Dear Shareholders:

Another year has come and gone—but this was no ordinary year.

From the surprising results of the UK referendum in favor of leaving the European Union to the dramatic results of the U.S. presidential election, 2016 was a year for the history books. From an investment perspective, it was also a year that introduced a new set of opportunities alongside new risks.

Then again, opportunity and risk have always been joined at the hip. And as we face the year to come, I would like to express my appreciation for your confidence in our ability to navigate a shifting economic, financial and socio-political landscape in pursuit of returns on your investments with us.

Our Outlook for 2017

Krishna Memani, our chief investment officer, notes that the U.S. election has changed our outlook for the American and global economies in the year ahead. Indeed, growth in the United States could surprise to the upside if President-elect Donald J. Trump emphasizes targeted infrastructure spending, corporate tax reform, and the easing of business regulations—and de-emphasizes protectionism.

In fact, accommodative fiscal policy in the United States and abroad could provide a boost to the world economy, whose growth proved resilient in 2016 and continues to support equity returns. For example, while China’s economy has decelerated, it has also stabilized—and is going through a mini “boom”—as a result of massive government support. Since China remains the largest contributor to global growth, this stabilization should be good news for emerging markets and commodity prices, at least in the first two quarters of 2017.

In all, we see the likelihood of a bull market persisting for an eighth consecutive year.

But the risks to this outlook have grown. Fears that the U.S. economy will overheat have risen, as have concerns about the pace and magnitude of interest rate hikes by the U.S. Federal Reserve. Higher interest rates could be a drag on the aging economic cycle, the positive economic effect of fiscal stimulus could fade, and protectionist sentiment in the United States and elsewhere may hurt global trade.

Balancing the opportunities and risks of this macro picture requires a long view. As a firm that was founded nearly 60 years ago, we have been through countless market gyrations that only reinforced our long-term investment philosophy and honed our discipline of risk management, through prosperous and challenging times alike.

A Historic Year for Us in 2016

Against the backdrop of this momentous year, we made our own history at OppenheimerFunds by offering new and innovative solutions to investors.

Building on our acquisition of VTL Associates in 2015, we have expanded our lineup of “smart beta” ETFs. Smart beta is a strategy of weighting stocks according to fundamental criteria (such as revenue, dividends or cash flow) or factors (e.g., momentum and low volatility) that have historically been associated with strong long-term performance. The strategy’s objective is to maintain a diverse portfolio of securities while seeking to outperform market-cap-weighted strategies over long market cycles.

As part of our smart beta platform, we launched Oppenheimer ESG Revenue ETF and Oppenheimer Global ESG Revenue ETF, which focus on large-cap companies with highly rated environmental, social and governance practices in the United States and around the world, respectively.

Separately, we launched Oppenheimer International Growth and Income Fund, which seeks to boost total return by investing in dividend-paying companies that may benefit from long-term growth trends. And, in partnership with Macquarie Investment Management, we launched Oppenheimer Macquarie Global Infrastructure Fund, which seeks to offer portfolio diversification, a potential hedge against inflation, high risk-adjusted returns relative to the broader equity market, and liquid exposure to an asset class that had traditionally only been available in private or illiquid form.

We were pleased that eight of our funds earned the 2016 Thomson Reuters Lipper Fund Awards for their strong relative risk-adjusted performance over the 3-, 5- or 10-year periods ended November 30, 2015. We believe these awards are a testament to the efficacy of our long-term approach to investing.

In addition, we are bringing some of our most compelling investment strategies to an international audience. In the fourth quarter, we launched an Ireland-domiciled UCITS platform for non-U.S. investors. The initial focus is on investment opportunities in global and developing market equities.

Finally, as stewards of investment capital, we have sustained our broader mission of investing for the future and giving back to the communities in which we work and live. We continue to promote math education for younger generations who will need it to succeed in their personal and professional lives. Toward that end, we announced a new philanthropic initiative called 10,000 Kids by 2020, which aims to engage 10,000 students in math literacy programs over the next several years through non-profit partnerships and active employee volunteerism, including our sponsorship of the National Museum of Mathematics (MoMath). Our employees—who enjoy paid time off to help worthy causes, and whose charitable donations we match—have continued supporting philanthropic efforts in the United States and abroad. And, as investors in emerging markets, we partnered with the Financial Times for a second year in a row to sponsor our annual Emerging Voices Awards program, which recognizes and rewards outstanding artists in the developing world. For more information, visit ft.com/emerging-voices.

On behalf of OppenheimerFunds, I would like to thank you for the trust you have placed in us.

My colleagues and I look forward to continue helping you pursue your investment goals in 2017 and the years ahead.

Regards,
Art Steinmetz

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