to
enable you to receive that day's offering price, the Distributor must
receive your order by the time of day The New York Stock Exchange
closes, which is normally 4:00 P.M., New York time, but may be earlier
on some days (all references to time in this Prospectus mean "New York
time"). The net asset value of each class of shares is determined as
of that time on each day The New York Stock Exchange is open (which is
a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange on a regular business
day and transmit it to the Distributor so that it is received before
the Distributor's close of business that day, which is normally 5:00
P.M. The Distributor may reject any purchase order for the Fund's
shares, in its sole discretion.
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales charge.
However, in some cases, described below, purchases are not subject to
an initial sales charge, and the offering price will be the net asset
value. In some cases, reduced sales charges may be available, as
described below. Out of the amount you invest, the Fund receives the
net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales
charge may be retained by the Distributor and allocated to your dealer.
The current sales charge rates and commissions paid to dealers and
brokers are as follows:
<TABLE>
<CAPTION>
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- ------------------ -------------- --------------- --------------
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
</TABLE>
________________________
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
- Purchases aggregating $1 million or more; or
- Purchases by an OppenheimerFunds prototype 401(k) plan that (1)
buys shares costing $500,000 or more, or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that it
projects to have annual plan purchases of $200,000 or more.
Shares of any of the Oppenheimer funds that offers only one class of
shares that has no class designation are considered "Class A shares"
for this purpose. The Distributor pays dealers of record commissions
on these purchases in an amount equal to the sum of 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million. That commission will be paid only on the
amount of those purchases in excess of $1 million ($500,000, for
purchases by OppenheimerFunds prototype 401(k) plans) that were not
previously subject to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") may be deducted
from the redemption proceeds. That sales charge will be equal to 1.0%
of either (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is
less. However, the Class A contingent deferred sales charge will not
exceed the aggregate amount of the commissions the Distributor paid to
your dealer on all Class A shares of all Oppenheimer funds you
purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to the
sales charge, including shares purchased by reinvestment of dividends
and capital gains, and then will redeem other shares in the order that
you purchased them. The Class A contingent deferred sales charge is
waived in certain cases described in "Waivers of Class A Sales Charges"
below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below).
However, if the shares acquired by exchange are redeemed within 18
months of the end of the calendar month of the purchase of the
exchanged shares, the sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of Oppenheimer funds
(other than money market funds) under OppenheimerFunds-sponsored
403(b)(7) custodial plans exceed $5 million per year (calculated per
quarter), will receive monthly one-half of the Distributor's retained
commissions on those sales, and if those sales exceed $10 million per
year, those dealers will receive the Distributor's entire retained
commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of
the following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A and Class B shares you purchase for
your individual accounts, or jointly, or for trust or custodial
accounts on behalf of your children who are minors. A fiduciary can
count all shares purchased for a trust, estate or other fiduciary
account (including one or more employee benefit plans of the same
employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the
sales charge rate that applies to current purchases of Class A shares.
You can also include Class A and Class B shares of Oppenheimer funds
you previously purchased subject to an initial or contingent deferred
sales charge to reduce the sales charge rate for current purchases of
Class A shares, provided that you still hold your investment in one of
the Oppenheimer funds. The value of those shares will be based on the
greater of the amount you paid for the shares or their current value
(at offering price). The Oppenheimer funds are listed in "Reduced
Sales Charges" in the Statement of Additional Information, or a list
can be obtained from the Distributor. The reduced sales charge will
apply only to current purchases and must be requested when you buy your
shares.
- Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the sales
charge rate that applies to your purchases of Class A shares. The
total amount of your intended purchases of both Class A and Class B
shares will determine the reduced sales charge rate for the Class A
shares purchased during that period. This can include purchases made
up to 90 days before the date of the Letter. More information is
contained in the Application and in "Reduced Sales Charges" in the
Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are
not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the Statement
of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are
not subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees
(and their "immediate families" as defined in "Reduced Sales Charges"
in the Statement of Additional Information) of the Fund, the Manager
and its affiliates, and retirement plans established by them for their
employees;
- registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser
must certify to the Distributor at the time of purchase that the
purchase is for the purchaser's own account (or for the benefit of such
employee's spouse or minor children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing specifically
for the use of shares of the Fund in particular investment products
made available to their clients; (those clients may be charged a
transaction fee by their dealer, broker or adviser for the purchase or
sale of Fund shares) or
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor to sell shares to
defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts for
which reinvestment arrangements have been made with the Distributor; or
- shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a fund
managed by the Manager or any of its subsidiaries) on which an initial
sales charge or contingent sales charge was paid (this waiver also
applies to shares purchased by exchange of shares of Oppenheimer Money
Market Fund, Inc. that were purchased and paid for in this manner);
this waiver must be requested when the purchase order is placed for
your shares of the Fund, and the Distributor may require evidence of
your qualification for this waiver.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also
waived if shares that would otherwise be subject to the contingent
deferred sales charge are redeemed in the following cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation
plans or other employee benefit plans, including OppenheimerFunds
prototype 401(k) plans (these are all referred to as "Retirement
Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
- if, at the time a purchase order is placed for Class A shares
that would otherwise be subject to the Class A contingent deferred
sales charge, the dealer agrees in writing to accept the dealer's
portion of the commission payable on the sale in installments of 1/18th
of the commission per month (and no further commission will be payable
if the shares are redeemed within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans
for any of the following cases or purposes: (1) following death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must occur after the
participant's account was established); (2) hardship withdrawals, as
defined in the plan; (3) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (4) to meet the minimum
distribution requirements of the Internal Revenue Code; (5) to
establish "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code, or (6) separation from
service.
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of
its costs incurred in connection with the personal service and
maintenance of shareholder accounts that hold Class A shares.
Reimbursement is made quarterly at an annual rate that may not exceed
0.25% of the average annual net assets of Class A shares of the Fund.
The Distributor uses all of those fees to compensate dealers, brokers,
banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class
A shares and to reimburse itself (if the Fund's Board of Trustees
authorizes such reimbursements, which it has not yet done) for its
other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details,
please refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of
dividends or capital gains distributions. The charge will be assessed
on the lesser of the net asset value of the shares at the time of
redemption or the original purchase price. The contingent deferred
sales charge is not imposed on the amount of your account value
represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 6 years, and (3) shares held
the longest during the 6-year period. The contingent deferred sales
charge is not imposed in the circumstances described in "Waivers of
Class B and Class C Sales Charges" below.
The amount of the contingent deferred sales charge will depend on
the number of years since you invested and the dollar amount being
redeemed, according to the following schedule:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted As % of Amount Subject to
Charge)
- --------------------------------- --------------------------------
<S> <C>
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of the
month in which the purchase was made.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B shareholders
of the asset-based sales charge that applies to Class B shares under
the Class B Distribution and Service Plan, described below. The
conversion is based on the relative net asset value of the two classes,
and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the
reinvestment of dividends and distributions on the converted shares
will also convert to Class A shares. The conversion feature is subject
to the continued availability of a tax ruling described in "Alternative
Sales Arrangements - Class A and Class B Shares" in the Statement of
Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class B shares
that are outstanding for 6 years or less. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on
the average annual net assets of Class B shares, determined as of the
close of each regular business day. The asset-based sales charge allows
investors to buy Class B shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell Class B
shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The asset-based sales charge and service fee
increase Class B expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale.
The Fund pays the asset-based sales charge to the Distributor for
its services rendered in connection with the distribution of Class B
shares. Those payments, retained by the Distributor, are at a fixed
rate which is not related to the Distributor's expenses. The services
rendered by the Distributor include paying and financing the payment of
sales commissions, service fees, and other costs of distributing and
selling Class B shares. If the Plan is terminated by the Fund, the
Board of Trustees may allow the Fund to continue payments of the asset-
based sales charge to the Distributor for distributing Class B shares
before the Plan was terminated.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to shares
redeemed in certain circumstances as described below. The reasons for
this policy are in "Reduced Sales Charges" in the Statement of
Additional Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of
shares in the following cases:
- distributions to participants or beneficiaries from Retirement
Plans, if the distributions are made (a) under an Automatic Withdrawal
Plan after the participant reaches age 59-1/2, as long as the payments
are no more than 10% of the account value annually (measured from the
date the Transfer Agent receives the request), or (b) following the
death or disability (as defined in the Internal Revenue Code) of the
participant or beneficiary (the death or disability must have occurred
after the account was established);
- redemptions from accounts other than Retirement Plans following
the death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and
for disability you must provide evidence of a determination of
disability by the Social Security Administration);
- returns of excess contributions to Retirement Plans;
- distributions from IRAs (including SEP-IRAs and SAR/SEP accounts)
before the participant is age 59-1/2, and distributions from 403(b)(7)
custodial plans or pension or profit sharing plans before the
participant is age 59-1/2 but only after the participant has separated
from service, if the distributions are made in substantially equal
periodic payments over the life (or life expectancy) of the participant
or the joint lives (or joint life and last survivor expectancy) of the
participant and the participant's designated beneficiary (and the
distributions must comply with other requirements for such
distributions under the Internal Revenue Code and may not exceed 10% of
the account value annually, measured from the date the Transfer Agent
receives the request); and
- distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order,
as defined in the Internal Revenue Code; (3) to meet minimum
distribution requirements as defined in the Internal Revenue Code; (4)
to make "substantially equal periodic payments" as described in Section
72(t) of the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
- shares issued in plans of reorganization to which the Fund is a
party; and
- shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies," below.
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred
sales charge of 1.0% will be deducted from the redemption proceeds.
That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions. The charge
will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent
deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 12 months, and (3) shares held
the longest during the 12-month period.
- Waivers of Class C Sales Charge. The Class C contingent deferred
sales charge will be waived if the shareholder requests for any of the
redemptions or circumstances described above under "Waivers of Class B
and Class C Contingent Deferred Sales Charges."
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to
compensate the Distributor for distributing Class C shares and
servicing accounts. Under the Plan, the Fund pays the Distributor an
annual "asset-based sales charge" of 0.75% per year on Class C shares.
The Distributor also receives a service fee of 0.25% per year. Both
fees are computed on the average annual net assets of Class C shares,
determined as of the close of each regular business day. The asset-
based sales charge allows investors to buy Class C shares without a
front-end sales charge while allowing the Distributor to compensate
dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares.
Those services are similar to the services provided under the Class A
Service Plan, described above. The asset-based sales charge and
service fees increase Class C expenses by up to 1.00% of average net
assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year, after Class C shares have been sold by the dealer.
After the shares have been held for a year, the Distributor pays the
fee on a quarterly basis. The Distributor pays sales commissions of
0.75% of the purchase price to dealers from its own resources at the
time of sale. The total up-front commission paid by the Distributor to
the dealer at the time of sale of Class C shares is 1.00% of the
purchase price. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares that
have been outstanding for a year or more.
The Distributor's actual expenses in selling Class C shares may be
more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the
Distribution and Service Plan for Class C shares. Therefore, those
expenses may be carried over and paid in future years. At September
30, 1994, the end of the Plan year, the Distributor had incurred
unreimbursed expenses under the Plan of $195,526 (equal to 1.15% of the
Fund's net assets represented by Class C shares on that date), which
have been carried over into the present Plan year. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor
for certain expenses it incurred before the plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to
your account at your bank or other financial institution to enable you
to send money electronically between those accounts to perform a number
of types of account transactions. These include purchases of shares by
telephone (either through a service representative or by PhoneLink,
described below), automatic investments under Asset Builder Plans, and
sending dividends and distributions or Automatic Withdrawal Plan
payments directly to your bank account. Please refer to the Application
for details or call the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy
your shares through your dealer. After your account is established, you
can request AccountLink privileges by sending signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply
to each shareholder listed in the registration on your account as well
as to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or changing
those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own
the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone representative,
call the Distributor at 1-800-852-8457. The purchase payment will be
debited from your bank account.
- PhoneLink. PhoneLink is the Oppenheimer funds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone. PhoneLink
may be used on already-established Fund accounts after you obtain a
Personal Identification Number (PIN), by calling the special PhoneLink
number: 1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with the
Fund, to pay for these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from
your Fund account to another Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to
"How to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to
Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another Oppenheimer funds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of
withdrawals of up to $1,500 per month by telephone. You should consult
the Application and Statement of Additional Information for more
details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange automatically an amount you establish in advance for shares of
up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each Oppenheimer funds account is $25. These exchanges are subject
to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
shares of the Fund, you have up to 6 months to reinvest all or part of
the redemption proceeds in Class A shares of the Fund or other
Oppenheimer funds without paying a sales charge. This privilege
applies to Class A shares that you purchased with an initial sales
charge and to Class A or Class B shares on which you paid a contingent
deferred sales charge when you redeemed them. It does not apply to
Class C shares. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your
employer, the plan trustee or administrator must make the purchase of
shares for your retirement plan account. The Distributor offers a
number of different retirement plans that can be used by individuals
and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SARSEP-
IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
other employers
- 401(k) Prototype Retirement Plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers
you a number of ways to sell your shares: in writing or by telephone.
You can also set up Automatic Withdrawal Plans to redeem shares on a
regular basis, as described above. If you have questions about any of
these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, or from a
retirement plan, please call the Transfer Agent first at 1-800-525-
7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement
of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations
(there may be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive a
check
- The redemption check is not payable to all shareholders listed on
the account statement
- The redemption check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent
will accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing on behalf of a corporation, partnership or other
business, or as a fiduciary, you must also include your title in the
signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270, Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be received
by the Transfer Agent by the close of The New York Stock Exchange that
day, which is normally 4:00 P.M., but may be earlier on some days. You
may not redeem shares held in an OppenheimerFunds retirement plan or
under a share certificate by telephone.
- To redeem shares through a service representative, call 1-800-
852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to
your bank account on AccountLink, you may have the proceeds sent to
that bank account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, once in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to the
address on the account statement. This service is not available within
30 days of changing the address on an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH transfer
to your bank is initiated on the business day after the redemption.
You do not receive dividends on the proceeds of the shares you redeemed
while they are waiting to be transferred.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please refer to "Special Arrangements for Repurchase of
Shares from Dealers and Brokers" in the Statement of Additional
Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of exchange,
without sales charge. To exchange shares, you must meet several
conditions:
- Shares of the fund selected for exchange must be available for
sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other Oppenheimer funds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another
fund. At present, not all of the Oppenheimer funds offer Class B and
Class C shares. A list showing which Funds offer which classes can be
obtained by calling the Distributor at 1-800-525-7048. If a fund has
only one class of shares that does not have a class designation, they
are "Class A" shares for exchange purposes. Certain Oppenheimer funds
offer Class A shares and Class B or Class C shares, and a list can be
obtained by calling the Distributor at 1-800-525-7048. In some cases,
sales charges may be imposed on exchange transactions. Please refer to
"How to Exchange Shares" in the Statement of Additional Information for
more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are
registered with the same name(s) and address. Shares held under
certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by
calling a service representative at 1-800-525-7048. That list can
change from time to time.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in
proper form by the close of The New York Stock Exchange that day, which
is normally 4:00 P.M., but may be earlier on some days. However,
either fund may delay the purchase of shares of the fund you are
exchanging into up to 7 days if it determines it would be disadvantaged
by a same-day transfer of the proceeds to buy shares. For example, the
receipt of multiple exchange requests from a dealer in a "market-
timing" strategy might require the sale of portfolio securities at a
time or price disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other
fund, which may result in a capital gain or loss. For more information
about taxes affecting exchanges, please refer to "How to Exchange
Shares" in the Statement of Additional Information.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of The New York Stock Exchange on each regular business
day by dividing the value of the Fund's net assets attributable to a
class by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities, obligations for which market values
cannot be readily obtained, and call options and hedging instruments.
These procedures are described more completely in the Statement of
Additional Information.
- The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless and until the Transfer
Agent receives cancellation instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm
that telephone instructions are genuine, by requiring callers to
provide tax identification numbers and other account data or by using
PINs, and by confirming such transactions in writing. If the Transfer
Agent does not use reasonable procedures it may be liable for losses
due to unauthorized transactions, but otherwise neither it nor the Fund
will be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine. If you are unable to
reach the Transfer Agent during periods of unusual market activity, you
may not be able to complete a telephone transaction and should consider
placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From
time to time, the Transfer Agent in its discretion may waive certain of
the requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
- The redemption price for shares will vary from day to day because
the values of the securities in the Fund's portfolio fluctuate, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker/dealer,
payment will be forwarded within 3 business days. The Transfer Agent
may delay forwarding a check or processing a payment via AccountLink
for recently purchased shares, but only until the purchase payment has
cleared. That delay may be as much as 10 days from the date the shares
were purchased. That delay may be avoided if you purchase shares by
certified check or arrange with your bank to provide telephone or
written assurance to the Transfer Agent that your purchase payment has
cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the
fact that the market value of shares has dropped, and in some cases
involuntary redemptions may be made to repay the Distributor for losses
from the cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind," which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified
Social Security or Employer Identification Number when you sign your
application, or if you violate Internal Revenue Service regulations on
tax reporting of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer
Agent. Under the circumstances described in "How to Buy Shares," you
may be subject to a contingent deferred sales charge when redeeming
certain Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's
records. However, each shareholder may call the Transfer Agent at 1-
800-525-7048 to ask that copies of those materials be sent personally
to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B
and Class C shares from net investment income and pays such dividends
to shareholders quarterly in March, June, September and December, but
the Board of Trustees can change that schedule. Dividends paid with
respect to Class A shares will generally be higher than for Class B and
C shares because expenses allocable to Class B and C shares will
generally be higher than for Class A shares. There is no fixed
dividend rate and there can be no assurance as to the payment of any
dividends.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of capital gains following the end of its
fiscal year. Short-term capital gains are treated as dividends for tax
purposes. Long-term capital gains will be separately identified in the
tax information the Fund sends you after the end of the year. There
can be no assurance that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check
or sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or
have them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds Account.
You can reinvest all distributions in another OppenheimerFunds account
you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you have
held your shares. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Distributions are
subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each
taxable distribution you received in the previous year.
When more than 50% of its assets are invested in foreign securities
at the end of any fiscal year, the Fund may elect that Section 853 of
the Internal Revenue Code will apply to it to permit shareholders to
take a credit (or a deduction) on their own federal income tax returns
for foreign income taxes paid by the Fund. The Statement of Additional
Information contains further discussion of this tax provision.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares
on or just before the ex-dividend date, or just before the Fund
declares a capital gains distribution, you will pay the full price for
the shares and then receive a portion of the price back as a taxable
dividend or capital gain.
- Taxes on Transactions: Share redemptions, including redemptions
for exchanges, are subject to capital gains tax. Generally speaking, a
capital gain or loss is the difference between the price you paid for
the shares and the price you received when you sold them.
- Returns of Capital: In certain cases distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders. A
non-taxable return of capital may reduce your tax basis in your Fund
shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained in
the Statement of Additional Information, and in addition you should
consult with your tax adviser about the effect of an investment in the
Fund on your particular tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER GLOBAL GROWTH & INCOME FUND
Graphic material included in Prospectus of Oppenheimer Global Growth
& Income Fund: "Comparison of Total Return of Oppenheimer Global Growth
& Income Fund to the Morgan Stanley Capital International World Index
and the Lehman Aggregate Bond Index - Change in Value of $10,000
Hypothetical Investments" in Class A and Class B shares.
Linear graphs will be included in the Prospectus of Oppenheimer
Global Growth & Income Fund (the "Fund") depicting the initial account
value and subsequent account value of a hypothetical $10,000 investment
in each class of shares of the Fund. In the case of the Fund's Class A
shares, that graph will cover the life of the Fund from 10/22/90
through 9/30/94 and in the case of the Fund's Class C shares will cover
the period from the inception of the class (December 1, 1993) through
9/30/94. The graphs will compare such values with hypothetical $10,000
investments over the same time periods to the Morgan Stanley Capital
International World Index and the Lehman Aggregate Bond Index. Set
forth below are the relevant data points that will appear on the linear
graph. Additional information with respect to the foregoing, including
a description of the Morgan Stanley Capital International World Index
and the Lehman Aggregate Bond Index, is set forth in the Prospectus
Under "Performance of the Fund - Comparing the Fund's Performance to
the Market."
<TABLE>
<CAPTION>
Fiscal Year Oppenheimer Global
(Period) Growth & Income Morgan Stanley Lehman Aggregate
Ended Fund A World Index Bond Index
- ----------- ------------------ -------------- ----------------
<S> <C> <C> <C>
10/22/90 (1) $ 9,425 $10,000 $10,000
09/30/91 $10,454 $11,454 $11,454
09/30/92 $10,345 $11,338 $12,891
09/30/93 $12,518 $13,633 $14,178
09/30/94 $14,265 $14,664 $13,721
Fiscal Year Oppenheimer Global
(Period) Growth & Income Morgan Stanley Lehman Aggregate
Ended Fund B World Index Bond Index
- ----------- ------------------ -------------- ----------------
<S> <C> <C> <C>
12/01/93(2) $10,000 $10,000 $10,000
09/30/94 $10,641 $11,100 $9,724
<FN>
- ----------------------
(1) The Fund commenced operations on October 22, 1990.
(2) Class C shares of the Fund were first publicly offered on December
1, 1993.
</TABLE>
<PAGE>
Oppenheimer Global Growth & Income Fund
Two World Trade Center
New York, New York 10048-0023
1-800-525-7048
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 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional
Information, and if given or made, such information and representations
must not be relied upon as having been authorized by the Fund,
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 an offer in such state.
PR215.1095 Printed on recycled paper
<PAGE>
Oppenheimer Global Growth & Income Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated October 10, 1995
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated October 10, 1995. It should be
read together with the Prospectus, which may be obtained by writing to
the Fund's Transfer Agent, Oppenheimer Shareholder Services, at P.O.
Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent at
the toll-free number shown above.
CONTENTS
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How To Buy Shares
How To Sell Shares
How To Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Financial Information About the Fund
Independent Auditors' Report
Financial Statements
Appendix A: Ratings of Investments A-1
Appendix B: Industry Classifications B-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth below
is supplemental information about those policies and the types of
securities in which the Fund invests, as well as strategies the Fund
may use to try to achieve its objective. Capitalized terms used in
this Statement of Additional Information have the same meaning as those
terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's investment
adviser, Oppenheimer Management Corporation (the "Manager"), evaluates
the merits of particular equity and fixed-income securities primarily
through the exercise of its own investment analysis. This may include,
among other things, evaluation of the history of the issuer's
operations, prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product developments
and developments by competitors, the effect of general market and
economic conditions on the issuer's business, and legislative proposals
or new laws that might affect the issuer. Depending on the assessment
of market conditions by the Manager, the Fund may emphasize investments
in common stocks, and securities convertible into common stocks, or
securities acquired primarily to produce income, or in a combination of
both types of investments. While the Fund may invest in securities
having appreciation possibilities, such securities will not be selected
which, in the view of the Manager, would involve undue risk.
- Securities of Growth-Type Companies. The Fund may emphasize
securities of "growth-type" companies. Such issuers typically are
those whose goods or services have relatively favorable long-term
prospects for increasing demand, or ones that develop new products,
services or markets and normally retain a relatively large part of
their earnings for research, development and investment in capital
assets. They may include companies in the natural resources fields or
those developing industrial applications for new scientific knowledge
having potential for technological innovation, such as nuclear energy,
oceanography, business services and new customer products.
- Investing in Small, Unseasoned Companies. The securities of
small, unseasoned companies may have a limited trading market, which
may adversely affect the Fund's ability to dispose of them and can
reduce the price the Fund might be able to obtain for them. If other
investment companies and investors trade the same securities when the
Fund attempts to dispose of its holdings, the Fund may receive lower
prices than might otherwise be obtained, because of the thinner market
for such securities.
- Fixed-Income Securities. All fixed-income securities 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. Generally, higher yielding bonds
are subject to credit risk to a greater extent that lower yielding,
higher quality bonds. Interest rate risk refers to the fluctuations in
value of fixed-income securities resulting solely from the inverse
relationship between price and yield of fixed-income 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. In addition, debt securities with longer
maturities, which tend to produce higher yields, are subject to
potentially greater capital appreciation and depreciation than
obligations with shorter maturities. Fluctuations in the market value
of fixed-income securities after the Fund buys them will not affect the
interest payable on those securities, nor the cash income from such
securities. However, those price fluctuations will be reflected in the
valuations of these securities and therefore the Fund's net asset
values.
As stated in the Prospectus, the Fund may not invest more than 25%
of its assets in bonds and debentures in the lower rating categories of
Moody's and Standard & Poor's, the principal rating services. High
yield securities, whether rated or unrated, may be subject to greater
market fluctuations and risks of loss of income and principal than
lower-yielding, higher-rated, fixed-income securities. Risks of high
yield securities may include (i) limited liquidity and secondary market
support, (ii) substantial market price volatility resulting from
changes in prevailing interest rates, (iii) subordination of the
obligations to the prior claims of banks and other senior lenders, (iv)
the operation of mandatory sinking fund or call/redemption provisions
during periods of declining interest rates that could cause the Fund to
be able to reinvest premature redemption proceeds only in lower-
yielding portfolio securities, (v) the possibility that earnings of the
issuer may be insufficient to meet its debt service, and (vi) the
issuer's low creditworthiness and potential for insolvency during
periods of rising interest rates and economic downturn. As a result of
the limited liquidity of high yield securities, at times their prices
have experienced significant and rapid declines when a substantial
number of holders decided to sell simultaneously. A decline is also
likely in the high yield bond market during a general economic
downturn. An economic downturn or an increase in interest rates could
severely disrupt the market for high yield bonds and adversely affect
the value of outstanding bonds and the ability of the issuers to repay
principal and interest. In addition, there have been several
Congressional attempts to limit the use of tax and other advantages of
high yield bonds which, if enacted, could adversely affect the value of
these securities and the Fund's net asset value. For example,
federally-insured savings and loan associations have been required to
divest their investments in high yield bonds.
- Convertible Securities. While convertible securities are a form
of debt security in many cases, their conversion feature (allowing
conversion into equity securities) causes them to be regarded more as
"equity equivalents." As a result, the rating assigned to the security
has less impact on the Manager's investment decision with respect to
convertible securities than in the case of non-convertible fixed-income
securities. To determine whether convertible securities should be
regarded as "equity equivalents," the Manager examines the following
factors: (1) whether, at the option of the investor, the convertible
security can be exchanged for a fixed number of shares of common stock
of the issuer, (2) whether the issuer of the convertible securities has
restated its earnings per share of common stock on a fully diluted
basis (considering the effect of converting the convertible
securities), and (3) the extent to which the convertible security may
be a defensive "equity substitute," providing the ability to
participate in any appreciation in the price of the issuer's common
stock.
- Foreign Securities. "Foreign securities" are equity and debt
securities issued by companies organized under the laws of countries
other than the U.S. and debt securities issued by foreign governments,
which securities 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.
A number of current significant political and economic developments
may affect investments in foreign securities and in securities of
companies with operations overseas. Such developments include dramatic
political changes in government and economic policies in several
Eastern European countries, Germany and the Commonwealth of Independent
States (the former Soviet Union), as well as unification of the
European Economic Community. The course of any of one or more of these
events and the effect on trade barriers, competition and markets for
consumer goods and services is uncertain.
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 and the Fund's income available for distribution. 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. The Fund may engage in
foreign currency exchange transactions for hedging purposes to protect
against changes in future exchange rates. See "Other Investment
Techniques and Strategies-Hedging" below.
The values of foreign investments and the investment income
derived from them 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.
Investing in foreign securities offers potential benefits not
available from investing 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 taking advantage of 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.
The Fund intends to invest less than 5% of its total assets in
securities of issuers of Eastern European countries. The social,
political and economic reforms in most Eastern European countries are
still in their early stages, and there can be no assurance that these
reforms will continue, or, if they continue, will prove beneficial to
the Fund. Eastern European countries in many cases have no existing
capital market structure for the sale and trading of securities.
Participation in the growth of such countries may be available
initially or solely through investment in joint ventures, state
enterprises, private placements, unlisted securities or other similar
illiquid investment vehicles.
In addition, even though opportunities for investment may exist in
Eastern European countries, any change in the leadership or policies of
the governments of those countries, or changes in the leadership or
policies of any other government that exercises a significant influence
over those countries, may halt the expansion of or reverse the
liberalization of foreign investment policies now occurring and thereby
eliminate any investment opportunities which may currently exist.
Prospective investors should note that upon the accession to power
of authoritarian regimes, the governments of a number of the Eastern
European countries previously expropriated large quantities of real and
personal property, similar to the property which will be represented by
the securities purchased by the Fund. The claims of property owners
against those governments were never finally settled. There can be no
assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise
confiscated. If such confiscation were to occur, the Fund could lose a
substantial portion of its investments in such countries. The Fund's
investments would similarly be adversely affected by exchange control
regulations in any of those countries.
The obligations of foreign governmental entities may or may not be
supported by the full faith and credit of a foreign government.
Obligations of supranational entities include those of international
organizations designated or supported by governmental entities to
promote economic reconstruction or development and of international
banking institutions and related government agencies. Examples include
the International Bank for Reconstruction and Development (the World
Bank), the European Coal and Steel Community, the Asian Development
Bank and the Inter-American Development Bank. The governmental
members, or "stockholders," usually make initial capital contributions
to the supranational entity and in many cases are committed to make
additional capital contributions if the supranational entity is unable
to repay its borrowings. Each supranational entity's lending
activities are limited to a percentage of its total capital (including
"callable capital" contributed by members at the entity's call),
reserves and net income. There is no assurance that foreign
governments will be able or willing to honor their commitments.
The Fund may invest in U.S. dollar-denominated, collateralized
"Brady Bonds", as described in the Prospectus. These foreign debt
obligations may be fixed-rate par bonds or floating-rate discount bonds
and are generally collateralized in full as to principal due at
maturity by U.S. Treasury zero coupon obligations that have the same
maturity as the Brady Bonds. Brady Bonds are often viewed as having
three or four valuation components: (i) the collateralized repayment of
principal at final maturity; (ii) the collateralized interest payments;
(iii) the uncollateralized interest payments; and (iv) any
uncollateralized repayment of principal at maturity (these
uncollateralized amounts constitute the "residual risk"). In the event
of a default with respect to collateralized Brady Bonds as a result of
which the payment obligations of the issuer are accelerated, the zero
coupon U.S. Treasury securities held as collateral for the payment of
principal will not be distributed to investors, nor will such
obligations be sold and the proceeds distributed. The collateral will
be held by the collateral agent to the scheduled maturity of the
defaulted Brady Bonds, which will continue to be outstanding, at which
time the face amount of the collateral will equal the principal
payments which would have then been due on the Brady Bonds in the
normal course. In addition, in light of the residual risk of Brady
Bonds and, among other factors, the history of defaults with respect to
commercial bank loans by public and private entities of countries
issuing Brady Bonds, investment in Brady Bonds are to be viewed as
speculative.
- Asset-Backed Securities. These securities, issued by trusts and
special purpose corporations, are backed by pools of assets, primarily
automobile and credit-card receivables and home equity loans, which
pass through the payments on the underlying obligations to the security
holders (less servicing fees paid to the originator or fees for any
credit enhancement). The value of an asset-backed security is affected
by changes in the market's perception of the asset backing the
security, the creditworthiness of the servicing agent for the loan
pool, the originator of the loans, or the financial institution
providing any credit enhancement, and is also affected if any credit
enhancement has been exhausted. Payments of principal and interest
passed through to holders of asset-backed securities are typically
supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or having a
priority to certain of the borrower's other securities. The degree of
credit enhancement varies, and generally applies to only a fraction of
the asset-backed security's par value until exhausted. If the credit
enhancement of an asset-backed security held by the Fund has been
exhausted, and if any required payments of principal and interest are
not made with respect to the underlying loans, the Fund may experience
losses or delays in receiving payment. The risks of investing in
asset-backed securities are ultimately dependent upon payment of the
consumer loans by the individual borrowers. As a purchaser of an
asset-backed security, the Fund would generally have no recourse to the
entity that originated the loans in the event of default by a borrower.
The underlying loans are subject to prepayments that shorten the
weighted average life of asset-backed securities and may lower their
return in the same manner as described in the Prospectus and in
"Mortgage-Backed Securities" below for prepayments of a pool of
mortgage loans underlying mortgage-backed securities.
- U.S. Government Securities. U.S. Government Securities are debt
obligations issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities, and include "zero coupon" Treasury
securities, mortgage-backed securities, collateralized mortgage-backed
obligations and money market instruments. See "Temporary Investments"
for further discussion.
- Mortgage-Backed Securities. These securities represent
participation interests in pools of residential mortgage loans that may
or may not be guaranteed by agencies or instrumentalities of the U.S.
Government. Such securities differ from conventional debt securities
which generally provide for periodic payment of interest in fixed or
determinable amounts (usually semi-annually) with principal payments at
maturity or specified call dates. Some of the mortgage-backed
securities in which the Fund may invest may be backed by the full faith
and credit of the U.S. Treasury (e.g., direct pass-through certificates
of the Government National Mortgage Association (the "GNMA")); some are
supported by the right of the issuer to borrow from the U.S. Government
(e.g., obligations of Federal Home Loan Banks); and some are backed by
only the credit of the issuer itself. Any such guarantees do not
extend to the value of or yield of the mortgage-backed securities
themselves or to the net asset value of the Fund's shares. Any of
these government agencies may issue collateralized mortgage-backed
obligations ("CMO's"), discussed below.
The yield on mortgage-backed securities is based on the average
expected life of the underlying pool of mortgage loans. The actual
life of any particular pool will be shortened by any unscheduled or
early payments of principal and interest. Principal prepayments
generally result from the sale of the underlying property or the
refinancing or foreclosure of underlying mortgages. The occurrence of
prepayments is affected by a wide range of economic, demographic and
social factors and, accordingly, it is not possible to predict
accurately the average life of a particular pool. Yield on such pools
is usually computed by using the historical record of prepayments for
that pool or, in the case of newly-issued mortgages, the prepayment
history of similar pools. The actual prepayment experience of a pool
of mortgage loans may cause the yield realized by the Fund to differ
from the yield calculated on the basis of the expected average life of
the pool.
Prepayments tend to increase during periods of falling interest
rates, while during periods of rising interest rates prepayments will
most likely decline. When prevailing interest rates rise, the value of
a pass-through security may decrease as do other debt securities, but,
when prevailing interest rates decline, the value of a pass-through
security is not likely to rise on a comparable basis with other debt
securities because of the prepayment feature of pass-through
securities. The Fund's reinvestment of scheduled principal payments
and unscheduled prepayments it receives may occur at higher or lower
rates than the original investment, thus affecting the yield of the
Fund. Monthly interest payments received by the Fund have a
compounding effect that may increase the yield to the Fund more than
debt obligations that pay interest semi-annually. Due to those
factors, mortgage-backed securities may be less effective than Treasury
bonds of similar maturity at maintaining yields during periods of
declining interest rates. Accelerated prepayments adversely affect
yields for pass-through securities purchased at a premium (i.e., at a
price in excess of principal amount) and may involve additional risk of
loss of principal because the premium may not have been fully
amortized at the time the obligation is repaid. The opposite is true
for pass-through securities purchased at a discount. The Fund may
purchase mortgage-backed securities at par, at a premium or at a
discount.
- GNMA Certificates. Certificates of the Government National
Mortgage Association ("GNMA Certificates") are mortgage-backed
securities that evidence an undivided interest in a pool or pools of
mortgages. The GNMA Certificates that the Fund may purchase are of the
"modified pass-through" type, which entitle the holder to receive
timely payment of all interest and principal payments due on the
mortgage pool, net of fees paid to the "issuer" and the GNMA,
regardless of whether the mortgagor actually makes the payments.
The National Housing Act authorized the GNMA to guarantee the
timely payment of principal and interest on securities backed by a pool
of mortgages insured by the Federal Housing Administration (the "FHA")
or guaranteed by the Veterans Administration (the "VA"). The GNMA
guarantee is backed by the full faith and credit of the U.S.
Government. The GNMA is also empowered to borrow without limitation
from the U.S. Treasury if necessary to make any payments under its
guarantee.
The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosures will usually result in the return of the greater
part of principal investment long before the maturity of the mortgages
in the pool. Foreclosures impose no risk to principal investment
because of the GNMA guarantee, except to the extent that the Fund has
purchased the certificates at a premium in the secondary market.
- FNMA Securities. The Federal National Mortgage Association (the
"FNMA") was established to create a secondary market in mortgages
insured by the FHA. FNMA issues guaranteed mortgage pass-through
certificates ("FNMA Certificates"). The FNMA Certificates resemble
GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owed on the
underlying pool. The FNMA guarantees timely payment of interest and
principal on FNMA Certificates. The FNMA guarantee is not backed by
the full faith and credit of the U.S. Government.
- FHLMC Securities. The Federal Home Loan Mortgage Corporation
(the "FHLMC") was created to promote development of a nationwide
secondary market for conventional residential mortgages. The FHLMC
issues mortgage pass-through certificates ("PCS"). PCS resemble GNMA
Certificates in that each PC represents a pro rata share of all
interest and principal payments made and owed on the underlying pool.
The FHLMC guarantees timely monthly payment of interest on PCS and the
ultimate payment of principal. The FHLMC guarantee is not backed by
the full faith and credit of the U.S. Government.
- Collateralized Mortgage-Backed Obligations ("CMOs"). CMOs are
fully-collateralized bonds that are the general obligations of the
issuer thereof, either the U.S. Government, a U.S. Government
instrumentality, or a private issuer. Such bonds generally are secured
by an assignment to a trustee (under the indenture pursuant to which
the bonds are issued) of collateral consisting of a pool of mortgages.
Payments with respect to the underlying mortgages generally are made to
the trustee under the indenture. Payments of principal and interest on
the underlying mortgages are not passed through to the holders of the
CMOs as such (i.e., the character of payments of principal and interest
is not passed through, and therefore payments to holders of CMOs
attributable to interest paid and principal repaid on the underlying
mortgages do not necessarily constitute income and return of capital,
respectively, to such holders), but such payments are dedicated to
payment of interest on and repayment of principal of the CMOs. CMOs
often are issued in two or more classes with different characteristics
such as varying maturities and stated rates of interest. Because
interest and principal payments on the underlying mortgages are not
passed through to holders of CMOs, CMOs of varying maturities may be
secured by the same pool of mortgages, the payments on which are used
to pay interest on each class and to retire successive maturities in
sequence. Unlike other mortgage-backed securities (discussed above),
CMOs are designed to be retired as the underlying mortgages are repaid.
In the event of prepayment on such mortgages, the class of CMO first to
mature generally will be paid down. Therefore, although in most cases
the issuer of CMOs will not supply additional collateral in the event
of such prepayment, there will be sufficient collateral to secure CMOs
that remain outstanding.
- Mortgage-Backed Security Rolls. The Fund may enter into "forward
roll" transactions with respect to mortgage-backed securities issued by
the GNMA, FNMA or FHLMC. In a forward roll transaction, which is
considered to be a borrowing by the Fund, the Fund will sell a
mortgage-backed security to a bank or other permitted entity and
simultaneously agree to repurchase a similar security from the
institution at a later date at an agreed upon price. The mortgage-
backed securities that are repurchased will bear the same interest rate
as those sold, but generally will be collateralized by different pools
of mortgages with different prepayment histories than those sold.
Risks of mortgage-backed security rolls include (i) the risk of
prepayment prior to maturity, (ii) the possibility that the Fund may
not be entitled to receive interest and principal payments on the
securities sold and that the proceeds of the sale may have to be
invested in money market instruments (typically repurchase agreements)
maturing not later than the expiration of the roll, and (iii) the risk
that the market value of the securities sold by the Fund may decline
below the price at which the Fund is obligated to purchase the
securities. Upon entering into a mortgage-backed security roll, the
Fund will be required to place cash, U.S. Government securities or
other high-grade debt securities in a segregated account with its
Custodian in an amount equal to its obligation under the roll.
- Temporary Defensive Investments. As stated in the Prospectus,
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 day to day operating purposes. Under
unusual market or economic conditions (including drastic market
fluctuations), the Fund may invest up to 100% of its assets in those
instruments identified in the Prospectus under "Temporary Defensive
Investments."
- U.S. Government Securities. U.S. Government securities are debt
obligations issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities. Certain of these obligations, including
U.S. Treasury notes and bonds, and GNMA debentures ("Ginnie Mae's"),
are supported by the full faith and credit of the U.S. Certain other
U.S. Government securities, issued or guaranteed by Federal agencies or
government sponsored enterprises, are not supported by the full faith
and credit of the U.S. These latter securities may include obligations
supported by the right of the issuer to borrow from the U.S. Treasury,
such as obligations of the Federal Home Loan Mortgage Corporation
("Freddie Macs's") and obligations supported by the credit of the
instrumentality, such as FNMA bonds (Fannie Mae's"). U.S. Government
securities in which the Fund may invest include zero coupon U.S.
Treasury securities, mortgage-backed securities and CMOs (see
discussion above) and money market instruments.
- Zero Coupon Securities. The Fund may invest in zero coupon
securities issued by the U.S. Treasury. Zero coupon U.S. Treasury
securities are U.S. Treasury notes and bonds that have been stripped of
their unmatured interest coupons and receipts or bills issued without
interest coupons, U.S. Treasury certificates representing interest in
such stripped debt obligations or coupons. The Fund may also invest in
zero coupon securities issued by other issuers, including foreign
governments.
These securities usually trade at a deep discount from their face
or par value and will be subject to greater fluctuations in market
value in response to changing interest rates than debt obligations of
comparable maturities that make current payments of interest. However,
the interest rate is "locked in" and there is no risk of having to
reinvest periodic interest payments in securities having lower rates.
Because the Fund accrues taxable income from zero coupon securities
issued by either the U.S. Treasury or other issuers without receiving
cash, the Fund may be required to sell portfolio securities in order to
pay a dividend depending, among other things, upon the proportion of
shareholders who elect to receive dividends in cash rather than
reinvesting dividends in additional shares of the Fund. The Fund might
also sell portfolio securities to maintain portfolio liquidity. In
either case, cash distributed or held by the Fund and not reinvested in
Fund shares will hinder the Fund in seeking a high level of current
income.
- Commercial Paper. The Fund's commercial paper investments
include:
Variable Amount Master Demand Notes. Master demand notes are
corporate obligations that permit the investment of fluctuating amounts
by the Fund at varying rates of interest pursuant to direct
arrangements between the Fund, as lender, and the borrower. These
notes may or may not be backed by bank letters of credit. Because
these notes are direct lending arrangements between the lender and
borrower, it is not generally contemplated that they will be traded.
There is no secondary market for these notes, although they are
redeemable (and thus immediately repayable by the borrower) at
principal amount, plus accrued interest, at any time. Accordingly, the
Fund's right to redeem is dependent upon the ability of the borrower to
pay principal and interest on demand. The Manager will consider the
earning power, cash flow and other liquidity ratios of the issuer, and
its ability to pay principal and interest on demand, including a
situation in which all holders of such notes made demand
simultaneously. Investments in bank time deposits and master demand
notes are subject to the 10% of total assets limitation on securities
that are not readily marketable.
Floating Rate/Variable Rate Notes. Some of the notes the Fund
may purchase may have variable or floating interest rates. Variable
rates are adjustable at stated periodic intervals. Floating rates are
automatically adjusted according to a specified market rate for such
investments, such as the percentage of the prime rate of a bank, or the
91-day U.S. Treasury Bill rate. Such obligations may be secured by
bank letters of credit or other credit support arrangements.
- Warrants and Rights. Warrants basically are options to purchase
equity securities at set prices valid for a specified period of time.
The prices of warrants do not necessarily move in a manner parallel to
the prices of the underlying securities. The price the Fund pays for a
warrant will be lost unless the warrant is exercised prior to its
expiration. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its
shareholders. Warrants and rights have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.
Other Investment Techniques and Strategies
- Borrowing for Leverage. From time to time, the Fund may
increase its ownership of securities by borrowing from banks on an
unsecured basis and investing the borrowed funds subject to the
restrictions stated in the Prospectus. Any such borrowing will be made
only from banks, and, pursuant to the requirements of the Investment
Company Act of 1940 (the "Investment Company Act"), will only be made
to the extent that the value of the Fund's assets, less its liabilities
other than borrowings, is equal to at least 300% of all borrowings
including the proposed borrowing. If the value of the Fund's assets,
when computed in that manner, should fail to meet the 300% asset
coverage requirement, the Fund is required within three days to reduce
its bank debt to the extent necessary to meet such requirement. To do
so, the Fund 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 during period of substantial borrowing, its expenses may
increase more than funds that do not borrow.
- Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. Under applicable regulatory requirements (which are
subject to change), the loan collateral on each business day must at
least equal the value of the loaned securities and must consist of
cash, bank letters of credit or securities of the U.S. Government (or
its agencies or instrumentalities). To be acceptable as collateral,
letters of credit must obligate a bank to pay amounts demanded by the
Fund if the demand meets the terms of the letter. Such terms and the
issuing bank must be satisfactory to the Fund. When it lends
securities, the Fund receives amounts equal to the dividends or
interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower.
The Fund may also pay reasonable finder's, custodian and administrative
fees. The terms of the Fund's loans must meet applicable tests under
the Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
- Repurchase Agreements. The Fund may acquire securities subject
to repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of
Fund shares, or pending the settlement of purchases of portfolio
securities. In a repurchase transaction, the Fund acquires a security
from, and simultaneously resells it to, an approved vendor. An
"approved vendor" is a U.S. commercial bank or the U.S. branch of a
foreign bank or a broker-dealer that has been designated a primary
dealer in government securities, that must meet credit requirements set
by the Fund's Board of Trustees from time to time. 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.
- Restricted and Illiquid Securities. As stated in the
Prospectus, restricted securities, unregistered under the Securities
Act of 1933, which are offered and sold to institutional investors
under Rule 144A, may be readily marketable and thus not illiquid if the
Fund's Board of Trustees, or the Manager under Board-approved
guidelines, so determines. 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 a price representing their fair
value. The expenses of registration of restricted securities that are
illiquid may be negotiated by the Fund 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 a
decision to sell the securities and the time when the Fund would be
permitted to sell them. Thus, the Fund would bear the risks of any
downward price fluctuation during that period. The Fund also may
acquire, through private placements, securities having contractual
restrictions on their resale, which might lower the amount realizable
upon the sale of such securities. The Fund will also treat as illiquid
any OTC option held by it, as well as repurchase transactions having a
maturity beyond seven days.
- Participation Interests. The Fund may invest in participation
interests, subject to the limitation, described in "Illiquid and
Restricted Securities" in the Prospectus on investments by the Fund in
illiquid investments. Participation interests provide the Fund an
undivided interest in a loan made by the issuing financial institution
in the proportion that the Fund's participation interest bears to the
total principal amount of the loan. No more than 5% of the Fund's net
assets can be invested in participation interests of the same borrower.
The issuing financial institution may have no obligation to the Fund
other than to pay the Fund the proportionate amount of the principal
and interest payments it receives. Participation interests are
primarily dependent upon the creditworthiness of the borrowing
corporation, which is obligated to make payments of principal and
interest on the loan, and there is a risk that such borrowers may have
difficulty making payments. In the event the borrower fails to pay
scheduled interest or principal payments, the Fund could experience a
reduction in its income and might experience a decline in the value of
that participation interest and in the net asset value of its shares.
In the event of a failure by the financial institution to perform its
obligation in connection with the participation agreement, the Fund
might incur certain costs and delays in realizing payment or may suffer
a loss of principal and/or interest.
- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis, and may purchase or sell
such securities on a "delayed delivery" basis. Although the Fund will
enter into such transactions for the purpose of acquiring securities
for its portfolio or for delivery pursuant to options contracts it has
entered into, the Fund may dispose of a commitment prior to settlement.
"When-issued" or "delayed delivery" refers to securities whose terms
and indenture are available and for which a market exists, but which
are not available for immediate delivery. When such transactions are
negotiated, the price (which is generally expressed in yield terms) is
fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. The Fund does not intend to
make such purchases for speculative purposes. The commitment to
purchase a security for which payment will be made on a future date may
be deemed a separate security and involve a risk of loss if the value
of the security declines prior to the settlement date. During the
period between commitment by the Fund and settlement (generally within
two months but not to exceed 120 days), no payment is made for the
securities purchased by the purchaser, and no interest accrues to the
purchaser from the transaction. Such securities are subject to market
fluctuation; the value at delivery may be less than the purchase price.
The Fund will maintain a segregated account with its Custodian,
consisting of cash, U.S. Government securities or other high grade debt
obligations at least equal to the value of purchase commitments until
payment is made.
The Fund will engage in when-issued transactions in order to
secure what is considered to be an advantageous price and yield at the
time of entering into the obligation. When the Fund engages in when-
issued or delayed delivery transactions, it relies on the buyer or
seller, as the case may be, to consummate the transaction. Failure of
the buyer or seller to do so may result in the Fund losing the
opportunity to obtain a price and yield considered to be advantageous.
At the time the Fund makes a commitment to purchase or sell a security
on a when-issued or forward commitment basis, it records the
transaction and reflects the value of the security purchased, or if a
sale, the proceeds to be received, in determining its net asset value.
If the Fund chooses to (i) dispose of the right to acquire a when-
issued security prior to its acquisition or (ii) dispose of its right
to deliver or receive against a forward commitment, it may incur a gain
or loss.
To the extent the Fund engages in when-issued and delayed delivery
transactions, it will do so for the purpose of acquiring or selling
securities consistent with its investment objective and policies and
not for the purposes of investment leverage. The Fund enters into such
transactions only with the intention of actually receiving or
delivering the securities, although (as noted above), when-issued
securities and forward commitments may be sold prior to settlement
date. In addition, changes in interest rates before settlement in a
direction other than that expected by the Manager will affect the value
of such securities and may cause a loss to the Fund.
When-issued transactions and forward commitments allow the Fund a
technique to use against anticipated changes in interest rates and
prices. For instance, in periods of rising interest rates and falling
prices, the Fund might sell securities in its portfolio on a forward
commitment basis to attempt to limit its exposure to anticipated
falling prices. In periods of falling interest rates and rising
prices, the Fund might sell portfolio securities and purchase the same
or similar securities on a when-issued or forward commitment basis,
thereby obtaining the benefit of currently higher cash yields
- Short Sales Against-the-Box. In this type of short sale, while
the short position is open, the Fund must own an equal amount of such
securities sold short, or by virtue of ownership of securities have the
right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may
be made to defer, for Federal income tax purposes, recognition of gain
or loss on the sale of securities "in the box" until the short position
is closed out. They may also be used to protect a gain on the security
"in the box" when the Fund does not want to sell it and recognize a
capital gain.
- 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"). 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.
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) buy puts on such Futures or securities, or (iii)
write covered calls on securities or on Futures. 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), or to attempt to protect against the possibility that
portfolio debt securities are not fully included in a rise in value of
the debt securities market, the Fund may: (i) buy Futures, or (ii) buy
calls on such Futures or on securities. Covered calls and puts may
also be written on debt securities to attempt to increase the Fund's
income. When hedging to attempt to protect against declines in the
dollar value of a foreign currency-denominated security or in a payment
on such security, the Fund may: (a) buy puts on that foreign currency
or on foreign currency Futures, (b) write calls on that currency or on
such Futures, or (c) enter into Forward Contracts at a different 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, Forward Contracts or
options on Futures 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.
The Fund's Custodian, or a securities depository acting for the
Custodian, will act as the Fund's escrow agent, through the facilities
of the Options Clearing Corporation ("OCC"), as to the investments on
which the Fund has written options that are traded on exchanges, or as
to other acceptable escrow securities, so that no margin will be
required from the Fund for such option transactions. OCC will release
the securities covering a call on the expiration of the call or when
the Fund enters into a closing purchase transaction. Call writing
affects the Fund's turnover rate and the brokerage commissions it pays.
Commissions, normally higher than on general securities transactions,
are payable on writing or purchasing a call.
- Writing Covered Call Options. When the Fund writes a call on an
investment, it receives a premium and agrees to sell the callable
investment to a purchaser of a corresponding call during the call
period (usually not more than 9 months) at a fixed exercise price
(which may differ from the market price of the underlying investment),
regardless of market price changes during the call period. To
terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of 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 investment 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 investment until the call expired or was exercised.
The Fund may write 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 which 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, cash or 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 forgoes the opportunity of investing the segregated assets or
writing calls against those assets. As long as the obligation of the
Fund as the put writer continues, it may be assigned an exercise notice
by the exchange or broker-dealer through whom such option was sold,
requiring the Fund to exchange currency at the specified rate of
exchange or to take delivery of the underlying security against payment
of the exercise price. The Fund may have no control over when it may
be required to purchase the underlying security, since it may be
assigned an exercise notice at any time prior to the termination of its
obligation as the writer of the put. This obligation terminates upon
expiration of the put, or such earlier time at which the Fund effects a
closing purchase transaction by purchasing a put of the same series as
that previously sold. Once the Fund has been assigned an exercise
notice, it is thereafter not allowed to effect a closing purchase
transaction.
The Fund may effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent an
underlying security from being put. Furthermore, effecting such a
closing purchase transaction will permit the Fund to write another put
option to the extent that the exercise price thereof is secured by the
deposited assets, or to utilize the proceeds from the sale of such
assets for other investments by the Fund. The Fund will realize a
profit or loss from a closing purchase transaction if the cost of the
transaction is less or more than the premium received from writing the
option. As above for writing covered calls, any and all such profits
described herein from writing puts are considered short-term capital
gains for Federal tax purposes, and when distributed by the Fund, are
taxable as ordinary income.
- 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. No payment is paid or received by the Fund on the
purchase or sale of a Future. Upon entering into a Futures
transaction, the Fund will be required to deposit an initial margin
payment 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 loss or gain is
realized. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.
- Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller to
deliver and the purchaser to take a specific amount of foreign currency
at a specific future date for a fixed price. A Forward Contract
involves bilateral obligations of one party to purchase, and another
party to sell, a specific currency at a future date (which may be any
fixed number of days from the date of the contract agreed upon by the
parties), at a price set at the time the contract is entered into.
These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their
customers. The Fund may enter into a Forward Contract in order to
"lock in" the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet settled,
or to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the gain
that would otherwise result from a change in the relationship between
the U.S. dollar and a foreign currency. To attempt to limit its
exposure to loss under Forward Contracts in a particular foreign
currency, the Fund limits its use of these contracts to the amount of
its assets denominated in that currency or denominated in a closely-
correlated foreign currency. Forward Contracts include standardized
foreign currency futures contracts which are traded on exchanges and
are subject to procedures and regulations applicable to other Futures.
The Fund may also enter into a Forward Contract to sell a foreign
currency denominated in a currency other than that in which the
underlying security is denominated. This is done in the expectation
that there is a greater correlation between the foreign currency of the
Forward Contract and the foreign currency of the underlying investment
than between the U.S. dollar and the foreign currency of the underlying
investment. This technique is referred to as "cross hedging." The
success of cross hedging is dependent on many factors, including the
ability of the Manager to correctly identify and monitor the
correlation between foreign currencies and the U.S. dollar. To the
extent that the correlation is not identical, the Fund may experience
losses or gains on both the underlying security and the cross currency
hedge.
The Fund may use Forward Contracts to protect against uncertainty
in the level of future exchange rates. The use of Forward Contracts
does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does fix a rate
of exchange in advance. In addition, although Forward Contracts limit
the risk of loss due to a decline in the value of the hedged
currencies, at the same time they limit any potential gain that might
result should the value of the currencies increase.
There is no limitation as to the percentage of the Fund's assets
that may be committed to foreign currency exchange contracts. The Fund
does not enter into such forward contracts or maintain a net exposure
in such contracts to the extent that the Fund would be obligated to
deliver an amount of foreign currency in excess of the value of the
Fund's assets denominated in that currency, or enter into a "cross
hedge," unless it is denominated in a currency or currencies that the
Manager believes will have price movements that tend to correlate
closely with the currency in which the investment being hedged is
denominated. See "Tax Aspects of Covered Calls and Hedging
Instruments" below for a discussion of the tax treatment of foreign
currency exchange contracts.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for
the purchase or sale of a security denominated in a foreign currency,
or when the Fund anticipates receipt of dividend payments in a foreign
currency, the Fund may desire to "lock-in" the U.S. dollar price of the
security or the U.S. dollar equivalent of such payment by entering into
a Forward Contract, for a fixed amount of U.S. dollars per unit of
foreign currency, for the purchase or sale of the amount of foreign
currency involved in the underlying transaction ("transaction hedge").
The Fund will thereby be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the
currency exchange rates during the period between the date on which the
security is purchased or sold, or on which the payment is declared, and
the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge,
for example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a
forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency, or when the Fund
believes that the U.S. dollar may suffer a substantial decline against
a foreign currency, it may enter into a forward purchase contract to
buy that foreign currency for a fixed dollar amount. In this situation
the Fund may, in the alternative, enter into a forward contract to sell
a different foreign currency for a fixed U.S. dollar amount where the
Fund believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a decline
in the U.S. dollar value of the currency in which portfolio securities
of the Fund are denominated ("cross hedge").
The Fund's Custodian will place cash or U.S. Government securities
or other liquid high-quality debt securities in a separate account of
the Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions. If
the value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the
Fund's commitments with respect to such contracts. As an alternative
to maintaining all or part of the separate account, the Fund may
purchase a call option permitting the Fund to purchase the amount of
foreign currency being hedged by a forward sale contract at a price no
higher than the forward contract price, or the Fund may purchase a put
option permitting the Fund to sell the amount of foreign currency
subject to a forward purchase contract at a price as high or higher
than the forward contract price. Unanticipated changes in currency
prices may result in poorer overall performance for the Fund than if it
had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value
of the securities involved will not generally be possible because the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities
between the date the Forward Contract is entered into and the date it
is sold. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear
the expense of such purchase), if the market value of the security is
less than the amount of foreign currency the Fund is obligated to
deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to
sell on the spot market some of the foreign currency received upon the
sale of the portfolio security if its market value exceeds the amount
of foreign currency the Fund is obligated to deliver. The projection
of short-term currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the Fund
to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring the Fund
to sell a currency, the Fund may either sell a portfolio security and
use the sale proceeds to make delivery of the currency or retain the
security and offset its contractual obligation to deliver the currency
by purchasing a second contract pursuant to which the Fund will obtain,
on the same maturity date, the same amount of the currency that it is
obligated to deliver. Similarly, the Fund may close out a Forward
Contract requiring it to purchase a specified currency by entering into
a second contract entitling it to sell the same amount of the same
currency on the maturity date of the first contract. The Fund would
realize a gain or loss as a result of entering into such an offsetting
Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the
execution dates of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because Forward
Contracts are usually entered into on a principal basis, no fees or
commissions are involved. Because such contracts are not traded on an
exchange, the Fund must evaluate the credit and performance risk of
each particular counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. The Fund may convert
foreign currency from time to time, and investors should be aware of
the costs of currency conversion. Foreign exchange dealers do not
charge a fee for conversion, but they do seek to realize a profit based
on the difference between the prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the
Fund desire to resell that currency to the dealer.
- Interest Rate Swap Transactions. Swap agreements entail both
interest rate risk and credit risk. There is a risk that, based on
movements of interest rates in the future, the payments made by the
Fund under a swap agreement will have been greater than those received
by it. Credit risk arises from the possibility that the counterparty
will default. If the counterparty to an interest rate swap defaults,
the Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor
the creditworthiness of counterparties to the Fund's interest rate swap
transactions on an ongoing basis. The Fund will enter into swap
transactions with appropriate counterparties pursuant to master netting
agreements.
A master netting agreement provides that all swaps done between
the Fund and that counterparty under the master agreement shall be
regarded as parts of an integral agreement. If on any date amounts are
payable in the same currency in respect of one or more swap
transactions, the net amount payable on that date in that currency
shall be paid. In addition, the master netting agreement may provide
that if one party defaults generally or on one swap, the counterparty
may terminate the swaps with that party. Under such agreements, if
there is a default resulting in a loss to one part, the measure of that
part's damages is calculated by reference to the average cost of a
replacement swap with respect to each swap (i.e., the mark-to-market
value at the time of the termination of each swap). The gains and
losses on all swaps are then netted, and the result is the
counterparty's gain or loss on termination. The termination of all
swaps and the netting of gains and losses on termination is generally
referred to as "aggregation." The Fund will not invest more than 25%
of its assets in interest rate swap transactions.
- Regulatory Aspects of Hedging Instruments. The Fund is required
to operate within certain guidelines and restrictions with respect to
its use of futures and options thereon as established by the
Commodities Futures Trading Commission ("CFTC"). In particular, the
Fund is excluded from registration as a "commodity pool operator" if it
complies with the requirements of Rule 4.5 adopted by the CFTC. The
Rule does not limit the percentage of the Fund's assets that may be
used for Futures margin and related option premiums for a bona fide
hedging position. However, under the Rule the Fund must limit its
aggregate initial futures margin and related option premiums to no more
than 5% of the Fund's net assets for hedging strategies that are not
considered bona fide hedging strategies under the Rule.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or
more brokers. Thus the number of options which the Fund may write or
hold may be affected by options written or held by other entities,
including other investment companies having the same adviser as the
Fund (or an adviser that is an affiliate of the Fund's adviser). The
exchanges also impose position limits on Futures transactions. An
exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act, when the
Fund purchases a Future, the Fund will maintain, in a segregated
account or accounts with its Custodian, cash or readily-marketable,
short-term (maturing in one year or less) debt instruments in an amount
equal to the market value of the securities underlying such Future,
less the margin deposit applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the
Internal Revenue Code (although it reserves the right not to qualify).
That qualification enables the Fund to "pass through" its income and
realized capital gains to shareholders without having to pay tax on
them. This avoids a "double tax" on that income and capital gains,
since shareholders normally will be taxed on the dividends and capital
gains they receive from the Fund (unless the Fund's shares are held in
a retirement account or the shareholder is otherwise exempt from tax).
One of the tests for the Fund's qualification as a regulated investment
company is that less than 30% of its gross income must be derived from
gains realized on the sale of securities held for less than three
months. To comply with this 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be precluded
from them: (i) selling investments, including Futures, held for less
than three months, whether or not they were purchased on the exercise
of a call held by the Fund; (ii) purchasing options which expire in
less than three months; (iii) effecting closing transactions with
respect to calls or puts written or purchased less than three months
previously; (iv) exercising puts or calls held by the Fund for less
than three months; or (v) writing calls on investments held less than
three months.
Certain foreign currency exchange contracts (Forward Contracts) in
which the Fund may invest are treated as "section 1256 contracts."
Gains or losses relating to section 1256 contracts generally are
characterized under the Internal Revenue Code as 60% long-term and 40%
short-term capital gains or losses. However, foreign currency gains or
losses arising from certain section 1256 contracts (including Forward
Contracts) generally are treated as ordinary income or loss. In
addition, section 1256 contracts held by the Fund at the end of each
taxable year are "marked-to-market" with the result that unrealized
gains or losses are treated as though they were realized. These
contracts also may be marked-to-market for purposes of the excise tax
applicable to investment company distributions and for other purposes
under rules prescribed pursuant to the Internal Revenue Code. An
election can be made by the Fund to exempt these transactions from this
marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on
straddle positions. Generally, a loss sustained on the disposition of
a position(s) making up a straddle is allowed only to the extent such
loss exceeds any unrecognized gain in the offsetting positions making
up the straddle. Disallowed loss is generally allowed at the point
where there is no unrecognized gain in the offsetting positions making
up the straddle, or the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates which occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally
are treated as ordinary income or ordinary loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of foreign currency forward contracts, gains or losses
attributable to fluctuations in the value of a foreign currency between
the date of acquisition of the security or contract and the date of
disposition also are treated as an ordinary gain or loss. Currency
gains and losses are offset against market gains and losses 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.
- Risks of Hedging With Options and Futures. An option position
may be closed out only on a market that provides secondary trading for
options of the same series, and there is no assurance that a liquid
secondary market will exist for any particular option. In addition to
the risks associated with hedging that are discussed in the Prospectus
and above, there is a risk in using short hedging by (i) selling
Futures or (ii) purchasing puts on broadly-based indices or Futures to
attempt to protect against declines in the value of the Fund's equity
securities. The risk is that the prices of Futures will correlate
imperfectly with the behavior of the cash (i.e., market value) prices
of the Fund's equity securities. The ordinary spreads between prices
in the cash and futures markets are subject to distortions, due to
differences in the natures of those markets. First, all participants
in the futures markets are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the
futures markets depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent
participants decide to make or take delivery, liquidity in the futures
markets could be reduced, thus producing distortion. Third, from the
point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the
futures markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of
the Fund's portfolio diverges from the securities included in the
applicable index. To compensate for the imperfect correlation of
movements in the price of the portfolio 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 portfolio securities being hedged if the historical volatility of
the prices of such portfolio securities being hedged is more than the
historical volatility of the applicable index. It is also possible
that if the Fund has used hedging instruments in a short hedge, the
market may advance and the value of the securities held in the Fund's
portfolio may decline. If that occurred, the Fund would lose money on
the hedging instruments and also experience a decline in value in its
portfolio securities. However, while this could occur for a very brief
period or to a very small degree, over time the value of a diversified
portfolio of 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 securities markets as a temporary substitute for the purchase of
particular securities (long hedging) by buying Futures and/or calls on
such Futures, on securities, or on broadly-based indices, it is
possible that the market may decline. If the Fund then concludes not
to invest in such securities at that time because of concerns as to a
possible further market decline or for other reasons, the Fund will
realize a loss on the hedging instruments that is not offset by a
reduction in the price of the securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth
in the Prospectus. There are additional investment restrictions that
the Fund must follow that are also fundamental policies. Fundamental
policies and the Fund's investment objective cannot be changed without
the vote of a "majority" of the Fund's outstanding voting securities.
Under the Investment Company Act, such a "majority" vote is defined as
the vote of the holders of the lesser of (1) 67% or more of the shares
present or represented by proxy at a shareholder meeting, if the
holders of more than 50% of the outstanding shares are present, or (2)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
- buy the securities of any company for the purpose of exercising
management control;
- invest in commodities or in commodities contracts, other than
the Hedging Instruments permitted by any of its other fundamental
policies, whether or not any such Hedging Instrument is considered to
be a commodity or a commodity contract;
- buy or sell real estate; 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;
- buy securities on margin, except that the Fund may make margin
deposits in connection with any of the Hedging Instruments which it may
use;
- 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;
- mortgage or pledge any of its assets; however this does not
prohibit the Fund from pledging its assets for collateral arrangements
contemplated in connection with the use of Hedging Instruments;
- underwrite securities of other companies 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;
- buy and retain securities of any issuer if those officers,
directors or trustees 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;
- 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; or
- invest in oil, gas or other mineral exploration or development
programs.
In connection with the qualification of its shares in certain
states, the Fund has undertaken that in addition to the above, it will
not (i) invest more than 5% of its net assets in warrants, and that
warrants not listed on the New York and American Stock Exchanges shall
not exceed 2% of its net assets, (ii) invest more than 5% of its total
assets in securities of issuers, including their predecessors, that
have been in continuous operation for less than three continuous years;
(iii) invest in real estate limited partnerships, or (iv) invest in
oil, gas or other mineral leases. In the event that the Fund's shares
cease to be qualified under such laws or if such undertaking otherwise
ceases to be operative, the Fund would not be subject to such
restriction. The percentage restrictions described above and in the
Prospectus apply only at the time of investment and require no action
by the Fund as a result of subsequent changes in relative values.
For purposes of the Fund's policy not to concentrate its assets
described under the second investment restriction in the Prospectus,
the Fund has adopted the industry classifications set forth in Appendix
B to this Statement of Additional Information. This is not a
fundamental policy.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund
is not required to hold, and does not plan to hold, regular annual
meetings of shareholders. The Fund will hold meetings when required to
do so by the Investment Company Act or other applicable law, or when a
shareholder meeting is called by the Trustees or upon proper request of
the shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the
Trustees will then either make the Fund's shareholder list available to
the applicants or mail their communication to all other shareholders at
the applicants' expense, or the Trustees may take such other action as
set forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of its
property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any
judgment thereon. Thus, while Massachusetts law permits a shareholder
of a business trust (such as the Fund) to be held personally liable as
a "partner" under certain circumstances, the risk of a Fund shareholder
incurring financial loss on account of shareholder liability is
limited to the relatively remote circumstances in which the Fund would
be unable to meet its obligations described above. Any person doing
business with the Trust, and any shareholder of the Trust, agrees under
the Trust's Declaration of Trust to look solely to the assets of the
Trust for satisfaction of any claim or demand which may arise out of
any dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees And Officers of the Fund. The Fund's Trustees and officers
and their principal occupations and business affiliations during the
past five years are set forth below. The address of each Trustee and
officer is Two World Trade Center, New York, New York 10048-0203,
unless another address is listed below. All of the Trustees are also
trustees of Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer
Growth Fund, Oppenheimer Target Fund, Oppenheimer Discovery Fund,
Oppenheimer Global Growth & Income Fund, Oppenheimer Global Emerging
Growth Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer New York Tax-
Exempt Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer Multi-
State Tax-Exempt Trust, Oppenheimer Asset Allocation Fund, Oppenheimer
U.S. Government Trust, Oppenheimer Multi-Sector Income Trust and
Oppenheimer Multi-Government Trust (the "New York-based Oppenheimer
funds"). Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and Zack
respectively hold the same offices with the other New York-based
Oppenheimer funds as with the Fund. As of September 18, 1995, the
officers and Trustees of the Fund as a group owned of record or
beneficially less than 1% of each class of shares of the Fund. The
foregoing does not include shares held of record by an employee benefit
plan for employees of the Manager (for which plan one of the officers
listed below, Mr. Donohue, is a trustee), other than the shares
beneficially owned under that plan by the officers of the Fund listed
below.
Leon Levy, Chairman of the Board of Trustees; Age: 70
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership)
and Chairman of Avatar Holdings, Inc. (real estate development).
Leo Cherne, Trustee; Age: 83
122 East 42nd Street, New York, New York 10168
Chairman Emeritus of the International Rescue Committee
(philanthropic organization); formerly Executive Director of The
Research Institute of America.
Robert G. Galli, Trustee*; Age: 62
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp., 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
Oppenheimer funds and Executive Vice President and General Counsel
of the Manager and the Distributor.
Benjamin Lipstein, Trustee; Age: 72
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a Director of Sussex
Publishers, Inc. (Publishers of Psychology Today and Mother Earth
News and Spy Magazine, L.P.)
Elizabeth B. Moynihan, Trustee; Age: 66
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery
of Art (Smithsonian Institution), the Institute of Fine Arts (New
York University), National Building Museum; a member of the
Trustees Council, Preservation League of New York State; a member
of the Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 68
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company),
Kemper Corporation (insurance and financial services company), and
Fidelity Life Association (mutual life insurance company);
formerly Chairman of the Federal Deposit Insurance Corporation,
Chairman of the Board of ICL, Inc. (information systems), and
President and Chief Executive Officer of The Conference Board,
Inc. (international economic and business research).
_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Edward V. Regan, Trustee; Age: 65
40 Park Avenue, New York, New York 10016
President of Jerome Levy Institute, Bard College; a member of the
U.S. Competitiveness Policy Council; a director or GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and
trustee, New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 63
200 Park Avenue, New York, New York 10166
Founder Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting
and publishing); a trustee of Mystic Seaport Museum, International
House, Greenwich Hospital and the Greenwich Historical Society.
Sidney M. Robbins, Trustee; Age: 83
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. (a closed-end investment company); 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*; Age: 69
Chairman Emeritus and a director of the Manager; formerly Chairman
of the Manager and the Distributor.
Pauline Trigere, Trustee; Age: 82
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and
sale of women's fashions).
Clayton K. Yeutter, Trustee; Age: 64
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),
Farmers Insurance Company (insurance), FMC Corp. (chemicals and
machinery), Lindsay Manufacturing Co. (irrigation equipment),
Texas Instruments, Inc. (electronics) and The Vigoro Corporation
(fertilizer manufacturer); formerly (in descending chronological
order) Counsellor to the President (Bush) for Domestic Policy,
Chairman of the Republican National Committee, Secretary of the
U.S. Department of Agriculture, and U.S. Trade Representative.
Frank Jennings, Vice President and Portfolio Manager; Age: ____.
Formerly Managing Director of Global Equities at Mitchell Hutchins
Asset Management, Inc., a subsidiary of Paine Webber, Inc., prior
to which, he was a global funds manager for AIG Global Investors.
William L. Wilby, Vice President; Age: 51
Vice President of the Manager and HarbourView; an officer of other
Oppenheimer funds; formerly international investment strategist
at Brown Brothers, Harriman & Co., prior to which he was a
Managing Director and Portfolio Manager at AIG Global Investors.
_____________________________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Andrew J. Donohue, Secretary; Age: 45
Executive Vice President and General Counsel of the Manager and
the Distributor; an officer of other Oppenheimer funds; formerly
Senior Vice President and Associate General Counsel of the Manager
and the Distributor, prior to which he was a 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), and a director and an
officer of First Investors Family of Funds and First Investors
Life Insurance Company.
George C. Bowen, Treasurer; Age: 59
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 and Assistant Secretary and a director of
Centennial; Vice President, Treasurer and Secretary of SSI and
SFSI; an officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the
Manager; Assistant Secretary of SSI and SFSI; an officer of other
Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund Controller
for the Manager, prior to which he was an Accountant for Yale &
Seffinger, P.C., an accounting firm; and previously an Accountant
and Commissions Supervisor for Stuart James Company Inc., a
broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund Controller
for the Manager, prior to which he was an International Mutual
Fund Supervisor for Brown Brothers Harriman & Co. (a bank) and
previously a Senior Fund Accountant for State Street Bank & Trust
Company.
- Remuneration of Trustees. The officers of the Fund are
affiliated with the Manager; they and the Trustees of the Fund who are
affiliated with the Manager (Messrs. Galli and Spiro; Mr. Spiro is also
an officer) receive no salary or fee from the Fund. The Trustees of
the Fund (excluding Messrs. Galli and Spiro) received the total amounts
shown below from all 17 of the New York-based Oppenheimer funds
(including the Fund) listed in the first paragraph of this section (and
from Oppenheimer Global Environment Fund, a former New York-based
Oppenheimer funds), for services in the positions shown:
<TABLE>
<CAPTION>
Retirement Total Compensation
Aggregate Benefits Accrued From All
Compensation as Part of New York-based
Name and Position From Fund Fund Expenses Oppenheimer Funds1
<S> <C> <C> <C>
Leon Levy, Chairman and Trustee $2,284 $5,617 $141,000.00
Leo Cherne, Audit Committee $1,115 $2,742 $ 68,800.00
Member and Trustee
Edmund T. Delaney, $1,397 $3,434 $ 86,200.00
Study Committee
Member and Trustee
Benjamin Lipstein, $1,397 $3,434 $ 86,200.00
Study Committee
Member and Trustee
Elizabeth B. Moynihan, $ 982 $2,415 $ 60,625.00
Study Committee
Member and3 Trustee
Kenneth A. Randall, $1,270 $3,124 $ 78,400.00
Audit Committee Member
and Trustee
Edward V. Regan, $ 911 $2,241 $ 56,275.00
Audit Committee
Member3 and Trustee
Russell S. Reynolds, Jr., Trustee $ 845 $2,077 $ 52,100.00
Sidney M. Robbins, Study $1,979 $4,867 $122,100.00
Committee Chairman, Audit
Committee Vice-Chairman
and Trustee
Pauline Trigere, Trustee $ 845 $2,077 $ 52,100.00
Clayton K. Yeutter, Trustee $ 845 $2,077 $ 52,100.00
<FN>
______________________
1 For the 1994 calendar year.
2 Board and Committee positions held during a portion of the period
shown.
3 Committee position held during a portion of the period shown.
</TABLE>
The Fund has adopted a retirement plan that provides for payment to
a retired Trustee of up to 80% of the average compensation paid during
that Trustee's five years of service in which the highest compensation
was received. A Trustee must serve in that capacity for any of the New
York-based Oppenheimer funds for at least 15 years to be eligible for
the maximum payment. Because each Trustee's retirement benefits will
depend on the amount of the Trustee's future compensation and length of
service, the amount of these benefits cannot be determined as of this
time nor can we estimate the number of years of credited service that
will be used to determine those benefits. No sums were accrued during
the fiscal year ended September 30, 1994 for the Fund's projected
retirement benefit obligations.
- Major Shareholders. As of September 18, 1995, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
shares of (i) the Fund in the aggregate or (ii) any class of the Fund
except for Merrill, Lynch, Pierce, Fenner & Smith, Inc., which was the
record owner of 147,255 Class C shares (representing approximately
7.82% of the then outstanding Class C shares).
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Mr. Galli and Mr.
Spiro) serve as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of
Ethics is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation
and filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the
Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributor's
Agreement are paid by the Fund. The advisory agreement lists examples
of expenses paid by the Fund, the major categories of which relate to
interest, taxes, brokerage commissions, fees to certain Trustees, legal
and audit expenses, custodian and transfer agent expenses, share
issuance costs, certain printing and registration costs and non-
recurring expenses, including litigation costs. For the Fund's fiscal
years ended September 30, 1992, 1993, and 1994, the management fees
paid by the Fund to the Manager were $278,376, $449,323, and $945,062,
respectively.
The advisory agreement contains no expense limitation. However,
independently of the advisory 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) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to
the undertaking, the Manager's fee will be reduced at the end of a
month so that there will not be any accrued but unpaid liability under
this undertaking. Currently, the most stringent state expense
limitation is imposed by California, and limits the Fund's expenses
(with specified exclusions) to 2.5% of the first $30 million of average
annual net assets, 2% of the next $70 million of average annual net
assets, and 1.5% of average annual net assets in excess of $100
million. The Manager reserves the right to terminate or amend the
undertaking at any time. Any assumption of the Fund's expenses under
this limitation would lower the Fund's overall expense ratio and
increase its total return during any period in which expenses are
limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting
from a good faith error or omission on its part with respect to any of
its duties thereunder. The advisory agreement permits the Manager to
act as investment adviser for any other person, firm or corporation and
to use the name "Oppenheimer" in connection with other investment
companies for which it may act as investment adviser or general
distributor. If the Manager shall no longer act as investment adviser
to the Fund, the right of the Fund to use the name "Oppenheimer" as
part of its name may be withdrawn.
- The Distributor. Under its General Distributor's Agreement with
the Fund, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the Fund's Class A, Class B and Class
C shares but is not obligated to sell a specific number of shares.
Expenses normally attributable to sales (excluding payments under the
Distribution and Service Plans but including advertising and the cost
of printing and mailing prospectuses, other than those furnished to
existing shareholders), are borne by the Distributor. During the
Fund's fiscal years ended September 30, 1992, 1993, and 1994, the
aggregate sales charges on sales of the Fund's Class A shares were
$444,168, $429,513, and $1,020,885, respectively, of which the
Distributor and an affiliated broker-dealer retained in the aggregate
$105,976, $130,709, and $286,660 in those respective years. During the
Fund's fiscal year ended September 30, 1994, contingent deferred sales
charges collected on the Fund's Class C shares totalled $3,352, all of
which the Distributor retained. For additional information about
distribution of the Fund's shares and the expenses connected with such
activities, please refer to "Distribution and Service Plans," below.
Class B shares were not publicly offered during the fiscal year ended
September 30, 1994, and no contingent deferred sales charges were
collected.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder
servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers,
including "affiliated" brokers, as that term is defined in the
Investment Company Act, as may, in its best judgment based on all
relevant factors, implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" (prompt and reliable execution
at the most favorable price obtainable) of such transactions. The
Manager need not seek competitive commission bidding but is expected to
minimize the commissions paid to the extent consistent with the
interest and policies of the Fund as established by its Board of
Trustees. Purchases of securities from underwriters include a
commission or concession paid by the issuer to the underwriter, and
purchases from dealers include a spread between the bid and asked
price.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be
higher than another qualified broker would have charged if a good faith
determination is made by the Manager that the commission is fair and
reasonable in relation to the services provided. Subject to the
foregoing considerations, the Manager may also consider sales of shares
of the Fund and other investment companies managed by the Manager or
its affiliates as a factor in the selection of brokers for the Fund's
portfolio transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, and the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon recommendations from the
Manager's portfolio managers. In certain instances, portfolio managers
may directly place trades and allocate brokerage, also subject to the
provisions of the advisory agreement and the procedures and rules
described above. Regardless, brokerage is allocated under the
supervision of the Manager's executive officers. Transactions in
securities other than those for which an exchange is the primary market
are generally done with principals or market makers. Brokerage
commissions are paid primarily for effecting transactions in listed
securities or for certain fixed-income agency transactions in the
secondary market and are otherwise paid only if it appears likely that
a better price or execution can be obtained. When the Fund engages in
an option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by
the Manager or its affiliates are combined. The transactions effected
pursuant to such combined orders are averaged as to price and allocated
in accordance with the purchase or sale orders actually placed for each
account.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more of
such other accounts. Such research, which may be supplied by a third
party at the instance of a broker, includes information and analyses on
particular companies and industries as well as market or economic
trends and portfolio strategy, receipt of market quotations for
portfolio evaluations, information systems, computer hardware and
similar products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making
process may be paid in commission dollars. The Board of Trustees has
permitted the Manager to use concessions on fixed-price offerings to
obtain research, in the same manner as is permitted for agency
transactions. The Board has also permitted the Manager to use stated
commissions on secondary fixed-income agency trades to obtain research
where the broker has represented to Manager that: (i) the trade is not
from or for the broker's own inventory, (ii) the trade was executed by
the broker on an agency basis at the stated commission, and (iii) the
trade is not a riskless principal transaction.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities
held in the Fund's portfolio or being considered for purchase. The
Board of Trustees, including the "independent" Trustees of the Fund
(those Trustees of the Fund who are not "interested persons" as defined
in the Investment Company Act, and who have no direct or indirect
financial interest in the operation of the advisory agreement or the
Distribution Plans described below) annually reviews information
furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether the
amount of such commissions was reasonably related to the value or
benefit of such services.
During the Fund's fiscal years ended September 30, 1992, 1993, and
1994, total brokerage commissions paid by the Fund (not including
spreads or concessions on principal transactions on a net trade basis)
were $93,625, $1,462,229, and $720,379, respectively. During the
fiscal year ended September 30, 1994, $216,351 was paid to brokers as
commissions in return for research services; the aggregate dollar
amount of those transactions was $66,940,906. The transactions giving
rise to those commissions were allocated in accordance with the
Manager's internal allocation procedures.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time to
time the "average annual total return," "cumulative total return,"
"average annual total return at net asset value" and "total return at
net asset value" of an investment in a class of shares of the Fund may
be advertised. An explanation of how these total returns are
calculated for each class and the components of those calculations is
set forth below. No calculations are presented below for Class B
shares because no shares of that class were publicly offered during the
fiscal year ended September 30, 1994.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include the
average annual total returns for each class of shares of the Fund for
the 1, 5, and 10-year periods (or the life of the class, if less)
ending as of the most recently-ended calendar quarter prior to the
publication of the advertisement. This enables an investor to compare
the Fund's performance to the performance of other funds for the same
periods. However, a number of factors should be considered before using
such information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction
or representation by the Fund of future returns. The returns of Class
A, Class B and Class C shares of the Fund are affected by portfolio
quality, the type of investments the Fund holds and its operating
expenses allocated to the particular class.
- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each
year in a specified number of years. It is the rate of return based on
the change in value of a hypothetical initial investment of $1,000 ("P"
in the formula below) held for a number of years ("n") to achieve an
Ending Redeemable Value ("ERV") of that investment, according to the
following formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment
of $1,000 over an entire period of years. Its calculation uses some of
the same factors as average annual total return, but it does not
average the rate of return on an annual basis. Cumulative total return
is determined as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is
deducted from the initial investment ("P") (unless the return is shown
at net asset value, as described below). For Class B shares, the
payment of the applicable contingent deferred sales charge (5.0% for
the first year, 4.0% for the second year, 3.0% for the third and fourth
years, 2.0% for the fifth year, 1.0% for the sixth year and none
thereafter) is applied to the investment result for the period shown
(unless the total return is shown at net asset value, as described
below). For Class C shares, a 1.0% contingent deferred sales charge is
applied to the investment result for the one-year period (or less).
Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional shares
at net asset value per share, and that the investment is redeemed at
the end of the period. The "average annual total returns" on an
investment in Class A shares of the Fund for the fiscal year ended
September 30, 1994 and for the period October 22, 1990 (commencement of
operations) to September 30, 1994 were 7.41% and 9.44%, respectively.
The cumulative "total return" on Class A shares for the period October
22, 1990 (commencement of operations) to September 30, 1994 was 42.65%.
The cumulative total return on Class C shares for the period from
December 1, 1993 (the commencement of the offering of the shares)
through September 30, 1994 was 6.41%.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A, Class B or
Class C shares. Each is based on the difference in net asset value per
share at the beginning and the end of the period for a hypothetical
investment in that class of shares (without considering front-end or
contingent deferred sales charges) and takes into consideration the
reinvestment of dividends and capital gains distributions. The
cumulative total return at net asset value of the Fund's Class A shares
for the period from October 22, 1990 (commencement of operations) to
September 30, 1994 was 51.35%. The average annual total returns at net
asset value for the fiscal year ended September 30, 1994 and for the
period October 22, 1990 (commencement of operations) through September
30, 1994, for Class A shares were 13.96% and 11.10%, respectively. The
cumulative total return at net asset value on the Fund's Class C shares
for the fiscal period from December 1, 1993 through September 30, 1994
was 7.41%.
Total return information may be useful to investors in reviewing the
Fund's performance. However, when comparing total return of an
investment in the Fund with that of other alternatives, investors
should understand that as the Fund is an aggressive equity fund seeking
capital appreciation, its shares are subject to greater market risks
and volatility than shares of funds having other investment objectives
and that the Fund is designed for investors who are willing to accept
greater risk of loss in the hopes of realizing greater gains.
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A, Class B or Class C shares by Lipper
Analytical Services, Inc. ("Lipper"), a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to
investment objectives. The performance of the Fund is ranked against
(i) all other funds, (ii) all other "balanced" funds and (iii) all
other "balanced" funds in a specific size category. The Lipper
performance rankings are based on total returns that include the
reinvestment of capital gain distributions and income dividends but do
not take sales charges or taxes into consideration.
From time to time the Fund may publish the ranking of the
performance of its Class A, Class B or Class C shares by Morningstar,
Inc., an independent mutual fund monitoring service that ranks mutual
funds, including the Fund, monthly in broad investment categories
(equity, taxable bond, municipal bond and hybrid) based on risk-
adjusted investment return. Investment return measures a fund's three,
five and ten-year average annual total returns (when available) in
excess of 90-day U.S. Treasury bill returns after considering sales
charges and expenses. Risk measures fund performance below 90-day U.S.
Treasury bill monthly returns. Risk and investment return are combined
to produce star rankings reflecting performance relative to the average
fund in a fund's category. Five stars is the "highest" ranking (top
10%), four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and one
star is "lowest" (bottom 10%). Morningstar ranks the Fund in relation
to other rated growth and income funds. Rankings are subject to
change.
From time to time, the Fund may include in its advertisements and
sales literature performance information about the Fund cited in other
newspapers and periodicals, such as The New York Times, which may
include performance quotations from other sources, including Lipper.
The total return on an investment in the Fund's Class A, Class B or
Class C shares may be compared with performance for the same period of
either the Morgan Stanley Capital International World Index or the
Lehman Aggregate Bond Index, as described in the Prospectus. The
performance of each index includes a factor for the reinvestment of
income dividends, but does not reflect reinvestment of capital gains,
expenses or taxes. The performance of the Fund's Class A, Class B or
Class C shares may also be compared in publications to (i) the
performance of various market indices or to other investments for which
reliable performance data is available, and (ii) to averages,
performance rankings or other benchmarks prepared by recognized mutual
fund statistical services.
Investors may also wish to compare the Fund's Class A, Class B or
Class C return to the returns on fixed income investments available
from banks and thrift institutions, such as certificates of deposit,
ordinary interest-paying checking and savings accounts, and other forms
of fixed or variable time deposits, and various other instruments such
as Treasury bills. However, the Fund's returns and share price are not
guaranteed by the FDIC or any other agency and will fluctuate daily,
while bank depository obligations may be insured by the FDIC and may
provide fixed rates of return, and Treasury bills are guaranteed as to
principal and interest by the U.S. Government.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other than
performance rankings of the Oppenheimer funds themselves. Those
ratings or rankings of shareholder/investor services by third parties
may compare the Oppenheimer funds' services to those of other mutual
fund families selected by the rating or ranking services and may be
based upon the opinions of the rating or ranking service itself, based
on its research or judgment, or based upon surveys of investors,
brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares under
Rule 12b-1 of the Investment Company Act pursuant to which the Fund
will make payments to the Distributor in connection with the
distribution and/or servicing of the shares of that class, as described
in the Prospectus. Each Plan has been approved by a vote of (i) the
Board of Trustees of the Fund, including a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting
on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class. For the
Distribution and Service Plan for Class B and Class C shares, that vote
was cast by the Manager as the sole initial holder of Class B and Class
C shares of the Fund.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the
advisory fee it receives from the Fund) to make payments to brokers,
dealers or other financial institutions (each is referred to as a
"Recipient" under the Plans) for distribution and administrative
services they perform at no cost to the Fund. The Distributor and the
Manager may, in their sole discretion, increase or decrease the amount
of payments they make from their own resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for
the purpose of voting on such continuance. Either Plan may be
terminated at any time by the vote of a majority of the Independent
Trustees or by the vote of the holders of a "majority" (as defined in
the Investment Company Act) of the outstanding shares of that class.
Neither Plan may be amended to increase materially the amount of
payments to be made unless such amendment is approved by shareholders
of the class affected by the amendment. In addition, because Class B
shares of the Fund automatically convert into Class A shares after six
years, the Fund is required to obtain the approval of Class B as well
as Class A shareholders for a proposed amendment to the Class A Plan
that would materially increase the amount to be paid by Class A
shareholders under the Class A Plan. Such approval must be by a
"majority of the Class A and Class B shares (as defined in the
Investment Company Act), voting separately by class. All material
amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which each payment was made and the identity of
each Recipient that received any payment. Those reports, including the
allocations on which they are based, will be subject to the review and
approval of the Independent Trustees in the exercise of their fiduciary
duty. Each Plan further provides that while it is in effect, the
selection and nomination of those Trustees of the Fund who are not
"interested persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of others
in such selection and nomination if the final decision on selection or
nomination is approved by a majority of the Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers, did not exceed a minimum
amount, if any, that may be determined from time to time by a majority
of the Fund's Independent Trustees. Initially, the Board of Trustees
has set the fees at the maximum rate and set no requirement for a
minimum amount of assets.
For the fiscal year ended September 30, 1994, payments under the
Class A Plan totalled $288,568, all of which was paid by the
Distributor to Recipients, including $9,123 paid to an affiliate of the
Distributor. Any unreimbursed expenses incurred by the Distributor
with respect to Class A shares for any fiscal year may not be recovered
in subsequent years. Payments received by the Distributor under the
Plan for Class A shares will not be used to pay any interest expense,
carrying charge, or other financial costs, or allocation of overhead by
the Distributor.
The Class B and the Class C Plans allow the service fee payment to
be paid by the Distributor to Recipients in advance for the first year
such shares are outstanding, and thereafter on a quarterly basis, as
described in the Prospectus. The advance payment is based on the net
asset value of the shares sold. An exchange of shares does not entitle
the Recipient to an advance service fee payment. In the event shares
are redeemed during the first year that the shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the advance
payment to the Distributor. Payments made under the Class C Plan
during the fiscal period ended September 30, 1994 totalled $165,352,
all paid by the Distributor to Recipients, including $3,351 paid to a
dealer affiliated with the Distributor. No payments were made under
the Class B Plan for the fiscal year ended September 30, 1994 because
no shares of that class were outstanding during that period.
Although the Class B Plan and the Class C Plan permits the
Distributor to retain both the asset-based sales charges and the
service fees on such shares, or to pay Recipients the service fee on a
quarterly basis, without payment in advance, the Distributor presently
intends to pay the service fee to Recipients in the manner described
above. A minimum holding period may be established from time to time
under the Class B and the Class C Plan by the Board. Initially, the
Board has set no minimum holding period. All payments under the Class
B and the Class C Plans are subject to the limitations imposed by the
Rules of Fair Practice of the National Association of Securities
Dealers, Inc. on payments of asset-based sales charges and service
fees.
Asset-based sales charge payments are designed to permit an investor
to purchase shares of the Fund without the assessment of a front-end
sales load and at the same time permit the Distributor to compensate
brokers and dealers in connection with the sale of Class B and Class C
shares of the Fund. The Class B and the Class C Plans provide for the
Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the
Fund during that period. Such payments are made in recognition that
the Distributor (i) pays sales commissions to authorized brokers and
dealers at the time of sale, as described in the Prospectus, (ii) may
finance such commissions and/or the advance of the service fee payment
to Recipients under those Plans, (iii) employs personnel to support
distribution of shares, and (iv) may bear the costs of sales
literature, advertising and prospectuses (other than those furnished to
current shareholders) and state "blue sky" registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares.
The availability of three classes of shares permits the individual
investor to choose the method of purchasing shares that is more
beneficial to the investor depending on the amount of the purchase, the
length of time the investor expects to hold shares and other relevant
circumstances. Investors should understand that the purpose and
function of the deferred sales charge and asset-based sales charge with
respect to Class B and Class C shares are the same as those of the
initial sales charge with respect to Class A shares. Any salesperson
or other person entitled to receive compensation for selling Fund
shares may receive different compensation with respect to one class of
shares than the other. The Distributor will not accept any order for
$500,000 or $1 million or more of Class B or Class C shares,
respectively, on behalf of a single investor (not including dealer
"street name" or omnibus accounts) because generally it will be more
advantageous for that investor to purchase Class A shares of the Fund
instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to
Class B and Class C shares and the dividends payable on Class B and
Class C shares will be reduced by incremental expenses borne solely by
that class, including the asset-based sales charge to which Class B and
Class C shares are subject.
The conversion of Class B shares to Class A shares after six years
is subject to the continuing availability of a private letter ruling
from the Internal Revenue Service, or an opinion of counsel or tax
adviser, to the effect that the conversion of Class B shares does not
constitute a taxable event for the holder under Federal income tax law.
If such a revenue ruling or opinion is no longer available, the
automatic conversion feature may be suspended, in which event no
further conversions of Class B shares would occur while such suspension
remained in effect. Although Class B shares could then be exchanged
for Class A shares on the basis of relative net asset value of the two
classes, without the imposition of a sales charge or fee, such exchange
could constitute a taxable event for the holder, and absent such
exchange, Class B shares might continue to be subject to the
asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not pertain
specifically to any class are allocated pro rata to the shares of each
class, based on the percentage of the net assets of such class to the
Fund's total assets, and then equally to each outstanding share within
a given class. Such general expenses include (i) management fees, (ii)
legal, bookkeeping and audit fees, (iii) printing and mailing costs of
shareholder reports, Prospectuses, Statements of Additional Information
and other materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and brokerage
commissions, and (ix) non-recurring expenses, such as litigation costs.
Other expenses that are directly attributable to a class are allocated
equally to each outstanding share within that class. Such expenses
include (a) Distribution Plan fees, (b) incremental transfer and
shareholder servicing agent fees and expenses, (c) registration fees
and (d) shareholder meeting expenses, to the extent that such expenses
pertain to a specific class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange (the
"Exchange") on each day that the Exchange is open, by dividing the
Fund's net assets attributable to a class by the number of shares of
that class that are outstanding. The Exchange normally closes at 4:00
P.M. New York time, but may close earlier on some days (for example, in
case of weather emergencies or on days falling before a holiday). The
Exchange's most recent annual holiday schedule (which is subject to
change) states that it will close on New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. It may also close on other days. The Fund may
invest a substantial portion of its assets in foreign securities
primarily listed on foreign exchanges which may trade on Saturdays or
customary U.S. business holidays on which the Exchange is closed.
Because the Fund's net asset value will not be calculated on those
days, the Fund's net asset values per share of Class A, Class B and
Class C shares may be significantly affected on such days when
shareholders may not purchase or redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of
the preceding trading day, or closing bid and asked prices); (ii)
securities actively traded on a foreign securities exchange are valued
at the last sales price available to the pricing service approved by
the Fund's Board of Trustees or to the Manager as reported by the
principal exchange on which the security is traded; (iii) unlisted
foreign securities or listed foreign securities not actively traded are
valued as in (i) above, if available, or at the mean between "bid" and
"asked" prices obtained from active market makers in the security on
the basis of reasonable inquiry; (iv) long-term debt securities having
a remaining maturity in excess of 60 days are valued at the mean
between the "bid" and "asked" prices determined by a portfolio pricing
service approved by the Fund's Board of Trustees or obtained from
active market makers in the security on the basis of reasonable
inquiry; (v) debt instruments having a maturity of more than one year
when issued, and non-money market type instruments having a maturity of
one year or less when issued, which have a remaining maturity of 60
days or less are valued at the mean between the "bid" and "asked"
prices determined by a pricing service approved by the Fund's Board of
Trustees or obtained from active market makers in the security on the
basis of reasonable inquiry; (vi) money market-type debt securities
having a maturity of less than one year when issued that having a
remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; and (vii)
securities (including restricted securities) not having readily-
available market quotations are valued at fair value under the Board's
procedures; and (viii) securities traded on foreign exchanges are
valued at the closing or 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 taken from the closing price
on the London foreign exchange market that day.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the Exchange.
Events affecting the values of foreign securities traded in stock
markets that occur between the time their prices are determined and the
close of the Exchange will not be reflected in the Fund's calculation
of net asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that the
particular event would materially affect the Fund's net asset value, in
which case an adjustment would be made. Foreign currency will be
valued as close to the time fixed for the valuation date as is
reasonably practicable. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the prevailing
rates of exchange at the time of valuation.
Puts, calls and Futures held by the Fund are valued at the last
sales price on the principal exchange on which they are traded, or on
NASDAQ, as applicable, or, if there are no sales that day, in
accordance with (i), above. Forward currency contracts are valued at
the closing price on the London foreign exchange market. When the Fund
writes an option, an amount equal to the premium received by the Fund
is included in the Fund's Statement of Assets and Liabilities as an
asset, and an equivalent deferred credit is included in the liability
section. The deferred credit is "marked-to-market" to reflect the
current market value of the option. In determining the Fund's gain on
investments, if a call written by the Fund is exercised, the proceeds
are increased by the premium received. If a call or put written by the
Fund expires, the Fund has a gain in the amount of the premium; if the
Fund enters into a closing purchase transaction, it will have a gain or
loss depending on whether the premium was more or less than the cost
of the closing transaction. If the Fund exercises a put it holds, the
amount the Fund receives on its sale of the underlying investment is
reduced by the amount of premium paid by the Fund.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House ("ACH") transfer to buy the shares. Dividends
will begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for the
purchase through the ACH system before the close of The New York Stock
Exchange. The Exchange normally closes at 4:00 P.M., but may close
earlier on certain days. If Federal Funds are received on a business
day after the close of the Exchange, the shares will be purchased and
dividends will begin to accrue on the next regular business day. The
proceeds of ACH transfers are normally received by the Fund 3 days
after the transfers are initiated. The Distributor and the Fund are
not responsible for any delays in purchasing shares resulting from
delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of
Accumulation and Letters of Intent because of the economies of sales
efforts and reduction in expenses realized by the Distributor, dealers
and brokers making such sales. No sales charge is imposed in certain
other circumstances described in the Prospectus because the Distributor
incurs little or no selling expenses. The term "immediate family"
refers to one's spouse, children, grandchildren, grandparents, parents,
parents-in-law, brothers and sisters, sons- and daughters-in-law, a
sibling's spouse and a spouse's siblings.
- The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the Oppenheimer funds except Money Market Funds (under
certain circumstances described herein, redemption proceeds of Money
Market Fund shares may be subject to a contingent deferred sales
charge).
- Letters of Intent. A Letter of Intent (referred to as a "Letter")
is an investor's statement in writing to the Distributor of the
intention to purchase Class A shares or Class A and Class B shares of
the Fund and other OppenheimerFunds during a 13-month period (the
"Letter of Intent period"), which may, at the investor's request,
include purchases made up to 90 days prior to the date of the Letter.
The Letter states the investor's intention to make the aggregate amount
of purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in the
Letter. Purchases made at net asset value without sales charge do not
count toward satisfying the amount of the Letter. A letter enables an
investor to count the Class A and Class B shares purchased under the
Letter to obtain the reduced sales charge rate on purchases of Class A
shares of the Fund (and other OppenheimerFunds) that applies under the
Right of Accumulation to current purchases of Class A shares. Each
purchase of Class A shares under the Letter will be made at the public
offering price (including the sales charge) that applies to a single
lump-sum purchase of shares in the amount intended to be purchased
under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not
equal or exceed the intended purchase amount, the investor agrees to
pay the additional amount of sales charge applicable to such purchases,
as set forth in "Terms of Escrow," below (as those terms may be amended
from time to time). The investor agrees that shares equal in value to
5% of the intended purchase amount will be held in escrow by the
Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of the Prospectus, this Statement of
Additional Information and the Application used for such Letter of
Intent, and if such terms are amended, as they may be from time to time
by the Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other OppenheimerFunds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended
purchase amount under the Letter entered into by an OppenheimerFunds
prototype 401(k) plan is not purchased by the plan by the end of the
Letter of Intent period, there will be no adjustment of commissions
paid to the broker-dealer or financial institution of record for
accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible
purchases during the Letter of Intent period exceed the intended
purchase amount and exceed the amount needed to qualify for the next
sales charge rate reduction set forth in the applicable prospectus, the
sales charges paid will be adjusted to the lower rate, but only if and
when the dealer returns to the Distributor the excess of the amount of
commissions allowed or paid to the dealer over the amount of
commissions that apply to the actual amount of purchases. The excess
commissions returned to the Distributor will be used to purchase
additional shares for the investor's account at the net asset value per
share in effect on the date of such purchase, promptly after the
Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter
of Intent period will be deducted. It is the responsibility of the
dealer of record and/or the investor to advise the Distributor about
the Letter in placing any purchase orders for the investor during the
Letter of Intent period. All of such purchases must be made through
the Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on
the escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended
purchase amount specified in the Letter, the investor must remit to the
Distributor an amount equal to the difference between the dollar amount
of sales charges actually paid and the amount of sales charges which
would have been paid if the total amount purchased had been made at a
single time. Such sales charge adjustment will apply to any shares
redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of
the expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released from
escrow. If a request is received to redeem escrowed shares prior to
the payment of such additional sales charge, the sales charge will be
withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a)
Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge, (b) Class B shares acquired subject
to a contingent deferred sales charge, and (c) Class A or B shares
acquired in exchange for either (i) Class A shares of one of the other
OppenheimerFunds that were acquired subject to a Class A initial or
contingent deferred sales charge or (ii) Class B shares of one of the
other OppenheimerFunds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as
described in the section of the Prospectus entitled "Exchange
Privilege," and the escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany
the application. Shares purchased by Asset Builder Plan payments from
bank accounts are subject to the redemption restrictions for recent
purchases described in "How To Sell Shares," in the Prospectus. Asset
Builder Plans also enable shareholders of Oppenheimer Cash Reserves to
use those accounts for monthly automatic purchases of shares of up to
four other Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after
the Transfer Agent's receipt of such instructions to implement them.
The Fund reserves the right to amend, suspend, or discontinue offering
such plans at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for
the Fund's shares (for example, when a purchase check is returned to
the Fund unpaid) causes a loss to be incurred when the net asset value
of the Fund's shares on the cancellation date is less than on the
purchase date. That loss is equal to the amount of the decline in the
net asset value per share multiplied by the number of shares in the
purchase order. The investor is responsible for that loss. If the
investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by
redeeming shares from any account registered in that investor's name,
or the Fund or the Distributor may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions
for redemptions set forth in the Prospectus.
- Involuntary Redemptions. The Fund's Board of Trustees has the
right to cause the involuntary redemption of the shares held in any
account if the aggregate net asset value of those shares is less than
$200 or such lesser amount as the Board may fix. The Board of Trustees
will not cause the involuntary redemption of shares in an account if
the aggregate net asset value of the shares has fallen below the stated
minimum solely as a result of market fluctuations. Should the Board
elect to exercise this right, it may also fix, in accordance with the
Investment Company Act, the requirements for any notice to be given to
the shareholders in question (not less than 30 days), or the Board may
set requirements for granting permission to the Shareholder to increase
the investment, and set other terms and conditions so that the shares
would not be involuntarily redeemed.
- Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash. However,
the Board of Trustees of the Fund may determine that it would be
detrimental to the best interests of the remaining shareholders of the
Fund to make payment of a redemption order wholly or partly in cash.
In that case the Fund may pay the redemption proceeds in whole or in
part by a distribution "in kind" of securities from the portfolio of
the Fund, in lieu of cash, in conformity with applicable rules of the
Securities and Exchange Commission. The Fund has elected to be
governed by Rule 18f-1 under the Investment Company Act, pursuant to
which the Fund is obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net assets of the Fund during any 90-
day period for any one shareholder. If shares are redeemed in kind,
the redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The method of valuing securities used
to make redemptions in kind will be the same as the method the Fund
uses to value its portfolio securities described above under the
"Determination of Net Asset Values Per Share" and that valuation will
be made as of the time the redemption price is determined.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of (i)
Class A shares, or (ii) Class B shares that were subject to the Class B
contingent deferred sales charge when redeemed. It does not apply to
Class C shares. The reinvestment may be made without sales charge only
in Class A shares of the Fund or any of the other Oppenheimer funds
into which shares of the Fund are exchangeable as described below, at
the net asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Distributor for that
privilege at the time of reinvestment. Any capital gain that was
realized when the shares were redeemed is taxable, and reinvestment
will not alter any capital gains tax payable on that gain. If there
has been a capital loss on the redemption, some or all of the loss may
not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are reinvested
in shares of the Fund or another of the Oppenheimer funds within 90
days of payment of the sales charge, the shareholder's basis in the
shares of the Fund that were redeemed may not include the amount of the
sales charge paid. That would reduce the loss or increase the gain
recognized from the redemption. However, in that case the sales charge
would be added to the basis of the shares acquired by the reinvestment
of the redemption proceeds. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed
after the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of
transfer to the name of another person or entity (whether the transfer
occurs by absolute assignment, gift or bequest, not involving, directly
or indirectly, a public sale). The transferred shares will remain
subject to the contingent deferred sales charge, calculated as if the
transferee shareholder had acquired the transferred shares in the same
manner and at the same time as the transferring shareholder. If less
than all shares held in an account are transferred, and some but not
all shares in the account would be subject to a contingent deferred
sales charge if redeemed at the time of transfer, the priorities
described in the Prospectus under "How to Buy Shares" for the
imposition of the Class B and Class C contingent deferred sales charges
will be followed in determining the order in which shares are
transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k)
plans, or pension or profit-sharing plans should be addressed to
"Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at
its address listed in "How To Sell Shares" in the Prospectus or on the
back cover of this Statement of Additional Information. The request
must: (i) state the reason for the distribution; (ii) state the owner's
awareness of tax penalties if the distribution is premature; and (iii)
conform to the requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons) 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 pension,
profit sharing plans or 401(k) plans are subject to special
requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed before the
distribution may be made. Distributions from retirement plans are
subject to withholding requirements under the Internal Revenue Code,
and IRS Form W-4P (available from the Transfer Agent) must be submitted
to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the
Transfer Agent with a certified tax identification number, the Internal
Revenue Code requires that tax be withheld from any distribution even
if the shareholder elects not to have tax withheld. The Fund, the
Manager, the Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any
tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be
the net asset value next computed after the Distributor receives the
order placed by the dealer or broker, except that if the Distributor
receives a repurchase order from the dealer or broker after the close
of The New York Stock Exchange on a regular business day, it will be
processed at that day's net asset value, if the order was received by
the dealer or broker from its customer prior to the time the Exchange
closes (normally, that is 4:00 P.M., but may be earlier on some days)
and the order was transmitted to and received by the Distributor prior
to its close of business that day (normally 5:00 P.M.). Ordinarily,
for accounts redeemed by a broker-dealer under this procedure, payment
will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption
documents in proper form, with the signature(s) of the registered
owners guaranteed on the redemption document as described in the
Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of
the Fund valued at $5,000 or more can authorize the Transfer Agent to
redeem shares (minimum $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares
will be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be
made by check payable to all shareholders of record and sent to the
address of record for the account (and if the address has not been
changed within the prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on this
basis. Payments are normally made by check, but shareholders having
AccountLink privileges (see "How To Buy Shares") may arrange to have
Automatic Withdrawal Plan payments transferred to the bank account
designated on the OppenheimerFunds New Account Application or
signature-guaranteed instructions. The Fund cannot guarantee receipt
of a payment on the date requested and reserves the right to amend,
suspend or discontinue offering such plans at any time without prior
notice. Because of the sales charge assessed on Class A share
purchases, shareholders should not make regular additional Class A
share purchases while participating in an Automatic Withdrawal Plan.
Class B and Class C shareholders should not establish withdrawal plans
because of the imposition of the contingent deferred sales charges on
such withdrawals (except where the Class B and Class C contingent
deferred sales charges are waived as described in the Prospectus under
"Waivers of Class B and Class C Contingent Deferred Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below and in the provisions of the OppenheimerFunds
Application relating to such Plans, as well as the Prospectus. These
provisions may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically apply to
existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to
the restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next,
followed by shares acquired with a sales charge, to the extent
necessary to make withdrawal payments. Depending upon the amount
withdrawn, the investor's principal may be depleted. Payments made
under withdrawal plans should not be considered as a yield or income on
your investment. It may not be desirable to purchase additional Class
A shares while making automatic withdrawals because of the sales
charges that apply to purchases when made. Accordingly, a shareholder
normally may not maintain an Automatic Withdrawal Plan while
simultaneously making regular purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. The Transfer Agent shall incur no
liability to the Planholder for any action taken or omitted by the
Transfer Agent in good faith to administer the Plan. Certificates will
not be issued for shares of the Fund purchased for and held under the
Plan, but the Transfer Agent will credit all such shares to the account
of the Planholder on the records of the Fund. Any share certificates
held by a Planholder may be surrendered unendorsed to the Transfer
Agent with the Plan application so that the shares represented by the
certificate may be held under the Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be
done at net asset value without a sales charge. Dividends on shares
held in the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be
made at the net asset value per share determined on the redemption
date. Checks or ACH transfer payments of the proceeds of Plan
withdrawals will normally be transmitted three business days prior to
the date selected for receipt of the payment (receipt of payment on the
date selected cannot be guaranteed), according to the choice specified
in writing by the Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written
notice (in proper form in accordance with the requirements of the then-
current Prospectus of the Fund) to redeem all, or any part of, the
shares held under the Plan. In that case, the Transfer Agent will
redeem the number of shares requested at the net asset value per share
in effect in accordance with the Fund's usual redemption procedures and
will mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by
the Transfer Agent upon receiving directions to that effect from the
Fund. The Transfer Agent will also terminate a Plan upon receipt of
evidence satisfactory to it of the death or legal incapacity of the
Planholder. Upon termination of a Plan by the Transfer Agent or the
Fund, shares that have not been redeemed from the account will be held
in uncertificated form in the name of the Planholder, and the account
will continue as a dividend-reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his
or her executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the Class A shares in
certificated form. Upon written request from the Planholder, the
Transfer Agent will determine the number of shares for which a
certificate may be issued without causing the withdrawal checks to stop
because of exhaustion of uncertificated shares needed to continue
payments. However, should such uncertificated shares become exhausted,
Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. Shares
of the Oppenheimer funds that have a single class without a class
designation are deemed "Class A" shares for this purpose. All
Oppenheimer funds offer Class A shares, but certain other Oppenheimer
funds do not presently offer Class B and/or Class C shares. A list
showing which funds offer which classes can be obtained by calling the
Distributor at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
Oppenheimer funds subject to a contingent deferred sales charge).
However, shares of Oppenheimer Money Market Fund, Inc. purchased with
the redemption proceeds of shares of other mutual funds (other than
funds managed by the Manager or its subsidiaries) redeemed within the
12 months prior to that purchase may subsequently be exchanged for
shares of other Oppenheimer funds without being subject to an initial
or contingent deferred sales charge, whichever is applicable. To
qualify for that privilege, the investor or the investor's dealer must
notify the Distributor of eligibility for this privilege at the time
the shares of Oppenheimer Money Market Fund, Inc. are purchased, and,
if requested, must supply proof of entitlement to this privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made
with the Distributor may be exchanged at net asset value for shares of
any of the Oppenheimer funds. No contingent deferred sales charge is
imposed on exchanges of shares of either class purchased subject to a
contingent deferred sales charge. However, when Class A shares
acquired by exchange of Class A shares of other Oppenheimer funds
purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the
initial purchase of the exchanged Class A shares, the Class A
contingent deferred sales charge is imposed on the redeemed shares (see
"Class A Contingent Deferred Sales Charge" in the Prospectus). The
Class B contingent deferred sales charge is imposed on Class B shares
acquired by exchange if they are redeemed within 6 years of the initial
purchase of the exchanged Class B shares. The Class C contingent
deferred sales charge is imposed on Class C shares acquired by exchange
if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for
the imposition of the Class B and Class C contingent deferred sales
charge will be followed in determining the order in which the shares
are exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts.
The Fund may accept requests for exchanges of up to 50 accounts per day
from representatives of authorized dealers that qualify for this
privilege. In connection with any exchange request, the number of
shares exchanged may be less than the number requested if the exchange
or the number requested would include shares subject to a restriction
cited in the Prospectus or this Statement of Additional Information or
would include shares covered by a share certificate that is not
tendered with the request. In those cases, only the shares available
for exchange without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a
prospectus of, the fund to which the exchange is to be made. For full
or partial exchanges of an account made by telephone, any special
account features such as Asset Builder Plans, Automatic Withdrawal
Plans and retirement plan contributions will be switched to the new
account unless the Transfer Agent is instructed otherwise. If all
telephone lines are busy (which might occur, for example, during
periods of substantial market fluctuations), shareholders might not be
able to request exchanges by telephone and would have to submit written
exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange
request that may disadvantage it (for example, if the receipt of
multiple exchange requests from a dealer might require the disposition
of portfolio securities at a time or at a price that might be
disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a shareholder
should assure that the Fund selected is appropriate for his or her
investment and should be aware of the tax consequences of an exchange.
For federal income tax purposes, an exchange transaction is treated as
a redemption of shares of one fund and a purchase of shares of another.
"Reinvestment Privilege," above, discusses some of the tax consequences
of reinvestment of redemption proceeds in such cases. The Fund, the
Distributor, and the Transfer Agent are unable to provide investment,
tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received
deduction for corporate shareholders. Long-term capital gains
distributions are not eligible for the deduction. In addition, the
amount of dividends paid by the Fund which may qualify for the
deduction is limited to the aggregate amount of qualifying dividends
that the Fund derives from its portfolio investments that the Fund has
held for a minimum period, usually 46 days. A corporate shareholder
will not be eligible for the deduction on dividends paid on Fund shares
held for 45 days or less. To the extent the Fund's dividends are
derived from gross income from option premiums, interest income or
short-term gains from the sale of securities or dividends from foreign
corporations, those dividends will not qualify for the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from
January 1 through December 31 of that year and 98% of its capital gains
realized in the period from November 1 of the prior year through
October 31 of the current year, or else the Fund must pay an excise tax
on the amounts not distributed. While it is presently anticipated that
the Fund will meet those requirements, the Fund's Board of Trustees and
the Manager might determine in a particular year that it would be in
the best interest of shareholders for the Fund not to make such
distributions at the required levels and to pay the excise tax on the
undistributed amounts. That would reduce the amount of income or
capital gains available for distribution to shareholders.
If the Fund has more than 50% of its total assets invested in foreign
securities at the end of its fiscal year, it may elect the application
of Section 853 of the Internal Revenue Code to permit shareholders to
take a credit (or, at their option, a deduction) for foreign taxes paid
by the Fund. Under Section 853, shareholders would be entitled to
treat the foreign taxes withheld from interest and dividends paid to
the Fund from its foreign investments as a credit on their federal
income taxes. As an alternative, shareholders could, if to their
advantage, treat the foreign tax withheld as a deduction from gross
income in computing taxable income rather than as a tax credit. In
substance, the Fund's election would enable shareholders to benefit
from the same foreign tax credit or deduction that would be received if
they had been the record owners of the Fund's foreign securities and
had paid foreign taxes on the income received.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes
on amounts paid by it as dividends and distribution. The Fund
qualified during its last fiscal year, and intends to qualify in
current and future years, but reserves the right not to do so. The
Internal Revenue Code contains a number of complex tests relating to
such qualification in which the Fund derives 30% or more of its gross
income from the sale of securities held less than three months, it may
fail to qualify (see "Tax Aspects of Covered Calls and Hedging
Instruments," above). If it did not so qualify, the Fund would be
treated for tax purposes as an ordinary corporation and receive no tax
deduction for payments made to shareholders.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's
portfolio, and expenses borne by the Fund or borne separately by a
class, as described in "Alternative Sales Arrangements -- Class A,
Class B and Class C Shares," above. Dividends are calculated in the
same manner, at the same time and on the same day for shares of each
class. However, dividends on Class B and Class C shares are expected
to be lower as a result of the asset-based sales charge on Class B and
Class C shares, and Class B and Class C dividends will also differ in
amount as a consequence of any difference in net asset value between
the classes.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the
Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after the
return of such checks to the Transfer Agent, to enable the investor to
earn a return on otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other Oppenheimer funds listed
in "Reduced Sales Charges," above, at net asset value without sales
charge. Class B and Class C shareholders should be aware that as of
the date of this Statement of Additional Information, not all of the
Oppenheimer funds offer Class B and Class C shares. To elect this
option, a shareholder must notify the Transfer Agent in writing and
either have an existing account in the fund selected for reinvestment
or must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made at
the net asset value per share in effect at the close of business on the
payable date of the dividend or distribution. Dividends and/or
distributions from shares of other Oppenheimer funds may be invested in
shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to
and from the Fund. The Manager has represented to the Fund that the
banking relationships between the Manager and the Custodian have been
and will continue to be unrelated to and unaffected by the relationship
between the Fund and the Custodian. It will be the practice of the
Fund to deal with the Custodian in a manner uninfluenced by any banking
relationship the Custodian may have with the Manager and its
affiliates. The Fund's cash balances in excess of $100,000 are not
protected by Federal deposit insurance. Such uninsured balances may at
times be substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the
Manager and its affiliates.
<PAGE>
----------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders of Oppenheimer
Global Growth & Income Fund:
We have audited the accompanying statements of investments
and assets and liabilities of Oppenheimer Global Growth &
Income Fund as of September 30, 1994, 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 October 22, 1990
(commencement of operations) to September 30, 1991. 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, 1994, 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 Growth & Income Fund as of September
30, 1994, 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 October 22, 1990
(commencement of operations) to September 30, 1991, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
October 21, 1994
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS September 30, 1994
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS--0.6%
Repurchase agreement with First Chicago Capital Markets, 4.95%,
dated 9/30/94, to be repurchased at $800,330 on 10/3/94,
collateralized by U.S. Treasury Nts., 4.25%--8.50%, 4/15/95-
7/15/98, with a value of $452,373 and U.S. Treasury Bills,
0%, 3/16/95--3/23/95, with a value of $364,369 (Cost $800,000) $ 800,000 $
800,000
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS--17.4%
- ----------------------------------------------------------------------------------------------------------------------------------
Argentina (Republic of) Bonds, Bonos de Consolidacion de
Deudas, Series I, 4.375%, 4/1/01(1)(7) 1,723,903 1,306,567
-----------------------------------------------------------------------------------------------
Banco Nacional de Comercio Exterior SNC International Finance
BV Gtd. Matador Bonds, 8%, 8/5/03(2) 2,000,000 1,745,000
-----------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, Banco Do Nordeste Brasil,
10.375%, 11/6/95(2) 1,000,000 1,003,750
-----------------------------------------------------------------------------------------------
Canada (Government of) Bonds, 9.25%, 10/1/96 1,300,000(3) 1,001,063
-----------------------------------------------------------------------------------------------
German Bund (Federal Republic of) Nts., 6.125%, 7/21/97 2,300,000(3)
1,469,784
-----------------------------------------------------------------------------------------------
Government National Mortgage Assn., 7.50%, 9/15/22 1,635,664 1,544,296
-----------------------------------------------------------------------------------------------
Italy (Republic of):
Treasury Bonds, 11.50%, 5/1/98 2,000,000,000(3) 1,284,615
Treasury Bonds, Buoni Poliennali del Tes, 12.50%, 6/16/97 1,500,000,000(3)
984,711
-----------------------------------------------------------------------------------------------
Mexican Tesobonos, 0%, 1/12/95 2,500,000 2,450,447
-----------------------------------------------------------------------------------------------
New Zealand (Government of) Bond, 9%, 11/15/96 1,500,000(3) 906,134
-----------------------------------------------------------------------------------------------
Polish People's Republic Loan Participation
Agreement, 5.875%, 2/3/24(2)(8) 2,000,000(3) 788,327
-----------------------------------------------------------------------------------------------
Spain (Kingdom of):
Bonds, 11.45%, 8/30/98 190,000,000(3) 1,496,208
Bonos y Obligacion del Estado Gtd. Bonds, 9%, 2/28/97 50,000,000(3) 376,823
-----------------------------------------------------------------------------------------------
Sweden (Kingdom of) Bonds, 11%, 1/21/99 7,000,000(3) 948,638
-----------------------------------------------------------------------------------------------
Treasury Corp. of Victoria Gtd. Bonds, 12%, 10/22/98 1,200,000(3) 953,704
-----------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 9.50%, 1/15/99 600,000(3) 971,334
-----------------------------------------------------------------------------------------------
U.S. Treasury Bonds, 7.625%, 11/15/22 4,410,000 4,252,894
-----------------------------------------------------------------------------------------------
U.S. Treasury Nts., 8.50%, 7/15/97 1,000,000 1,041,562
------------
Total Government Obligations (Cost $25,666,794) 24,525,857
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--13.7%
- ----------------------------------------------------------------------------------------------------------------------------------
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 400,000 396,000
-----------------------------------------------------------------------------------------------
Auburn Hills Trust, 12.375% Gtd. Exch. Ctfs., 5/1/20(7) 300,000 397,241
-----------------------------------------------------------------------------------------------
Banco De Galicia, 7%, 8/1/02 600,000 636,000
-----------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 7% Exch. Sub. Debs., 12/15/99(2) 300,000
348,375
-----------------------------------------------------------------------------------------------
Beaver Valley Funding Corp., 9% Debs., 6/1/17 500,000 380,408
-----------------------------------------------------------------------------------------------
Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 350,000 357,875
-----------------------------------------------------------------------------------------------
Card Establishment Services, Inc., 10% Sr. Sub. Nts.,
Series B, 10/1/03 500,000 472,500
-----------------------------------------------------------------------------------------------
Carlton Communications PLC, 7.50% Cv. Bonds, 8/14/07 170,000(3)
351,198
-----------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(2)(6) 1,750,000 1,109,059
-----------------------------------------------------------------------------------------------
Charoen Pokphand Indonesia, 12.875% Cv. Bonds, 3/23/98 238,100,000(3)
109,418
-----------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04(2) 500,000 517,500
-----------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 500,000 492,500
-----------------------------------------------------------------------------------------------
Computervision Corp., 10.875% Sr. Nts., 8/15/97 300,000 279,750
</TABLE>
4 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CORPORATE BONDS AND NOTES Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub.
(CONTINUED) Disc. Nts., 11/1/02(6) $ 556,000 $ 444,800
-----------------------------------------------------------------------------------------------
Envirotest Systems Corp., 9.625% Sr. Sub. Nts., 4/1/03 250,000 230,000
-----------------------------------------------------------------------------------------------
Family Restaurant, Inc., 9.75% Sr. Nts., 2/1/02 500,000 440,000
-----------------------------------------------------------------------------------------------
First PV Funding Corp., 10.15% Lease Obligation Bonds, 1/15/16 500,000
459,823
-----------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 500,000 420,000
-----------------------------------------------------------------------------------------------
GPA Holland BV, 9.75% Med.-Term Nts., Series B, 6/10/96 500,000
477,500
-----------------------------------------------------------------------------------------------
Grand Union Co., 11.25% Sr. Nts., 7/15/00 300,000 272,250
-----------------------------------------------------------------------------------------------
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs., 1/15/04 500,000 460,375
-----------------------------------------------------------------------------------------------
Industrial Credit and Investment Corp. India Ltd.,
2.50% Cv. Debs., 4/30/00(2) 450,000 399,375
-----------------------------------------------------------------------------------------------
Infinity Broadcasting Corp., 10.375% Sr. Sub. Nts., 3/15/02 300,000 312,000
-----------------------------------------------------------------------------------------------
International Container Terminal Services, Inc.:
5% Cv. Sr. Nts., 9/15/01 300,000 281,250
6% Cv. Sr. Nts., 2/19/00(2) 300,000 420,000
-----------------------------------------------------------------------------------------------
Jindal Strips Ltd., 4.25% Cv. Debs., 3/31/99(2) 400,000 538,000
-----------------------------------------------------------------------------------------------
Kinnevik Industrifoerval, 10.50% Cv. Bonds, 7/21/97 5,000,000(3) 1,310,145
-----------------------------------------------------------------------------------------------
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98(6) 390,000 346,125
-----------------------------------------------------------------------------------------------
Nextel Communications, Inc., 0%/9.75% Sr. Disc. Nts., 8/15/04(6) 525,000
259,875
-----------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 500,000 571,250
-----------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc.
Nts., 8/1/03(6) 1,000,000 672,500
-----------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 500,000 462,500
-----------------------------------------------------------------------------------------------
Piv Investment Financial Cayman Ltd., 4.50% Cv. Gtd. Bonds,
12/1/00(2) 500,000 407,500
-----------------------------------------------------------------------------------------------
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 225,000 196,875
-----------------------------------------------------------------------------------------------
Shangri-La Asia Ltd., 2.875% Cv.Sub.Debs., 6/6/00(2) 500,000 427,500
-----------------------------------------------------------------------------------------------
Southland Corp., 4.50% 2nd Priority Sr. Sub. Debs., Series A,
6/15/04 700,000 437,500
-----------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 300,000 296,250
-----------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A, 12/28/08(2) 650,000 599,625
-----------------------------------------------------------------------------------------------
Swift Energy Co., 6.50% Cv. Sub. Debs., 6/30/03 300,000 309,000
-----------------------------------------------------------------------------------------------
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 300,000 303,000
-----------------------------------------------------------------------------------------------
Thermo Electron Corp., 4.625% Cv. Sr. Debs., 8/1/97(2) 750,000 1,078,125
-----------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 250,000 249,375
-----------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 500,000 450,000
------------
Total Corporate Bonds and Notes (Cost $19,273,752) 19,380,342
SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--62.5%
- ----------------------------------------------------------------------------------------------------------------------------------
BASIC MATERIALS--6.6%
- ----------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--2.7% Minerals Technologies, Inc. 30,000 888,750
-----------------------------------------------------------------------------------------------
Mitsubishi Petrochemical Co. Ltd. 120,000 840,254
-----------------------------------------------------------------------------------------------
NOVA Corp. 80,000 880,000
-----------------------------------------------------------------------------------------------
PT Tri Polyta Indonesia ADR(4) 25,000 678,125
-----------------------------------------------------------------------------------------------
Tianjin Bohai Chemical Industry Co.(4) 2,500,000 454,563
------------
3,741,692
</TABLE>
5 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PAPER AND Corticeira Amorim, SA 7,000 $ 118,584
FOREST PRODUCTS--1.3% -----------------------------------------------------------------------------------------------
Hansol Paper Ltd., Sponsored GDR(2)(4) 10,463 458,501
-----------------------------------------------------------------------------------------------
Indah Kiat 560,000 733,439
-----------------------------------------------------------------------------------------------
Stora Kopparbergs Bergslags AB 8,400 482,882
------------
1,793,406
- ----------------------------------------------------------------------------------------------------------------------------------
STEEL--2.6% China Steel Corp., GDR(4) 21,000 435,750
-----------------------------------------------------------------------------------------------
Dofasco, Inc. 32,100 559,392
-----------------------------------------------------------------------------------------------
Kangwon Industrial Co. Ltd. 34,000 740,704
-----------------------------------------------------------------------------------------------
Pohang Iron & Steel Co. Ltd. 7,000 1,028,703
-----------------------------------------------------------------------------------------------
Tung Ho Steel Enterprise Corp., GDR(2) 25,000 425,000
-----------------------------------------------------------------------------------------------
Ugine SA 7,000 537,333
------------
3,726,882
- ----------------------------------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--9.2%
- ----------------------------------------------------------------------------------------------------------------------------------
AIRLINES--0.2% Vienna International Airport 6,500 276,228
- ----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--2.9% CIADEA SA 29,999 436,468
-----------------------------------------------------------------------------------------------
Fiat SpA di Risp. 300,000 725,961
-----------------------------------------------------------------------------------------------
Nissan Motor Co. 50,000 408,709
-----------------------------------------------------------------------------------------------
Volkswagen AG 3,000 822,724
-----------------------------------------------------------------------------------------------
Volvo AB, Series B Free 92,500 1,687,981
------------
4,081,843
- ----------------------------------------------------------------------------------------------------------------------------------
BROADCAST MEDIA--2.3% Comcast Corp., Cl. A Special(4) 30,000
459,375
-----------------------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored ADR(2) 10,000 578,750
-----------------------------------------------------------------------------------------------
Scandinavian Broadcasting System SA(4) 20,000 525,000
-----------------------------------------------------------------------------------------------
TeleCommunications, Inc., Cl. A(4) 24,000 532,500
-----------------------------------------------------------------------------------------------
Television Broadcast 100,000 464,592
-----------------------------------------------------------------------------------------------
United International Holdings, Inc., Cl. A(4) 42,000 637,875
------------
3,198,092
- ----------------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT--0.1% Euro Disney(4) 130,000
196,438
- ----------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHINGS Philips Gloeilamp NV 80,000
2,444,480
AND APPLIANCES--2.2% -----------------------------------------------------------------------------------------------
Sony Corp. 10,800 628,554
------------
3,073,034
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--1.1% Benetton SpA 30,000 403,846
-----------------------------------------------------------------------------------------------
Grupo Casa Autrey, SA de C.V. 15,000 489,375
-----------------------------------------------------------------------------------------------
Toys 'R' Us, Inc.(4) 20,000 712,500
------------
1,605,721
- ----------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES: GENERAL Rinascente SpA, Ordinary 63,000
370,933
MERCHANDISE CHAINS--0.4% -----------------------------------------------------------------------------------------------
Sonae Industria E. Investimentos(4) 11,000 243,641
------------
614,574
</TABLE>
6 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NON-CYCLICALS--6.1%
- ----------------------------------------------------------------------------------------------------------------------------------
AGRICULTURAL BIOTECHNOLOGY--0.9% Plant Genetics Systems International NV(2)(4) 50,072
$ 466,958
-----------------------------------------------------------------------------------------------
Sumitomo Chemical Co. Ltd. 150,000 850,257
------------
1,317,215
- ----------------------------------------------------------------------------------------------------------------------------------
BEVERAGES: ALCOHOLIC--0.6% LVMH Moet Hennessy Louis Vuitton 5,000
823,528
- ----------------------------------------------------------------------------------------------------------------------------------
DRUGS--1.5% Astra AB Free, Series A 30,000 719,911
-----------------------------------------------------------------------------------------------
Pharmavit(4) 16,000 240,000
-----------------------------------------------------------------------------------------------
Schering AG 1,500 922,301
-----------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 20,000 234,414
------------
2,116,626
- ----------------------------------------------------------------------------------------------------------------------------------
FOOD PROCESSING--0.5% Mavesa ADR(2) 75,000
494,475
-----------------------------------------------------------------------------------------------
Molinos Rio de la Plata SA(4) 14,600 139,421
------------
633,896
- ----------------------------------------------------------------------------------------------------------------------------------
HEALTHCARE: MISCELLANEOUS--1.7% Amgen, Inc.(4) 14,300
761,475
-----------------------------------------------------------------------------------------------
Chiron Corp. 9,400 625,100
-----------------------------------------------------------------------------------------------
Genzyme Corp.(4) 30,843 1,056,373
------------
2,442,948
- ----------------------------------------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT--0.3% Community Psychiatric Centers 35,000
476,875
- ----------------------------------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS--0.6% Arjo AB(4) 30,100
523,122
-----------------------------------------------------------------------------------------------
Circon Corp.(4) 2,500 30,000
-----------------------------------------------------------------------------------------------
Stryker Corp. 7,100 246,725
------------
799,847
- ----------------------------------------------------------------------------------------------------------------------------------
ENERGY--4.3%
- ----------------------------------------------------------------------------------------------------------------------------------
OIL: INTEGRATED British Petroleum Co. PLC 8,000 606,000
INTERNATIONAL--2.8% -----------------------------------------------------------------------------------------------
Compagnie Francaise de Petroleum Total 8,000 470,242
-----------------------------------------------------------------------------------------------
OeMV AG(4) 9,000 811,099
-----------------------------------------------------------------------------------------------
Repsol SA 16,000 487,808
-----------------------------------------------------------------------------------------------
YPF Sociedad Anonima, Sponsored ADR 39,200 989,800
-----------------------------------------------------------------------------------------------
YuKong Ltd. 10,364 522,936
------------
3,887,885
- ----------------------------------------------------------------------------------------------------------------------------------
OIL AND GAS DRILLING--0.8% Petroleum Geo-Services AS(4) 60,000
1,175,623
- ----------------------------------------------------------------------------------------------------------------------------------
OIL WELL SERVICES McDermott International, Inc. 10,000
257,500
AND EQUIPMENT--0.7% -----------------------------------------------------------------------------------------------
TH Loy Industries Berhad(4) 172,500 699,624
------------
957,124
</TABLE>
7 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL--5.9%
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: American Express Co. 20,000 $
607,500
MISCELLANEOUS--1.2% -----------------------------------------------------------------------------------------------
Industrial Finance Corporation of Thailand (The ) 230,000 570,971
-----------------------------------------------------------------------------------------------
Ssangyong Investment & Securities Co. Ltd. 22,662 513,563
------------
1,692,034
- ----------------------------------------------------------------------------------------------------------------------------------
INSURANCE: MULTI-LINE--1.3% American International Group, Inc. 9,000
799,875
-----------------------------------------------------------------------------------------------
National Mutual Asia, Ltd. 1,000,000 647,065
-----------------------------------------------------------------------------------------------
Reinsurance Australia Corp.(4) 350,000 458,426
------------
1,905,366
- ----------------------------------------------------------------------------------------------------------------------------------
MAJOR BANKS: OTHER--2.5% Banco LatinoAmericano de Exportaciones SA, Cl. E 10,000
320,000
-----------------------------------------------------------------------------------------------
Banco Portugues de Investimento 7,000 109,734
-----------------------------------------------------------------------------------------------
Banco Wiese, Sponsored ADR(4) 7,500 181,875
-----------------------------------------------------------------------------------------------
BankAmerica Corp. 12,000 529,500
-----------------------------------------------------------------------------------------------
C.S. Holdings 1,058 432,130
-----------------------------------------------------------------------------------------------
PT Lippo Bank 133,300 398,176
-----------------------------------------------------------------------------------------------
PT Panin Bank(2) 350,000 639,346
-----------------------------------------------------------------------------------------------
Skandinaviska Enskilda Banken Group(4) 75,000 454,206
-----------------------------------------------------------------------------------------------
Standard Chartered Bank PLC 122,696 507,916
------------
3,572,883
- ----------------------------------------------------------------------------------------------------------------------------------
MONEY CENTER BANKS--0.9% Citicorp 28,600
1,215,500
- ----------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--14.7%
- ----------------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS GROUP--0.1% Cimentos De Portugal SA 6,000
106,195
- ----------------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES--1.8% Catena AB, Series A Free(4) 100,000
842,236
-----------------------------------------------------------------------------------------------
Commercial del Plata 122,400 424,701
-----------------------------------------------------------------------------------------------
Desc, SA de C.V.(4) 15,000 481,875
-----------------------------------------------------------------------------------------------
Jardine Matheson Holdings Ltd. 100,000 847,655
------------
2,596,467
- ----------------------------------------------------------------------------------------------------------------------------------
CONTAINERS: METAL M C Packaging Corp. Ltd. 1,550,000
722,124
AND GLASS--0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--1.3% BBC Brown Boveri AG 850 732,631
-----------------------------------------------------------------------------------------------
Sasib SpA 116,666 642,411
-----------------------------------------------------------------------------------------------
Sumitomo Electric Industries, Inc. 30,000 442,558
------------
1,817,600
- ----------------------------------------------------------------------------------------------------------------------------------
ENGINEERING AND Empresas ICA Sociedad Controladora SA de C.V. 9,500
306,375
CONSTRUCTION--2.0% -----------------------------------------------------------------------------------------------
Grupo Tribasa, SA de C.V.(4) 11,850 435,488
-----------------------------------------------------------------------------------------------
Juan Minetti SA(4) 55,400 354,538
-----------------------------------------------------------------------------------------------
Leighton Holdings Ltd. 300,000 457,316
-----------------------------------------------------------------------------------------------
Raito Kogyo Co. Ltd. 21,000 498,636
-----------------------------------------------------------------------------------------------
VA Technologie AG(2)(4) 8,000 797,911
------------
2,850,264
</TABLE>
8 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MACHINERY: DIVERSIFIED--1.0% Beiren Printing Machinery Holdings, Ltd. 600,000 $
300,497
-----------------------------------------------------------------------------------------------
Bobst Bearers AG 310 394,774
-----------------------------------------------------------------------------------------------
Daifuku 50,000 727,493
------------
1,422,764
- ----------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING: DIVERSIFIED Autoliv AB(4) 34,000
1,022,715
INDUSTRIAL--3.6% -----------------------------------------------------------------------------------------------
CBI Industries, Inc. 23,000 623,875
-----------------------------------------------------------------------------------------------
Filippo Fochi SpA(4) 250,000 772,436
-----------------------------------------------------------------------------------------------
Mitsubishi Heavy Industries Ltd. 78,000 606,850
-----------------------------------------------------------------------------------------------
Stewart & Stevenson Services, Inc. 20,000 760,000
-----------------------------------------------------------------------------------------------
Valmet Corp., Cl. A(4) 37,000 696,189
-----------------------------------------------------------------------------------------------
Vitro Sociedad Anonima, ADR 20,000 517,500
------------
4,999,565
- ----------------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL--0.5% Ionics, Inc.(4) 14,000 682,500
- ----------------------------------------------------------------------------------------------------------------------------------
RAILROADS--0.5% Voest-Alpine Eisenbahnsysteme AG(2) 6,000
739,111
- ----------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: Brambles Industries Ltd. 65,000 658,964
MISCELLANEOUS--3.4% -----------------------------------------------------------------------------------------------
Kvaerner Industrier AS 37,420 1,582,162
-----------------------------------------------------------------------------------------------
Lisnave-Estaleiros Navais de Lisbona SA(4) 22,500 108,518
-----------------------------------------------------------------------------------------------
Malaysian Helicopter Services 40,000 124,014
-----------------------------------------------------------------------------------------------
Malaysian International Shipping Corp. 130,000 433,462
-----------------------------------------------------------------------------------------------
Sembawang Shipyard Ltd. 100,000 802,699
-----------------------------------------------------------------------------------------------
Singmarine Industries Ltd. 175,000 453,289
-----------------------------------------------------------------------------------------------
Unitor Ships Service AS 32,000 582,214
------------
4,745,322
- ----------------------------------------------------------------------------------------------------------------------------------
TECHNOLOGY--13.2%
- ----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE Microsoft Corp.(4) 23,400
1,313,320
AND SERVICES--1.4% -----------------------------------------------------------------------------------------------
Oracle Systems Corp. 15,000 645,000
------------
1,958,320
- ----------------------------------------------------------------------------------------------------------------------------------
COMPUTER SYSTEMS--0.5% International Business Machines Corp. 10,000
695,000
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRONICS: Advanced Micro Devices, Inc.(4) 18,000 535,500
SEMICONDUCTORS--1.6% -----------------------------------------------------------------------------------------------
Austria Mikro Systeme International(4) 10,000 641,113
-----------------------------------------------------------------------------------------------
Motorola, Inc. 6,000 316,500
-----------------------------------------------------------------------------------------------
National Semiconductor Corp.(4) 18,000 281,250
-----------------------------------------------------------------------------------------------
Tokyo Ohka Kogyo 14,000 523,391
------------
2,297,754
</TABLE>
9 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OFFICE EQUIPMENT Canon Inc. 40,000 $ 703,243
AND SUPPLIES--0.5%
- ----------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--9.2% AT&T Corp. 20,000
1,080,000
-----------------------------------------------------------------------------------------------
AirTouch Communications, Inc.(4) 25,000 715,625
-----------------------------------------------------------------------------------------------
Celcaribe SA(2)(4) 284,550 347,816
-----------------------------------------------------------------------------------------------
Comcast UK Cable Partners Ltd.(4) 27,000 516,375
-----------------------------------------------------------------------------------------------
Compania de Telefonos de Chile SA 10,000 877,500
-----------------------------------------------------------------------------------------------
International CableTel, Inc.(4) 30,000 960,000
-----------------------------------------------------------------------------------------------
Korea Mobile Telecommunications 700 630,938
-----------------------------------------------------------------------------------------------
L.M. Ericsson Telephone Co., Sponsored ADR 10,000 537,500
-----------------------------------------------------------------------------------------------
Millicom International Cellular SA(4) 31,225 698,659
-----------------------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. 100 889,158
-----------------------------------------------------------------------------------------------
Pakistan Telecommunications, GDR(2)(4) 3,322 642,807
-----------------------------------------------------------------------------------------------
Societa Finanziora Telefonica SpA 108,000 334,731
-----------------------------------------------------------------------------------------------
Technology Resources Industries(4) 100,000 409,479
-----------------------------------------------------------------------------------------------
Telecommunication de Argentina, Cl. B 115,000 768,152
-----------------------------------------------------------------------------------------------
Telecomunicazioni SpA 482,500 1,360,897
-----------------------------------------------------------------------------------------------
Telefonica de Espana, ADS 60,000 809,644
-----------------------------------------------------------------------------------------------
Telefonos de Mexico SA, Sponsored ADR 15,000 937,500
-----------------------------------------------------------------------------------------------
Vodafone Group 157,629 490,948
------------
13,007,729
- ----------------------------------------------------------------------------------------------------------------------------------
UTILITIES--2.5%
- ----------------------------------------------------------------------------------------------------------------------------------
ELECTRIC COMPANIES--1.8% Central Costanera SA, Cl. B 15,000
53,997
-----------------------------------------------------------------------------------------------
Sithe Energies, Inc.(4) 35,000 433,125
-----------------------------------------------------------------------------------------------
Veba AG 5,000 1,658,015
-----------------------------------------------------------------------------------------------
Verbund Oest Electriz 6,500 393,506
------------
2,538,643
- ----------------------------------------------------------------------------------------------------------------------------------
NATURAL GAS--0.7% British Gas PLC 200,000 941,470
------------
Total Common Stocks (Cost $76,721,250) 88,149,331
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS--3.8%
- ----------------------------------------------------------------------------------------------------------------------------------
American Express Co. Debt Exchangeable for Common Stock, 6.25% 40,000
1,780,000
-----------------------------------------------------------------------------------------------
Compania de Inversiones en Telecomunicaciones SA Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(2) 25,000
1,700,000
-----------------------------------------------------------------------------------------------
Klein, Schanjlin & Becker AG 2,000 444,715
-----------------------------------------------------------------------------------------------
Spar Handels, AG, Non-Vtg. 2,000 451,161
-----------------------------------------------------------------------------------------------
Trafalgar House PLC, 6%, Cum. Cv. 540,000 970,802
------------
Total Preferred Stocks (Cost $5,076,631) 5,346,678
</TABLE>
10 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT SEE NOTE 1
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STRUCTURED INSTRUMENTS--1.1%
- ----------------------------------------------------------------------------------------------------------------------------------
Citibank, 16.75% CD, 12/19/94(5) $ 423,653,758(3) $ 1,027,662
-------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Co. of New York, 12.15% CD, 2/3/95(5) 1,056,625,000(3)
485,570
------------
Total Structured Instruments (Cost $1,484,098) 1,513,232
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $129,022,525) 99.1%
139,715,440
- ----------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES .9 1,310,018
-------------- ------------
NET ASSETS 100.0% $141,025,458
-------------- ------------
-------------- ------------
<FN>
1. Interest or dividend is paid in kind.
2. Restricted security--See Note 5 of Notes to Financial Statements.
3. Face amount is reported in foreign currency.
4. Non-income producing security.
5. Indexed instrument for which the principal amount at maturity is affected by the relative
value of a foreign currency.
6. Represents a zero coupon bond that converts to a fixed rate of interest at a designated future
date.
7. Represents the current interest rate for a variable rate security.
8. Partial interest payment received.
See accompanying Notes to Financial Statements.
</TABLE>
11 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES September 30, 1994
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS Investments, at value (cost $129,022,525)--see accompanying statement
$139,715,440
-----------------------------------------------------------------------------------------------
Cash 35,008
-----------------------------------------------------------------------------------------------
Receivables:
Dividends and interest 1,241,425
Investments sold 628,062
Shares of beneficial interest sold 522,367
-----------------------------------------------------------------------------------------------
Deferred organization costs 3,322
-----------------------------------------------------------------------------------------------
Other 20,702
------------
Total assets 142,166,326
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES Payables and other liabilities:
Investments purchased 641,979
Shares of beneficial interest redeemed 299,474
Distribution and service plan fees--Note 4 87,170
Other 112,245
------------
Total liabilities 1,140,868
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $141,025,458
------------
------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF Paid-in capital $123,289,382
NET ASSETS -----------------------------------------------------------------------------------------------
Overdistributed net investment income (346,718)
-----------------------------------------------------------------------------------------------
Accumulated net realized gain from investment and foreign currency transactions 7,382,396
-----------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 10,700,398
------------
Net assets $141,025,458
------------
------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE Class A Shares:
PER SHARE Net asset value and redemption price per share (based on net
assets of $124,017,204 and 8,154,308 shares of beneficial interest outstanding) $15.21
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $16.14
-----------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $17,008,254 and 1,121,299 shares of
beneficial interest outstanding) $15.17
See accompanying Notes to Financial Statements.
</TABLE>
12 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Year Ended September 30, 1994
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME Interest (net of withholding taxes of $11,876) $
3,739,984
-----------------------------------------------------------------------------------------------
Dividends (net of withholding taxes of $167,303) 1,145,885
------------
Total income 4,885,869
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES Management fees--Note 4 945,062
-----------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 288,568
Class C--Note 4 65,984
-----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 272,744
-----------------------------------------------------------------------------------------------
Custodian fees and expenses 130,012
-----------------------------------------------------------------------------------------------
Shareholder reports 88,581
-----------------------------------------------------------------------------------------------
Legal and auditing fees 39,014
-----------------------------------------------------------------------------------------------
Trustees' fees and expenses 13,870
-----------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 9,678
Class C 5,736
-----------------------------------------------------------------------------------------------
Other 47,113
------------
Total expenses 1,906,362
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,979,507
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED Net realized gain (loss) from:
GAIN (LOSS) ON INVESTMENTS Investments 8,087,632
AND FOREIGN CURRENCY Foreign currency transactions
345,067
TRANSACTIONS ------------
Net realized gain 8,432,699
-----------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments 1,074,191
Translation of assets and liabilities denominated in foreign currencies 459,238
------------
Net change 1,533,429
------------
Net realized and unrealized gain on investments and foreign currency transactions 9,966,128
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$ 12,945,635
------------
------------
See accompanying Notes to Financial Statements.
</TABLE>
13 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30,
1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS Net investment income $ 2,979,507 $ 1,607,411
------------------------------------------------------------------------------------------------
Net realized gain on investments and foreign currency
transactions 8,432,699 2,657,100
------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on
investments and translation of assets and liabilities
denominated in foreign currencies 1,533,429 8,068,309
------------ -----------
Net increase in net assets resulting from operations 12,945,635 12,332,820
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND Dividends from net investment income:
DISTRIBUTIONS TO Class A ($.35 and $.173 per share, respectively) (2,811,077)
(867,342)
SHAREHOLDERS Class C ($.289 per share) (180,983) --
-----------------------------------------------------------------------------------------------
Distributions from net realized gain on investments
and foreign currency transactions:
Class A ($.481 and $.105 per share, respectively) (3,355,571) (450,227)
Class C ($.481 per share) (7,409) --
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST Net increase in net assets resulting from Class A beneficial
TRANSACTIONS interest transactions--Note 2 31,386,177 25,269,073
-----------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C beneficial
interest transactions--Note 2 17,029,695 --
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS Total increase 55,006,467 36,284,324
-----------------------------------------------------------------------------------------------
Beginning of year 86,018,991 49,734,667
------------ -----------
End of year [including undistributed (overdistributed) net
investment income of ($346,718) and $854,919, respectively] $141,025,458
$86,018,991
------------ -----------
------------ -----------
See accompanying Notes to Financial Statements.
</TABLE>
14 Oppenheimer Global Growth & Income Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A CLASS C
------------------------------------------------- -------------
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1992 1991(2) 1994(1)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value,
beginning of period $14.09 $11.91 $12.43 $11.43 $14.85
-----------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .33 .29 .26 .37 .22
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions 1.62 2.17 (.47) .95 .87
------- ------- ------- ------- -------
Total income (loss) from
investment operations 1.95 2.46 (.21) 1.32 1.09
-----------------------------------------------------------------------------------------------
Dividends and distributions
to shareholders:
Dividends from net investment
income (.35) (.17) (.28) (.32) (.29)
Distributions from net realized
gain on investments and foreign
currency transactions (.48) (.11) (.03) -- (.48)
------- ------- ------- ------- -------
Total dividends and
distributions to shareholders (.83) (.28) (.31) (.32) (.77)
-----------------------------------------------------------------------------------------------
Net asset value, end of period $15.21 $14.09 $11.91 $12.43 $15.17
------- ------- ------- ------- -------
------- ------- ------- ------- -------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET
VALUE(3) 13.96% 21.00% (1.76)% 11.73% 7.41%
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $124,017 $86,019 $49,735 $29,239 $17,008
-----------------------------------------------------------------------------------------------
Average net assets
(in thousands) $117,164 $59,951 $37,116 $19,340 $ 7,896
-----------------------------------------------------------------------------------------------
Number of shares outstanding
at end of period (in
thousands) 8,154 6,104 4,177 2,352 1,121
-----------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.44% 2.68% 2.41% 4.05%(4) 1.85%(4)
Expenses 1.49% 1.56% 1.74% 1.94%(4) 2.44%(4)
-----------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 87.4% 90.6% 51.3% 23.5% 87.4%
<FN>
1. For the period from December 1, 1993 (inception of offering) to September 30, 1994.
2. For the period from October 22, 1990 (commencement of operations) to September 30, 1991.
3. 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.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly
average of the market value of portfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of one year or less are excluded from the
calculation. Purchases and sales of investment securities (excluding short-term securities) for
the year ended September 30, 1994 were $149,601,811 and $98,419,511, respectively.
See accompanying Notes to Financial Statements.
</TABLE>
15 Oppenheimer Global Growth & Income Fund
<PAGE>
----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT Oppenheimer Global Growth & Income Fund (the Fund) is
ACCOUNTING registered under the Investment Company Act of 1940, as
POLICIES amended, as a diversified, open-end management investment
company. The Fund's investment advisor is Oppenheimer
Management Corporation (the Manager). The Fund offers both
Class A and Class C shares. Class A shares are sold with a
front-end sales charge. Class C shares may be subject to a
contingent deferred sales charge. Both classes have
identical rights to earnings, assets and voting
privileges, except that each class has its own
distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting
rights with respect to matters affecting a single class.
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 foreign currencies are
translated into U.S. dollars at the closing rates of
exchange. Amounts related to the purchase and sale of
securities and investment income are translated at the
rates of exchange prevailing on the respective dates of
such transactions.
The 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 on investments is separately identified
from the fluctuations arising from changes in market
values of securities held and reported with all other
foreign currency gains and losses in the Fund's results of
operations.
----------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to
take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the
custodian's vault, all securities held as collateral for
repurchase agreements. If the seller of the agreement
defaults and the value of the collateral declines, or if
the seller enters an insolvency proceeding, realization of
the value of the collateral by the Fund may be delayed or
limited.
----------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES.
Income, expenses (other than those attributable to a
specific class) and gains and losses are allocated daily
to each class of shares based upon the relative proportion
of net assets represented by such class. Operating
expenses directly attributable to a specific class are
charged against the operations of that class.
16 Oppenheimer Global Growth & Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. SIGNIFICANT FEDERAL INCOME TAXES. The Fund intends to continue to
ACCOUNTING comply with provisions of the Internal Revenue Code
POLICIES applicable to regulated investment companies and to
(CONTINUED) distribute all of its taxable income, including any net
realized gain on investments not offset by loss
carryovers, to shareholders. Therefore, no federal income
tax provision is required.
----------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a
nonfunded retirement plan for the Fund's independent
trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During
the year ended September 30, 1994, a provision of $5,376
was made for the Fund's projected benefit obligations,
resulting in an accumulated liability of $34,106 at
September 30, 1994. No payments have been made under the
plan.
----------------------------------------------------------
ORGANIZATION COSTS. The Manager advanced $15,751 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.
----------------------------------------------------------
CHANGE IN ACCOUNTING FOR DISTRIBUTIONS TO SHAREHOLDERS.
Effective October 1, 1993, the Fund adopted Statement of
Position 93-2: Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return
of Capital Distributions by Investment Companies. As a
result, the Fund changed the classification of
distributions to shareholders to better disclose the
differences between financial statement amounts and
distributions determined in accordance with income tax
regulations. Accordingly, subsequent to September 30,
1993, amounts have been reclassified to reflect a decrease
in paid-in capital of $135, a decrease in undistributed
net investment income of $946,781, and an increase in
undistributed capital gain on investments of $946,916.
During the year ended September 30, 1994, in accordance
with Statement of Position 93-2, undistributed net
investment income was decreased by $242,303 and
undistributed capital gain was increased by $242,303.
----------------------------------------------------------
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 The Fund has authorized an unlimited number of no par
BENEFICIAL value shares of beneficial interest of each class.
INTEREST Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1994(1) YEAR ENDED
SEPTEMBER 30, 1993
-------------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
Class A:
Sold 4,823,552 $ 73,290,047 3,291,571 $ 42,379,689
Dividends and distributions reinvested 392,494 5,940,555 102,240 1,265,994
Redeemed (3,165,575) (47,844,425) (1,466,579) (18,376,610)
---------- ------------ ---------- ------------
Net increase 2,050,471 $ 31,386,177 1,927,232 $ 25,269,073
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
------------------------------------------------------------------------------------------------------------
Class C:
Sold 1,177,454 $ 17,876,870 -- $ --
Dividends and distributions reinvested 11,355 170,041 -- --
Redeemed (67,510) (1,017,216) -- --
---------- ------------ ---------- ------------
Net increase 1,121,299 $ 17,029,695 -- $ --
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
<FN>
1. For the year ended September 30, 1994 for Class A shares and for the period from December 1, 1993
(inception of offering) to September 30, 1994 for Class C shares.
</TABLE>
17 Oppenheimer Global Growth & Income Fund
<PAGE>
----------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3. UNREALIZED GAINS At September 30, 1994, net unrealized appreciation on
AND LOSSES ON investments of $10,692,915 was composed of gross
INVESTMENTS appreciation of $14,960,634, and gross depreciation of
$4,267,719.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. MANAGEMENT FEES Management fees paid to the Manager were in accordance
AND OTHER with the investment advisory agreement with the Fund which
TRANSACTIONS provides for a fee of .80% on the first $250 million of
WITH AFFILIATES average annual net assets; the rate is .77% of the next
$250 million, .75% of the next $500 million, .69% of the
next $1 billion and .67% thereafter. Prior to June 27,
1994, management fees were as follows: .75% on the first
$200 million of net assets with a reduction of .03% on
each $200 million thereafter to $800 million, and .60% on
net assets in excess of $800 million. The Manager has
agreed to reimburse the Fund if aggregate expenses (with
specified exceptions) exceed the most stringent applicable
regulatory limit on Fund expenses.
For the year ended September 30, 1994,
commissions (sales charges paid by investors) on sales of
Class A shares totaled $1,020,885, of which $286,660 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by
an affiliated broker/dealer. During the year ended
September 30, 1994, OFDI received contingent deferred
sales charges of $3,352 upon redemption of Class C shares,
as reimbursement for sales commissions advanced by OFDI at
the time of sale of such shares. 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 separate approved plans, each class may
expend up to .25% of its net assets annually to reimburse
OFDI for costs incurred in connection with the personal
service and maintenance of accounts that hold shares of
the Fund, including amounts paid to brokers, dealers,
banks and other financial institutions. In addition, Class
C shares are subject to an asset-based sales charge of
.75% of net assets annually, to reimburse OFDI for sales
commissions paid from its own resources at the time of
sale and associated financing costs. In the event of
termination or discontinuance of the Class C plan, the
Board of Trustees may allow the Fund to continue payment
of the asset-based sales charge to OFDI for distribution
expenses incurred on Class C shares sold prior to
termination or discontinuance of the plan. During the year
ended September 30, 1994, OFDI paid $9,123 to an
affiliated broker/dealer as reimbursement for Class A
personal service and maintenance expenses and retained
$65,984 as reimbursement for Class C sales commissions and
service fee advances, as well as financing costs.
18 Oppenheimer Global Growth & Income Fund
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. RESTRICTED The Fund owns securities purchased in private placement
SECURITIES transactions, without registration under the Securities
Act of 1933 (the Act). The securities are valued under
methods approved by the Board of Trustees as reflecting
fair value. The Fund intends to invest no more than 10% of
its net assets (determined at the time of purchase) in
restricted and illiquid securities, excluding securities
eligible for resale pursuant to Rule 144A of the Act that
are determined to be liquid by the Board of Trustees or by
the Manager under Board-approved guidelines. Restricted
and illiquid securities, excluding securities eligible for
resale pursuant to Rule 144A of the Act amount to
$1,255,285 or .9% of the Fund's net assets, at September
30, 1994. Illiquid and/or restricted securities, including
those restricted securities that are transferable under
Rule 144A of the Act are listed below.
<TABLE>
<CAPTION>
VALUATION PER UNIT
COST AS OF
SECURITY ACQUISITION DATE PER UNIT SEPTEMBER
30, 1994
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Banco Nacional de Comercio Exterior SNC International
Finance BV Gtd. Matador Bonds, 8%, 8/5/03(1) 11/12/93 $ 97.88 $ 87.25
------------------------------------------------------------------------------------------------------------
Banco Nacional de Mexico SA, 7% Exch. Sub. Debs.,
12/15/99(1) 12/1/92 $100.00 $116.13
------------------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, Banco Do
Nordeste Brasil, 10.375%, 11/6/95(1) 4/27/93 $ 99.80 $100.38
------------------------------------------------------------------------------------------------------------
Celcaribe SA(1) 5/17/94 $ 1.19 $ 1.22
------------------------------------------------------------------------------------------------------------
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(1) 5/17/94 $ 60.78 $ 63.37
------------------------------------------------------------------------------------------------------------
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04(1) 4/22/94 $100.00 $103.50
------------------------------------------------------------------------------------------------------------
Compania de Inversiones en Telecomunicaciones SA
Provisionally Redeemable Income Debt Exchangeable
for Stock, 7%, 3/3/98(1) 2/24/94--4/20/94 $ 67.40 $ 68.00
------------------------------------------------------------------------------------------------------------
Grupo Televisa SA, Sponsored ADR(1) 4/28/92 $ 27.63 $ 57.88
------------------------------------------------------------------------------------------------------------
Hansol Paper Ltd., Sponsored GDR(1) 5/9/94 $ 53.41 $ 43.82
------------------------------------------------------------------------------------------------------------
Industrial Credit and Investment Corp. India Ltd.,
2.50% Cv. Debs, 4/30/00(1) 2/3/94 $100.00 $ 88.75
------------------------------------------------------------------------------------------------------------
International Container Terminal Services, Inc.,
6% Cv. Sr. Nts., 2/19/00(1) 2/19/93 $100.00 $140.00
------------------------------------------------------------------------------------------------------------
Jindal Strips Ltd., 4.25% Cv. Debs., 3/31/99(1) 11/9/93 $100.00 $134.50
------------------------------------------------------------------------------------------------------------
Mavesa ADR(1) 8/25/94 $ 5.88 $ 6.59
------------------------------------------------------------------------------------------------------------
PT Panin Bank(1) 7/29/93 $ 0.87 $ 1.83
------------------------------------------------------------------------------------------------------------
Pakistan Telecommunications, GDR(1) 9/19/94--9/30/94 $185.16 $193.50
------------------------------------------------------------------------------------------------------------
Piv Investment Financial Cayman
Ltd., 4.50% Cv. Gtd. Bonds, 12/1/00(1) 1/25/94 $100.00 $ 81.50
------------------------------------------------------------------------------------------------------------
Plant Genetics Systems International NV 5/27/92 $ 11.18 $ 9.33
------------------------------------------------------------------------------------------------------------
Polish People's Republic Loan
Participation Agreement, 5.875%, 2/3/24 1/24/94 $ 41.49 $ 39.42
------------------------------------------------------------------------------------------------------------
Shangri-La Asia Ltd., 2.875% Cv. Sub. Debs., 6/6/00(1) 12/9/93 $ 86.24 $ 85.50
------------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sr. Sec. Nts., Series A,
12/28/08(1) 12/20/93 $ 99.93 $ 92.25
------------------------------------------------------------------------------------------------------------
Thermo Electron Corp., 4.625% Cv. Sr. Debs., 8/1/97(1) 7/15/92 $100.00
$143.75
------------------------------------------------------------------------------------------------------------
Tung Ho Steel Enterprise Corp., GDR(1) 9/9/94 $ 17.20 $ 17.00
------------------------------------------------------------------------------------------------------------
VA Technologie AG(1) 8/26/94--8/30/94 $103.49 $ 99.74
------------------------------------------------------------------------------------------------------------
Voest-Alpine Eisenbahnsysteme AG(1) 7/19/93--12/7/93 $104.98 $123.19
<FN>
1. Transferable under Rule 144A of the Act.
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
==========================================================
==========================================
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS--1.1%
Government National Mortgage Assn., 7.50%, 9/15/22 (Cost $1,581,977) $ 1,557,638 $1,511,252
- ----------------------------------------------------------------------------------------------------
U.S. Government Obligations--6.6%
U.S. Treasury Bonds, 7.625%, 11/15/22 4,410,000 4,469,256
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 7.75%, 11/30/99 3,500,000 3,589,688
- ----------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 8.50%, 7/15/97 1,000,000 1,035,000
----------
Total U.S. Government Obligations (Cost $9,631,109) 9,093,944
==========================================================
==========================================
FOREIGN GOVERNMENT OBLIGATIONS--12.6%
Argentina (Republic of) Bonds, Bonos de Consolidacion
de Deudas, Series I, 6.062%, 4/1/01(3)(4) 1,771,208 932,302
- ----------------------------------------------------------------------------------------------------
Argentina (Republic of) Par Bonds, 4.25%, 3/31/23(5) 10,000,000 4,081,250
- ----------------------------------------------------------------------------------------------------
Brazil (Federal Republic of) Bonds, Banco do Nordeste Brasil,
10.375%, 11/6/95(2) 1,000,000 995,000
- ----------------------------------------------------------------------------------------------------
Canada (Government of) Debs., 10.50%, 7/1/00 CAD 1,200,000 934,028
- ----------------------------------------------------------------------------------------------------
German Bund (Federal Republic of) Nts., 6.125%, 7/21/97 DEM 2,300,000 1,698,833
- ----------------------------------------------------------------------------------------------------
Italy (Republic of) Treasury Bonds, 11.50%, 5/1/98 ITL 2,000,000,000 1,153,379
- ----------------------------------------------------------------------------------------------------
New South Wales Treasury Corp. Gtd. Exch. Bonds, 12%, 12/1/01 AUD 1,150,000 926,075
- ----------------------------------------------------------------------------------------------------
New Zealand (Republic of) Bonds, 9%, 11/15/96 NZD 1,500,000 986,805
- ----------------------------------------------------------------------------------------------------
Queensland Treasury Corp. Gtd. Nts., 8%, 8/14/01 AUD 2,550,000 1,696,940
- ----------------------------------------------------------------------------------------------------
Spain (Kingdom of) Bonds, 11.45%, 8/30/98 ESP 135,000,000 1,058,035
- ----------------------------------------------------------------------------------------------------
Sweden (Kingdom of) Bonds, 11%, 1/21/99 SEK 7,000,000 952,547
- ----------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 10.25%, 11/22/99 GBP 475,000 824,936
- ----------------------------------------------------------------------------------------------------
United Kingdom Treasury Nts., 9.50%, 1/15/99 GBP 600,000 1,012,706
----------
Total Foreign Government Obligations (Cost $17,771,921) 17,252,836
==========================================================
==========================================
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--9.0%
BASIC MATERIALS--0.6%
CHEMICALS--0.3%
Carbide/Graphite Group, Inc., 11.50% Sr. Nts., 9/1/03 350,000 365,750
PAPER--0.3%
PT Inti Indorayon Utama, 9.125% Sr. Nts., 10/15/00 175,000 147,875
- ----------------------------------------------------------------------------------------------------
Stone Consolidated Corp., 10.25% Sr. Sec. Nts., 12/15/00 300,000 304,875
----------
452,750
CONSUMER CYCLICALS--2.1%
AUTOS AND HOUSING--0.9%
Auburn Hills Trust, 12% Gtd. Exch. Certificates, 5/1/20(3) 300,000 415,212
- ----------------------------------------------------------------------------------------------------
Amstar Corp., 11.375% Sr. Sub. Nts., 2/15/97 400,000 400,000
- ----------------------------------------------------------------------------------------------------
Penda Corp., 10.75% Sr. Nts., Series B, 3/1/04 500,000 451,250
----------
1,266,462
LEISURE AND ENTERTAINMENT--0.3%
Family Restaurants, Inc., 9.75% Sr. Nts., 2/1/02 500,000 346,250
RETAIL-GENERAL--0.5%
Southland Corp., 4.50% 2nd Priority Sr. Sub. Debs., Series A, 6/15/04 700,000 453,250
- ----------------------------------------------------------------------------------------------------
Thrifty Payless, Inc., 11.75% Sr. Nts., 4/15/03 250,000 263,125
----------
716,375
</TABLE>
6 Oppenheimer Global Growth & Income Fund
<PAGE> 7
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
==========================================================
=================================================
<S> <C> <C>
RETAIL-SPECIALTY--0.4%
- -----------------------------------------------------------------------------------------------------------
Cole National Group, Inc., 11.25% Sr. Nts., 10/1/01 $ 500,000 $ 480,000
- -----------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--1.2%
- -----------------------------------------------------------------------------------------------------------
FOOD--0.6%
- -----------------------------------------------------------------------------------------------------------
Dr. Pepper/Seven-Up Cos., Inc., 0%/11.50% Sr. Sub. Disc. Nts., 11/1/02(6) 556,000 483,720
- -----------------------------------------------------------------------------------------------------------
Grand Union Co., 11.25% Sr. Nts., 7/15/00(7) 300,000 313,875
-----------
797,595
- -----------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES AND SERVICES--0.4%
Charter Medical Corp., 11.25% Sr. Sub. Nts., 4/15/04 500,000 527,500
- -----------------------------------------------------------------------------------------------------------
HOUSEHOLD GOODS--0.2%
Synthetic Industries, Inc., 12.75% Sr. Sub. Debs., 12/1/02 300,000 292,500
- -----------------------------------------------------------------------------------------------------------
ENERGY--1.0%
- -----------------------------------------------------------------------------------------------------------
ENERGY SERVICES AND PRODUCERS--1.0%
Gulf Canada Resources Ltd., 9.25% Sr. Sub. Debs., 1/15/04 500,000 470,055
- -----------------------------------------------------------------------------------------------------------
Mesa Capital Corp., 0%/12.75% Sec. Disc. Nts., 6/30/98(6) 390,000 376,350
- -----------------------------------------------------------------------------------------------------------
OPI International, Inc., 12.875% Gtd. Sr. Nts., 7/15/02 500,000 552,500
-----------
1,398,905
- -----------------------------------------------------------------------------------------------------------
FINANCIAL--1.6%
- -----------------------------------------------------------------------------------------------------------
BANKS--0.6%
Rabobank Nederland, 10.375% Debs., 6/21/00 ITL 1,500,000,000 821,990
- -----------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.0%
Card Establishment Services, Inc., 10% Sr. Sub. Nts., Series B, 10/1/03 500,000 555,625
- -----------------------------------------------------------------------------------------------------------
GPA Delaware, Inc., 8.75% Gtd. Nts., 12/15/98 500,000 395,000
- -----------------------------------------------------------------------------------------------------------
GPA Holland BV, 9.75% Medium-Term Nts., Series B, 6/10/96 500,000 473,750
-----------
1,424,375
- -----------------------------------------------------------------------------------------------------------
TECHNOLOGY--1.7%
- -----------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY--1.7%
Celcaribe SA, 0%/13.50% Sr. Sec. Nts., 3/15/04(2)(6) 1,750,000 1,175,229
- -----------------------------------------------------------------------------------------------------------
Panamsat LP/Panamsat Capital Corp., 0%/11.375% Sr. Sub. Disc. Nts., 8/1/03(6) 1,000,000 657,500
- -----------------------------------------------------------------------------------------------------------
USA Mobile Communications, Inc. II, 9.50% Sr. Nts., 2/1/04 500,000 432,500
-----------
2,265,229
- -----------------------------------------------------------------------------------------------------------
UTILITIES--0.8%
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.6%
First PV Funding Corp., 10.15% Lease Obligation Bonds, Series 1986B, 1/15/16 500,000 486,804
- -----------------------------------------------------------------------------------------------------------
Subic Power Corp., 9.50% Sinking Fund Debs., 12/28/08(2) 386,206 334,069
-----------
820,873
- -----------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.2%
Beaver Valley II Funding Corp., 9% 2nd Lease Obligation Bonds, 6/1/17 498,000 384,326
-----------
Total Non-Convertible Corporate Bonds and Notes (Cost $13,081,208) 12,360,880
==========================================================
=================================================
Convertible Corporate Bonds and Notes--5.8%
- -----------------------------------------------------------------------------------------------------------
BASIC MATERIALS--0.3%
- -----------------------------------------------------------------------------------------------------------
METALS--0.3%
Jindal Strips Ltd., 4.25% Cv. Debs., 3/31/99 400,000 367,750
- -----------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--2.1%
- -----------------------------------------------------------------------------------------------------------
AUTOS AND HOUSING--0.9%
Consorcio G Grupo Dina, SA de C.V., 8% Cv. Sub. Debs., 8/8/04 1,000,000 310,000
- -----------------------------------------------------------------------------------------------------------
Hutchison Delta Finance Ltd., 7% Exch. Gtd. Sr. Nts., 11/8/02(2) 1,000,000 1,021,850
-----------
1,331,850
- -----------------------------------------------------------------------------------------------------------
MEDIA--1.2%
Carlton Communications PLC, 7.50% Cv. Bonds, 8/14/07 GBP 170,000 382,116
- -----------------------------------------------------------------------------------------------------------
Carlton Communications PLC, 7.50% Cv. Sub. Bonds, 8/14/07 GBP 230,000 516,982
- -----------------------------------------------------------------------------------------------------------
Kinnevik Industrifoerval AB, 10.50% Cv. Sub. Debs., 7/21/97(8) SEK 2,500,000 668,247
-----------
1,567,345
</TABLE>
7 Oppenheimer Global Growth & Income Fund
<PAGE> 8
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET VALUE
AMOUNT(1) SEE NOTE 1
==========================================================
===============================================
<S> <C> <C>
CONSUMER NON-CYCLICALS--1.4%
- ---------------------------------------------------------------------------------------------------------
BEVERAGES--0.7%
Noble China Corp., 9% Cv. Sub. Debs., 11/30/04(9) CAD $1,250,000 $ 953,484
- ---------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--0.7%
ICN Pharmaceuticals, Inc., 8.50% Cv. Sub. Debs., 11/15/99 1,000,000 955,000
- ---------------------------------------------------------------------------------------------------------
ENERGY--0.2%
- ---------------------------------------------------------------------------------------------------------
OIL--INTEGRATED--0.2%
Swift Energy Co., 6.50% Cv. Sub. Debs., 6/30/03 300,000 283,500
- ---------------------------------------------------------------------------------------------------------
FINANCIAL--0.5%
- ---------------------------------------------------------------------------------------------------------
BANKS--0.3%
Banco de Galicia y Buenos Aires SA, 7% Cv. Negotiable Obligation Bonds, 8/1/02 600,000 378,000
- ---------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--0.2%
Industrial Credit and Investment Corp. India Ltd., 2.50% Cv. Debs., 4/30/00(2) 450,000 330,468
- ---------------------------------------------------------------------------------------------------------
INDUSTRIAL--1.3%
- ---------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.9%
Thermo Electron Corp., 4.625% Cv. Sr. Debs., 8/1/97(2) 750,000 1,197,188
- ---------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.4%
International Container Terminal Services, Inc., 5% Cv. Sr. Nts., 9/15/01 300,000 230,250
- ---------------------------------------------------------------------------------------------------------
International Container Terminal Services, Inc., 6% Cv. Sr. Nts., 2/19/00(2) 300,000 285,000
------------
515,250
------------
Total Convertible Corporate Bonds and Notes (Cost $8,183,088) 7,879,835
</TABLE>
<TABLE>
<CAPTION>
SHARES
==========================================================
===============================================
<S> <C> <C>
COMMON STOCKS--58.3%
- ---------------------------------------------------------------------------------------------------------
BASIC MATERIALS--3.8%
- ---------------------------------------------------------------------------------------------------------
CHEMICALS--1.2%
Minerals Technologies, Inc. 30,000 967,500
- ---------------------------------------------------------------------------------------------------------
NOVA Corp. 80,000 700,000
------------
1,667,500
- ---------------------------------------------------------------------------------------------------------
METALS--1.2%
Dofasco, Inc. 32,100 406,185
- ---------------------------------------------------------------------------------------------------------
Kangwon Industrial Co. Ltd. 34,000 669,343
- ---------------------------------------------------------------------------------------------------------
Ugine SA 7,000 474,355
------------
1,549,883
- ---------------------------------------------------------------------------------------------------------
PAPER--1.4%
Corticeira Amorim, SA 20,000 318,670
- ---------------------------------------------------------------------------------------------------------
PT Pabrik Kertas Tjiwi Kimia 350,000 625,558
- ---------------------------------------------------------------------------------------------------------
Stora Kopparbergs Bergslags AB 8,400 501,491
- ---------------------------------------------------------------------------------------------------------
Svenska Cellulosa AB 30,000 476,253
------------
1,921,972
- ---------------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--8.0%
- ---------------------------------------------------------------------------------------------------------
AUTOS AND HOUSING--3.1%
Fiat SpA di Risp. 300,000 701,785
- ---------------------------------------------------------------------------------------------------------
General Motors Corp. 30,000 1,327,500
- ---------------------------------------------------------------------------------------------------------
Philips Electronics NV 50,400 1,726,300
- ---------------------------------------------------------------------------------------------------------
Volvo AB, Series B Free 25,000 432,495
------------
4,188,080
- ---------------------------------------------------------------------------------------------------------
LEISURE AND ENTERTAINMENT--2.2%
Genting Berhad 50,000 450,151
- ---------------------------------------------------------------------------------------------------------
King World Productions, Inc.(10) 13,700 539,438
- ---------------------------------------------------------------------------------------------------------
Nintendo Co. 34,400 2,106,203
------------
3,095,792
</TABLE>
8 Oppenheimer Global Growth & Income Fund
<PAGE> 9
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
===============================================
<S> <C> <C>
MEDIA--1.7%
Comcast Corp. 5,800 $ 90,263
- ---------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special 24,000 375,000
- ---------------------------------------------------------------------------------------------------------
News Corp. Ltd., ADR 40,000 765,000
- ---------------------------------------------------------------------------------------------------------
Telewest Communications PLC, ADR 20,600 563,925
- ---------------------------------------------------------------------------------------------------------
United International Holdings, Inc., Cl. A(10) 32,000 520,000
----------
2,314,188
- ---------------------------------------------------------------------------------------------------------
RETAIL: GENERAL--0.9%
PT Matahari Putra Prima 313,000 475,514
- ---------------------------------------------------------------------------------------------------------
Rinascente SpA, Ordinary 42,000 209,864
- ---------------------------------------------------------------------------------------------------------
Sonae Industria E. Investimentos(10) 20,000 484,239
----------
1,169,617
- ---------------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--0.1%
Giordano Holdings Ltd. 301,500 200,813
- ---------------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--10.3%
- ---------------------------------------------------------------------------------------------------------
BEVERAGES--0.8%
Guinness PLC 75,000 569,266
- ---------------------------------------------------------------------------------------------------------
LVMH Moet Hennessy Louis Vuitton 3,000 589,868
----------
1,159,134
- ---------------------------------------------------------------------------------------------------------
FOOD--1.3%
Dairy Farm International Holdings Ltd. 800,000 1,024,000
- ---------------------------------------------------------------------------------------------------------
Mavesa ADR(2) 75,000 295,515
- ---------------------------------------------------------------------------------------------------------
PT Indofood Sukses Makmur 139,250 479,100
----------
1,798,615
- ---------------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--5.3%
Amgen, Inc.(10) 14,000 943,250
- ---------------------------------------------------------------------------------------------------------
Astra AB Free, Series A 30,000 797,826
- ---------------------------------------------------------------------------------------------------------
Genzyme Corp.(10) 30,843 1,195,166
- ---------------------------------------------------------------------------------------------------------
Gillette Co. 7,000 571,375
- ---------------------------------------------------------------------------------------------------------
Johnson & Johnson 20,000 1,190,000
- ---------------------------------------------------------------------------------------------------------
Pharmavit GDS(10) 16,000 136,000
- ---------------------------------------------------------------------------------------------------------
Plant Genetics Systems International NV(9)(10) 50,072 309,107
- ---------------------------------------------------------------------------------------------------------
Schering AG 1,500 1,112,538
- ---------------------------------------------------------------------------------------------------------
Sumitomo Chemical Co. Ltd. 100,000 532,407
- ---------------------------------------------------------------------------------------------------------
Takeda Chemical Industries Ltd. 34,000 448,612
----------
7,236,281
- ---------------------------------------------------------------------------------------------------------
HEALTHCARE/SUPPLIES AND SERVICES--2.9%
Arjo AB 30,100 494,177
- ---------------------------------------------------------------------------------------------------------
Circon Corp. 52,500 1,023,750
- ---------------------------------------------------------------------------------------------------------
Pharmacia AB 57,600 1,023,823
- ---------------------------------------------------------------------------------------------------------
Stryker Corp. 20,000 915,000
- ---------------------------------------------------------------------------------------------------------
Takare PLC 150,000 513,072
----------
3,969,822
</TABLE>
9 Oppenheimer Global Growth & Income Fund
<PAGE> 10
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
===============================================
<S> <C> <C>
ENERGY--4.3%
- ---------------------------------------------------------------------------------------------------------
ENERGY SERVICES AND PRODUCERS--1.2%
Baker Hughes, Inc. 35,000 $ 713,125
- ---------------------------------------------------------------------------------------------------------
McDermott International, Inc. 10,000 273,750
- ---------------------------------------------------------------------------------------------------------
Petroleum Geo-Services AS(10) 30,500 683,912
----------
1,670,787
- ---------------------------------------------------------------------------------------------------------
OIL--INTEGRATED--3.1%
British Petroleum Co. PLC 7,000 587,125
- ---------------------------------------------------------------------------------------------------------
Compagnie Francaise de Petroleum Total 8,000 478,400
- ---------------------------------------------------------------------------------------------------------
OeMV AG(10) 5,000 504,110
- ---------------------------------------------------------------------------------------------------------
Repsol SA 16,000 455,873
- ---------------------------------------------------------------------------------------------------------
Royal Dutch Petroleum Co. 11,900 1,428,000
- ---------------------------------------------------------------------------------------------------------
YPF Sociedad Anonima, Sponsored ADR 39,200 744,800
----------
4,198,308
- ---------------------------------------------------------------------------------------------------------
FINANCIAL--8.9%
- ---------------------------------------------------------------------------------------------------------
BANKS--5.2%
Banco Bradesco SA 32,080,000 214,930
- ---------------------------------------------------------------------------------------------------------
Banco Frances del Rio de la Plata SA 30,000 183,045
- ---------------------------------------------------------------------------------------------------------
Banco Latinoamericano de Exportaciones SA, Cl. E 10,000 255,000
- ---------------------------------------------------------------------------------------------------------
Banco Portugues de Investimento 20,000 356,079
- ---------------------------------------------------------------------------------------------------------
Banco Wiese, Sponsored ADR(10) 15,464 108,250
- ---------------------------------------------------------------------------------------------------------
BankAmerica Corp. 13,000 627,250
- ---------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. 15,000 534,375
- ---------------------------------------------------------------------------------------------------------
Chemical Banking Corp. 15,000 566,250
- ---------------------------------------------------------------------------------------------------------
Citicorp 28,600 1,215,500
- ---------------------------------------------------------------------------------------------------------
Credit Local de France 7,000 588,200
- ---------------------------------------------------------------------------------------------------------
J.P. Morgan & Co., Inc. 8,000 488,000
- ---------------------------------------------------------------------------------------------------------
Korea First Bank 13,000 137,392
- ---------------------------------------------------------------------------------------------------------
Northern Trust Corp. 15,000 526,875
- ---------------------------------------------------------------------------------------------------------
PT Panin Bank(2) 341,500 434,885
- ---------------------------------------------------------------------------------------------------------
Turkiye Garanti Bankasi AS, Sponsored ADR(2) 290,000 962,075
----------
7,198,106
- ---------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--1.6%
American Express Co. 20,000 697,500
- ---------------------------------------------------------------------------------------------------------
H & R Block Inc. 10,000 433,750
- ---------------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 15,000 639,375
- ---------------------------------------------------------------------------------------------------------
SG Warburg & Co., Inc. Ords. 36,000 420,426
----------
2,191,051
- ---------------------------------------------------------------------------------------------------------
INSURANCE--2.1%
American International Group, Inc. 9,000 938,250
- ---------------------------------------------------------------------------------------------------------
Marschollek, Lautenschlaeger und Partner AG 500 298,504
- ---------------------------------------------------------------------------------------------------------
Reinsurance Australia Corp.(10) 999,800 1,613,367
----------
2,850,121
</TABLE>
10 Oppenheimer Global Growth & Income Fund
<PAGE> 11
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
===============================================
<S> <C> <C>
INDUSTRIAL--8.1%
- ---------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.2%
Sasib SpA 70,000 $ 284,603
- ---------------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--0.7%
Cimentos de Portugal SA 12,000 225,701
- ---------------------------------------------------------------------------------------------------------
Stone Container Corp. 30,000 686,250
----------
911,951
- ---------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--2.6%
Adia SA 2,500 459,574
- ---------------------------------------------------------------------------------------------------------
IHC Caland NV 8,650 216,555
- ---------------------------------------------------------------------------------------------------------
Ionics, Inc. 28,000 840,000
- ---------------------------------------------------------------------------------------------------------
ISS International Service System AS, Series B 20,000 545,520
- ---------------------------------------------------------------------------------------------------------
Nittoc Construction 50,000 567,129
- ---------------------------------------------------------------------------------------------------------
Raito Kogyo Co. Ltd. 22,000 529,629
- ---------------------------------------------------------------------------------------------------------
WMX Technologies, Inc. 15,000 412,500
----------
3,570,907
- ---------------------------------------------------------------------------------------------------------
MANUFACTURING--3.0%
Bombardier, Inc. 1,300 25,022
- ---------------------------------------------------------------------------------------------------------
Bucher Holding AG, B Shares 1,250 721,555
- ---------------------------------------------------------------------------------------------------------
Buderus AG 700 368,289
- ---------------------------------------------------------------------------------------------------------
Catena AB Free, Series A(10) 75,000 559,699
- ---------------------------------------------------------------------------------------------------------
Compagnie Generale des Eaux 7,000 712,846
- ---------------------------------------------------------------------------------------------------------
Mitsubishi Heavy Industries Ltd. 78,000 562,430
- ---------------------------------------------------------------------------------------------------------
Powerscreen International PLC 125,000 509,000
- ---------------------------------------------------------------------------------------------------------
VAE Eisenbahnsysteme AG(2) 1,600 155,335
- ---------------------------------------------------------------------------------------------------------
Valmet Corp., Cl. A(10) 25,000 488,550
----------
4,102,726
- ---------------------------------------------------------------------------------------------------------
TRANSPORTATION--1.6%
Brambles Industries Ltd. 50,000 463,569
- ---------------------------------------------------------------------------------------------------------
Kvaerner AS 15,400 670,548
- ---------------------------------------------------------------------------------------------------------
Lisnave-Estaleiros Navais de Lisbona SA(10) 45,000 220,402
- ---------------------------------------------------------------------------------------------------------
Singmarine Industries Ltd. 175,000 436,349
- ---------------------------------------------------------------------------------------------------------
Unitor Ships Service AS 32,000 454,012
----------
2,244,880
- ---------------------------------------------------------------------------------------------------------
TECHNOLOGY--11.1%
- ---------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--2.1%
Canon USA, Inc. 40,000 662,036
- ---------------------------------------------------------------------------------------------------------
Digital Equipment Corp. 25,000 946,875
- ---------------------------------------------------------------------------------------------------------
International Business Machines Corp. 15,300 1,252,688
----------
2,861,599
- ---------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--0.7%
Microsoft Corp.(10) 10,000 711,250
- ---------------------------------------------------------------------------------------------------------
Oracle Systems Corp.(10) 7,500 234,375
----------
945,625
</TABLE>
11 Oppenheimer Global Growth & Income Fund
<PAGE> 12
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
===============================================
<S> <C> <C>
ELECTRONICS--3.0%
Advanced Micro Devices, Inc.(10) 20,000 $ 677,500
- ---------------------------------------------------------------------------------------------------------
Austria Mikro Systeme International AG 7,000 657,783
- ---------------------------------------------------------------------------------------------------------
General Motors Corp., Cl. H 20,000 825,000
- ---------------------------------------------------------------------------------------------------------
Hewlett-Packard Co. 5,000 601,875
- ---------------------------------------------------------------------------------------------------------
Intel Corp. 6,000 509,250
- ---------------------------------------------------------------------------------------------------------
Motorola, Inc. 16,000 874,000
----------
4,145,408
- ---------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY--5.3%
Airtouch Communications, Inc.(10) 25,000 681,250
- ---------------------------------------------------------------------------------------------------------
AT&T Corp. 30,000 1,552,500
- ---------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(10) 20,000 762,500
- ---------------------------------------------------------------------------------------------------------
International CableTel, Inc. 30,000 892,500
- ---------------------------------------------------------------------------------------------------------
Korea Mobile Telecommunications Corp. 1,000 752,520
- ---------------------------------------------------------------------------------------------------------
Korea Mobile Telecommunications GDR(2) 6,400 171,600
- ---------------------------------------------------------------------------------------------------------
Millicom International Cellular SA 41,225 1,092,463
- ---------------------------------------------------------------------------------------------------------
Millicom, Inc. 15,500 --
- ---------------------------------------------------------------------------------------------------------
Pakistan Telecommunications, GDR(2)(10) 2,522 232,024
- ---------------------------------------------------------------------------------------------------------
SR Telecom, Inc. 16,500 166,147
- ---------------------------------------------------------------------------------------------------------
Technology Resources Industries Berhad 150,000 429,421
- ---------------------------------------------------------------------------------------------------------
Vodafone Group 157,629 509,641
----------
7,242,566
- ---------------------------------------------------------------------------------------------------------
UTILITIES--3.8%
- ---------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.7%
Central Costanera SA, Cl. B 150,000 442,609
- ---------------------------------------------------------------------------------------------------------
Korea Electric Power Co. 20,000 696,802
- ---------------------------------------------------------------------------------------------------------
Sithe Energies, Inc. 26,700 246,975
- ---------------------------------------------------------------------------------------------------------
Veba AG 1,500 546,952
- ---------------------------------------------------------------------------------------------------------
Verbund Oest Electriz 6,500 404,274
----------
2,337,612
- ---------------------------------------------------------------------------------------------------------
GAS UTILITIES--0.9%
British Gas PLC 100,000 466,651
- ---------------------------------------------------------------------------------------------------------
Hong Kong & China Gas 400,000 713,898
----------
1,180,549
- ---------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--0.2%
Celcaribe SA(2)(10) 284,550 259,771
- ---------------------------------------------------------------------------------------------------------
TELEPHONE UTILITIES--1.0%
Compania Peruana de Telefonos SA 133,300 163,487
- ---------------------------------------------------------------------------------------------------------
Telecom Italia SpA 300,000 701,785
- ---------------------------------------------------------------------------------------------------------
Telecommunication de Argentina, Cl. B 115,000 500,373
----------
1,365,645
----------
Total Common Stocks (Cost $73,949,406) 79,833,912
</TABLE>
12 Oppenheimer Global Growth & Income Fund
<PAGE> 13
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
==========================================================
===============================================
<S> <C> <C>
PREFERRED STOCKS--3.7%
- ---------------------------------------------------------------------------------------------------------
American Express Co., Debt Exchangeable for Common Stock
of First Data Corp., 6.25%, 10/15/96 40,000 $ 1,795,000
- ---------------------------------------------------------------------------------------------------------
Compania de Inversiones en Telecomunicaciones SA, Provisionally
Redeemable Income Debt Exchangeable for Stock, 7%, 3/3/98(2) 15,000 768,750
- ---------------------------------------------------------------------------------------------------------
Fiat SpA(10) 200,000 486,713
- ---------------------------------------------------------------------------------------------------------
Rhoen Klinikum AG 800 561,202
- ---------------------------------------------------------------------------------------------------------
Spar Handels AG, Non-Vtg. 3,000 747,538
- ---------------------------------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA 24,600,000 663,647
------------
Total Preferred Stocks (Cost $4,805,254) 5,022,850
</TABLE>
<TABLE>
<CAPTION>
UNITS
==========================================================
===============================================
<S> <C> <C>
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ---------------------------------------------------------------------------------------------------------
American Satellite Networks Wts., Exp. 6/99 3,875 --
- ---------------------------------------------------------------------------------------------------------
Sasib SpA Wts., Exp. 7/97 16,666 --
------------
Total Rights, Warrants and Certificates (Cost $0) --
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT
==========================================================
===============================================
<S> <C> <C>
REPURCHASE AGREEMENTS--1.8%
- ---------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 6.25%, dated
3/31/95, to be repurchased at $2,501,302 on 4/3/95, collateralized by
U.S. Treasury Nts., 4.75%--8.875%, 5/15/96--10/31/99, with a value of
$2,181,447 and U.S. Treasury Bonds, 8.125%--12.50%, 8/15/14--8/15/19,
with a value of $371,270 (Cost $2,500,000) $2,500,000 2,500,000
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $131,503,963) 98.9% 135,455,509
- ---------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES 1.1 1,456,781
---------- ------------
NET ASSETS 100.0% $136,912,290
========== ============
</TABLE>
Distribution of investments by country of issue, as a percentage of total
investments at value, is as follows:
<TABLE>
<CAPTION>
COUNTRY MARKET VALUE PERCENT
==========================================================
======================
<S> <C> <C>
United States $58,881,389 43.5%
- --------------------------------------------------------------------------------
Argentina 8,031,129 5.9
- --------------------------------------------------------------------------------
Great Britain 6,875,845 5.1
- --------------------------------------------------------------------------------
Sweden 5,906,559 4.4
- --------------------------------------------------------------------------------
Australia 5,464,949 4.0
- --------------------------------------------------------------------------------
Japan 5,408,446 4.0
- --------------------------------------------------------------------------------
Germany 5,333,857 3.9
- --------------------------------------------------------------------------------
Italy 4,360,120 3.2
- --------------------------------------------------------------------------------
Canada 3,654,921 2.7
- --------------------------------------------------------------------------------
Netherlands 3,370,856 2.5
- --------------------------------------------------------------------------------
France 2,843,670 2.1
- --------------------------------------------------------------------------------
Korea, Republic of (South) 2,427,655 1.8
- --------------------------------------------------------------------------------
Indonesia 2,162,933 1.6
- --------------------------------------------------------------------------------
Brazil 1,873,578 1.4
- --------------------------------------------------------------------------------
Norway 1,808,472 1.3
- --------------------------------------------------------------------------------
Austria 1,721,502 1.3
- --------------------------------------------------------------------------------
Portugal 1,605,091 1.2
- --------------------------------------------------------------------------------
Spain 1,513,908 1.1
- --------------------------------------------------------------------------------
Singapore 1,460,349 1.1
</TABLE>
13 Oppenheimer Global Growth & Income Fund
<PAGE> 14
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COUNTRY MARKET VALUE PERCENT
==========================================================
======================
<S> <C> <C>
Colombia 1,435,000 1.1%
- --------------------------------------------------------------------------------
Switzerland 1,181,126 0.9
- --------------------------------------------------------------------------------
New Zealand 986,805 0.7
- --------------------------------------------------------------------------------
Turkey 962,075 0.7
- --------------------------------------------------------------------------------
Hong Kong 914,711 0.7
- --------------------------------------------------------------------------------
Malaysia 879,573 0.6
- --------------------------------------------------------------------------------
Philippines 849,319 0.6
- --------------------------------------------------------------------------------
India 698,219 0.5
- --------------------------------------------------------------------------------
Denmark 545,520 0.4
- --------------------------------------------------------------------------------
Finland 488,549 0.4
- --------------------------------------------------------------------------------
Mexico 310,000 0.2
- --------------------------------------------------------------------------------
Belgium 309,107 0.2
- --------------------------------------------------------------------------------
Venezuela 295,515 0.2
- --------------------------------------------------------------------------------
Peru 271,737 0.2
- --------------------------------------------------------------------------------
Panama 255,000 0.2
- --------------------------------------------------------------------------------
Pakistan 232,024 0.2
- --------------------------------------------------------------------------------
Hungary 136,000 0.1
------------ -----
Total $135,455,509 100.0%
============ =====
</TABLE>
1. Face amount is reported in local currency. Foreign currency abbreviations are
as follows:
AUD--Australian Dollar GBP--British Pound Sterling
CAD--Canadian Dollar NZD--New Zealand Dollar
DEM--German Deutsche Mark SEK--Swedish Krona
ESP--Spanish Peseta
2. Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended. This security has been determined
to be liquid under guidelines established by the Board of Trustees. These
securities amount to $8,618,759 or 6.3% of the Fund's net assets, at March 31,
1995.
3. Represents the current interest rate for a variable rate security.
4. Interest or dividend is paid in kind.
5. Represents the current interest rate for an increasing rate security.
6. Represents a zero coupon bond that converts to a fixed rate of interest at a
designated future date.
7. Non-income producing--issuer is in default of interest payment.
8. Affiliated company. Represents ownership of at least 5% of the voting
securities of the issuer and is or was an affiliate, as defined in the
Investment Company Act of 1940, at or during the period ended March 31, 1995.
The aggregate fair value of all securities of affiliated companies as of March
31, 1995 amounted to $668,247. Transactions during the period in which the
issuer was an affiliate are as follows:
<TABLE>
<CAPTION>
BALANCE SEPTEMBER 30, 1994 GROSS ADDITIONS GROSS REDUCTIONS
BALANCE MARCH 31, 1995
-------------------------- --------------- ------------------- ----------------------
FACE COST FACE COST FACE COST FACE COST
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Kinnevik Industrifoerval AB,
10.50% Cv. Sub. Debs., 7/21/97 SEK 5,000,000 $1,028,610 -- $ -- 2,500,000 $514,305 2,500,000
$514,305
</TABLE>
<TABLE>
<CAPTION>
INTEREST
INCOME
- ---------------------------------------------
<S> <C>
Kinnevik Industrifoerval AB,
10.50% Cv. Sub. Debs., 7/21/97 SEK $30,903
</TABLE>
9. Identifies issues considered to be illiquid--See Note 6 of Notes to Financial
Statements.
10. Non-income producing security.
See accompanying Notes to Financial Statements.
14 Oppenheimer Global Growth & Income Fund
<PAGE> 15
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES MARCH 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
==========================================================
=================================================
<S> <C> <C>
ASSETS
Investments, at value (cost $131,503,963)--see accompanying statement $135,455,509
- -----------------------------------------------------------------------------------------------------------
Cash 297,142
- -----------------------------------------------------------------------------------------------------------
Receivables:
Interest and dividends 1,475,098
Investments sold 1,346,989
Shares of beneficial interest sold 470,872
- -----------------------------------------------------------------------------------------------------------
Other 12,804
------------
Total assets 139,058,414
==========================================================
=================================================
LIABILITIES
Unrealized depreciation on forward foreign currency exchange contracts--Note 5 22,818
- -----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 952,949
Investments purchased 924,117
Distribution and service plan fees--Note 4 82,009
Trustees' fees 2,986
Other 161,245
------------
Total liabilities 2,146,124
==========================================================
=================================================
NET ASSETS $136,912,290
============
==========================================================
=================================================
COMPOSITION OF NET ASSETS
Paid-in capital $135,035,968
- -----------------------------------------------------------------------------------------------------------
Overdistributed net investment income (502,838)
- -----------------------------------------------------------------------------------------------------------
Accumulated net realized loss from investment and foreign currency transactions (1,572,284)
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 3,951,444
------------
Net assets $136,912,290
============
==========================================================
=================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net
assets of $115,269,801 and 8,479,998 shares of beneficial interest outstanding) $13.59
Maximum offering price per share (net asset value plus sales
charge of 5.75% of offering price) $14.42
- -----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share
(based on net assets of $21,642,489 and 1,598,055 shares of beneficial interest outstanding) $13.54
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Global Growth & Income Fund
<PAGE> 16
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
==========================================================
=================================================
<S> <C>
INVESTMENT INCOME
Interest:
Unaffiliated companies (net of foreign withholding taxes of $9,492) $ 2,622,212
Affiliated companies 30,903
- -----------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $32,530) 369,885
-----------
Total income 3,023,000
==========================================================
=================================================
EXPENSES
Management fees--Note 4 565,640
- -----------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 144,855
Class C--Note 4 96,124
- -----------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 180,039
- -----------------------------------------------------------------------------------------------------------
Custodian fees and expenses 92,736
- -----------------------------------------------------------------------------------------------------------
Shareholder reports 90,993
- -----------------------------------------------------------------------------------------------------------
Legal and auditing fees 42,507
- -----------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 4,725
- -----------------------------------------------------------------------------------------------------------
Registration and filing fees--Class C 1,861
- -----------------------------------------------------------------------------------------------------------
Other 22,474
-----------
Total expenses 1,241,954
==========================================================
=================================================
NET INVESTMENT INCOME 1,781,046
==========================================================
=================================================
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments (3,000,527)
Foreign currency transactions 2,132,304
-----------
Net realized loss (868,223)
- -----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on:
Investments (7,607,392)
Translation of assets and liabilities denominated in foreign currencies 858,438
-----------
Net change (6,748,954)
-----------
Net realized and unrealized loss on investments and foreign currency transactions (7,617,177)
==========================================================
=================================================
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(5,836,131)
===========
</TABLE>
See accompanying Notes to Financial Statements.
16 Oppenheimer Global Growth & Income Fund
<PAGE> 17
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1995 SEPTEMBER 30,
(UNAUDITED) 1994
==========================================================
========================================================
<S> <C> <C>
OPERATIONS
Net investment income $ 1,781,046 $ 2,979,507
- ------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and foreign currency transactions (868,223) 8,432,699
- ------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
and translation of assets and liabilities denominated in foreign currencies (6,748,954) 1,533,429
------------- -------------
Net increase (decrease) in net assets resulting from operations (5,836,131) 12,945,635
==========================================================
========================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A ($.20 and $.35 per share, respectively) (1,709,401) (2,811,077)
Class C ($.157 and $.289 per share, respectively) (227,765) (180,983)
- ------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments
and foreign currency transactions:
Class A ($.818 and $.481 per share, respectively) (6,990,963) (3,355,571)
Class C ($.818 and $.481 per share, respectively) (1,095,494) (7,409)
==========================================================
========================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from Class A beneficial
interest transactions--Note 2 5,042,400 31,386,177
- ------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from Class C beneficial
interest transactions--Note 2 6,704,186 17,029,695
==========================================================
========================================================
NET ASSETS
Total increase (decrease) (4,113,168) 55,006,467
- ------------------------------------------------------------------------------------------------------------------
Beginning of period 141,025,458 86,018,991
------------- -------------
End of period (including overdistributed net investment
income of $502,838 and $346,718, respectively) $136,912,290 $141,025,458
</TABLE>
See accompanying Notes to Financial Statements.
17 Oppenheimer Global Growth & Income Fund
<PAGE> 18
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS C
------------------------------------------------------------- -------------------------
SIX MONTHS SIX MONTHS PERIOD
ENDED MAR. 31, YEAR ENDED ENDED ENDED
1995 SEPTEMBER 30, MAR. 31, 1995 SEPT. 30,
(UNAUDITED) 1994 1993 1992 1991(2) (UNAUDITED) 1994(1)
==========================================================
==========================================================
=============
<S> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $15.21 $14.09 $11.91 $12.43 $11.43 $15.17 $14.85
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
investment operations:
Net investment income .19 .33 .29 .26 .37 .14 .22
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (.79) 1.62 2.17 (.47) .95 (.79) .87
------ ------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations (.60) 1.95 2.46 (.21) 1.32 (.65) 1.09
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.20) (.35) (.17) (.28) (.32) (.16) (.29)
Distributions from net realized
gain on investments and foreign
currency transactions (.82) (.48) (.11) (.03) -- (.82) (.48)
------ ------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (1.02) (.83) (.28) (.31) (.32) (.98) (.77)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.59 $15.21 $14.09 $11.91 $12.43 $13.54 $15.17
------ ------ ------ ------ ------ ------ ------
==========================================================
==========================================================
============
TOTAL RETURN, AT NET ASSET VALUE(3) (3.85)% 13.96% 21.00% (1.76)% 11.73%
(4.23)% 7.41%
==========================================================
==========================================================
============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $115,270 $124,017 $86,019 $49,735 $29,239 $21,642 $17,008
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $122,565 $117,164 $59,951 $37,116 $19,340 $19,216 $7,896
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares outstanding at
end of period (in thousands) 8,480 8,154 6,104 4,177 2,352 1,598 1,121
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income 2.63%(4) 2.44% 2.68% 2.41% 4.05%(4) 1.85%(4)
1.85%(4)
Expenses 1.65%(4) 1.49% 1.56% 1.74% 1.94%(4) 2.42%(4)
2.44%(4)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(5) 51.9% 87.4% 90.6% 51.3% 23.5% 51.9%
87.4%
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to
September 30, 1994.
2. For the period from October 22, 1990 (commencement of operations) to
September 30, 1991.
3. 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. Total returns are not annualized for
periods of less than one full year.
4. Annualized.
5. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the six
months ended March 31, 1995 were $71,254,436 and $66,800,064, respectively.
See accompanying Notes to Financial Statements.
18 Oppenheimer Global Growth & Income Fund
<PAGE> 19
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Global Growth & Income 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 advisor is Oppenheimer
Management Corporation (the Manager). The Fund offers both Class A and Class C
shares. Class A shares are sold with a front-end sales charge. Class C shares
may be subject to a contingent deferred sales charge. Both classes of shares
have identical rights to earnings, assets and voting privileges, except that
each class has its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with respect to
matters affecting a single class. The following is a summary of significant
accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which cannot
be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or under consistently applied procedures established by the Board of
Trustees to determine fair value in good faith. Short-term "money market type"
debt securities having a remaining maturity of 60 days or less are valued at
cost (or last determined market value) adjusted for amortization to maturity of
any premium or discount. Forward contracts are valued based on the closing
prices of the forward currency contract rates in the London foreign exchange
markets on a daily basis as provided by a reliable bank or dealer. Options are
valued based upon the last sale price on the principal exchange on which the
option is traded or, in the absence of any transactions that day, the value is
based upon the last sale price on the prior trading date if it is within the
spread between the closing bid and asked prices. If the last sale price is
outside the spread, the closing bid or asked price closest to the last reported
sale price is used.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The accounting records of the Fund are maintained
in U.S. dollars. Prices of securities denominated in foreign currencies are
translated into U.S. dollars at the closing rates of exchange. Amounts related
to the purchase and sale of securities and investment income are translated at
the rates of exchange prevailing on the respective dates of such transactions.
The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and reported with all other foreign
currency gains and losses in the Fund's results of operations.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
TRUSTEES' FEES AND EXPENSES. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the six months
ended March 31, 1995, the Fund's projected benefit obligations were reduced by
$3,844, and a payment of $507 was made to a retired trustee resulting in an
accumulated liability of $29,755 at March 31, 1995.
19 Oppenheimer Global Growth & Income Fund
<PAGE> 20
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
==========================================================
======================
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
ORGANIZATION COSTS. The Manager advanced $15,751 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.
- --------------------------------------------------------------------------------
CLASSIFICATION OF DISTRIBUTIONS TO SHAREHOLDERS. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax purposes
primarily because of the recognition of certain foreign currency gains (losses)
as ordinary income (loss) for tax purposes. The character of the distributions
made during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also, due
to timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gain (loss) was
recorded by the Fund. Effective October 1, 1993, the Fund adopted Statement of
Position 93-2: Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. As a result, the Fund changed the classification of distributions to
shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax regulations.
- --------------------------------------------------------------------------------
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 of each class. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, 1995 YEAR ENDED SEPTEMBER 30, 1994(1)
------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,755,731 $24,780,283 4,823,552 $73,290,047
Dividends and distributions reinvested 624,865 8,399,907 392,494 5,940,555
Redeemed (2,054,906) (28,137,790) (3,165,575) (47,844,425)
---------- ----------- ---------- -----------
Net increase 325,690 $5,042,400 2,050,471 $31,386,177
- ------------------------------------------------------------------------------------------------------------
Class C:
Sold 574,577 $8,069,956 1,177,454 $17,876,870
Dividends and distributions reinvested 92,552 1,243,086 11,355 170,041
Redeemed (190,373) (2,608,856) (67,510) (1,017,216)
---------- ----------- ---------- -----------
Net increase 476,756 $6,704,186 1,121,299 $17,029,695
</TABLE>
1. For the year ended September 30, 1994 for Class A shares and for the period
from December 1, 1993 (inception of offering) to September 30, 1994 for Class C
shares.
==========================================================
======================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At March 31, 1995, net unrealized appreciation on investments of $3,951,546 was
composed of gross appreciation of $10,256,272, and gross depreciation of
$6,304,726.
==========================================================
======================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .80% on the first
$250 million of average annual net assets; the rate is .77% of the next $250
million, .75% of the next $500 million, .69% of the next $1 billion and .67%
thereafter. The Manager has agreed to reimburse the Fund if aggregate expenses
(with specified exceptions) exceed the most stringent state regulatory limit on
Fund expenses.
20 Oppenheimer Global Growth & Income Fund
<PAGE> 21
==========================================================
======================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (Continued)
For the six months ended March 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $454,728, of which $133,419 was
retained by Oppenheimer Funds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class C shares
totaled $70,231, of which $5,769 was paid to an affiliated broker/dealer. During
the six months ended March 31, 1995, OFDI received contingent deferred sales
charges of $7,747 upon redemption of Class C shares, as reimbursement for sales
commissions advanced by OFDI at the time of sale of such shares.
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 separate approved plans, each class may expend up to .25% of
its net assets annually to reimburse OFDI for costs incurred in connection with
the personal service and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other institutions. In
addition, Class C shares are subject to an asset-based sales charge of .75% of
net assets annually, to reimburse OFDI for sales commissions paid from its own
resources at the time of sale and associated financing costs. In the event of
termination or discontinuance of the Class C plan, the Board of Trustees may
allow the Fund to continue payment of the asset-based sales charge to OFDI for
distribution expenses incurred on Class C shares sold prior to termination or
discontinuance of the plan. During the six months ended March 31, 1995, OFDI
paid $6,246 and $255, respectively, to an affiliated broker/dealer as
reimbursement for Class A and Class C personal service and maintenance expenses
and retained $96,124 as reimbursement for Class C sales commissions and
service fee advances, as well as financing costs.
==========================================================
======================
5. FORWARD CONTRACTS
A forward foreign currency exchange contract (forward contract) is a commitment
to purchase or sell a foreign currency at a future date, at a negotiated rate.
The Fund uses forward contracts to seek to manage foreign currency
risks. They may also be used to tactically shift portfolio currency risk. The
Fund generally enters into forward contracts as a hedge upon the purchase or
sale of a security denominated in a foreign currency. In addition, the Fund may
enter into such contracts as a hedge against changes in foreign currency
exchange rates on portfolio positions.
Forward contracts are valued based on the closing prices of the
forward currency contract rates in the London foreign exchange markets on a
daily basis as provided by a reliable bank or dealer. The Fund will realize a
gain or loss upon the closing or settlement of the forward transaction.
In this report, securities held in segregated accounts to cover
net exposure on outstanding forward contracts are noted in the Statement of
Investments where applicable. Gains and losses on outstand ing contracts
(unrealized appreciation or depreciation on forward contracts) are reported in
the Statement of Assets and Liabilities. Realized gains and losses are reported
with all other foreign currency gains and losses in the Fund's Statement of
Operations.
Risks include the potential inability of the counterparty to meet
the terms of the contract and unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
At March 31, 1995, the Fund had outstanding forward contracts to purchase and
sell foreign currencies as follows:
<TABLE>
<CAPTION>
NUMBER OF UNREALIZED
EXPIRATION CONTRACTS VALUATION AS OF APPRECIATION
CONTRACTS TO PURCHASE DATE (000s) MARCH 31, 1995 (DEPRECIATION)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
French Franc 4/28/95 455 $455,566 $ 665
- -------------------------------------------------------------------------------------
Hong Kong Dollar 4/3/95--4/4/95 70 69,539 (5)
- -------------------------------------------------------------------------------------
Japanese Yen 4/5/95 183 183,303 42
- -------------------------------------------------------------------------------------
Netherlands Guilder 4/6/95--4/7/95 214 215,709 1,906
-------- ------
$924,117 $2,608
======== ======
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF UNREALIZED
EXPIRATION CONTRACTS VALUATION AS OF APPRECIATION
CONTRACTS TO PURCHASE DATE (000s) MARCH 31, 1995 (DEPRECIATION)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Austrian Schilling 4/3/95--4/10/95 903 $926,831 $(23,892)
- -------------------------------------------------------------------------------------
Italian Lira 4/28/95 102 103,092 (945)
- -------------------------------------------------------------------------------------
Swedish Krone 4/3/95--4/5/95 304 304,174 (589)
---------- --------
$1,334,097 (25,426)
========== --------
$(22,818)
========
</TABLE>
21 Oppenheimer Global Growth & Income Fund
<PAGE> 22
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)
- --------------------------------------------------------------------------------
==========================================================
======================
6. ILLIQUID SECURITIES
At March 31, 1995, investments in securities included issues that are illiquid
or restricted. The securities are often purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. The Fund intends to invest no more
than 10% of its net assets (determined at the time of purchase) in illiquid or
restricted securities. The aggregate value of these securities subject to this
limitation at March 31, 1995 was $1,262,591, which represents .92% of the Fund's
net assets. Information concerning these securities is as follows:
<TABLE>
<CAPTION>
VALUATION
PER UNIT AS OF
SECURITY ACQUISITION DATE COST PER UNIT MARCH 31, 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Plant Genetics Systems International NV 5/27/92 $11.18 $6.17
- -----------------------------------------------------------------------------------------------
Noble China Corp., 9% Cv. Sub. Debs., 11/30/04 11/21/94 $ .73 $ .76
</TABLE>
Pursuant to guidelines adopted by the Board of Trustees, certain unregistered
securities are determined to be liquid and are not included within the 10%
limitations specified above.
<PAGE>
Appendix A: Ratings of Investments
Description of Moody's Investors Service, Inc. Bond Ratings
Aaa: Bonds which are rated "Aaa" are judged to be the best quality
and to carry the smallest degree of investment risk. Interest payments
are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely
to change, the changes that can be expected are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what are
generally known as "high-grade" bonds. They are rated lower than the
best bonds because margins of protection may not be as large as with
"Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative
elements; their future cannot be considered well-assured. Often the
protection of interest and principal payments may be very moderate and
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments or
of maintenance of other terms of the contract over any long period of
time may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other
marked shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Description of Standard & Poor's Bond Ratings
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from "AAA" issues only in small
degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse
effects of change in circumstances and economic conditions.
BBB: The bond investments in which the Fund will principally invest
will be in the lower-rated categories, described below. Bonds rated
"BBB" are regarded as having an adequate capacity to pay principal and
interest. Whereas they normally exhibit protection parameters, adverse
economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded,
on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the
terms of the obligation. "BB" indicates the lowest degree of
speculation and "CC" the highest degree. While such bonds will likely
have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C."
Bonds rated "D" are in default and payment of interest and/or repayment
of principal is in arrears.
<PAGE>
Appendix B: Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
Investment 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 Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
