OPPENHEIMER
GROWTH FUND
PROSPECTUS DATED DECEMBER 1, 1997
Oppenheimer Growth Fund is a mutual fund that seeks capital appreciation as its
investment objective. The Fund emphasizes investment in securities of
established mid- and large -capitalization growth companies that the Fund's
investment manager believes have above average earnings prospects but are
selling at below-normal valuations. The Fund does not invest to earn current
income to distribute to shareholders.
The Fund invests primarily in common stocks. The Fund may also use futures
contracts for hedging purposes to seek to reduce the risks of market
fluctuations that affect the value of the securities the Fund holds. The Fund
may borrow money from banks to buy securities, which is a speculative investment
method known as "leverage."
Please refer to "Investment Objectives and Policies" for more information
about the types of securities the Fund invests in and refer to "Investment
Risks" for a discussion of 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 December
1, 1997, Statement of Additional Information. For a free copy, call
OppenheimerFunds Services, the Fund's Transfer Agent, at 1-800 -525-7048, or
write to the Transfer Agent at the address on the back cover. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission and is incorporated into this Prospectus by reference (which means
that it is legally part of this Prospectus).
(OppenheimerFunds logo)
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT
GUARANTEED BY ANY BANK, ARE NOT INSURED BY THE F.D.I.C. OR ANY OTHER AGENCY, AND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
CONTENTS
ABOUT THE FUND
3 EXPENSES
5 A BRIEF OVERVIEW OF THE FUND
7 FINANCIAL HIGHLIGHTS
12 INVESTMENT OBJECTIVE AND POLICIES
13 INVESTMENT RISKS
14 INVESTMENT TECHNIQUES AND STRATEGIES
17 HOW THE FUND IS MANAGED
18 PERFORMANCE OF THE FUND
ABOUT YOUR ACCOUNT
23 HOW TO BUY SHARES
Class A Shares
Class B Shares
Class C Shares
Class Y Shares
38 SPECIAL INVESTOR SERVICES
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
40 HOW TO SELL SHARES
By Mail
By Telephone
42 HOW TO EXCHANGE SHARES
44 SHAREHOLDER ACCOUNT RULES AND POLICIES
46 DIVIDENDS, CAPITAL GAINS AND TAXES
48 APPENDIX A: SPECIAL SALES CHARGE ARRANGEMENTS
<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
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 expect to bear indirectly. The numbers below
are based on the Fund's expenses during its fiscal year ended August 31, 1997.
o SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell
shares of the Fund. Please refer to "About Your Account" starting on page 23 for
an explanation of how and when these charges apply.
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
- ------------------------------------------------------------------------------
Maximum Sales Charge 5.75% None None None
on Purchases (as a % of
offering price)
- ------------------------------------------------------------------------------
Maximum Deferred Sales None(1) 5% in the first 1% if shares None
Charge (as a % of the year, declining are redeemed
lower of the original to 1% in the within 12
ofeering price or sixth year and months of
redemption proceeds) eliminated purchase(2)
thereafter
- ------------------------------------------------------------------------------
Maximum Sales Charge None None None None
on Reinvested Dividends
- ------------------------------------------------------------------------------
Exchange Fee None None None None
- ------------------------------------------------------------------------------
Redemption Fee None None None None
(1)If you invest $1 million or more ($500,000 or more for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" on
page 28) in Class A shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 12 calendar months (18 months for shares purchased
prior to May 1, 1997) from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares - Buying Class A Shares," below.
(2)See "How to Buy Shares- Buying Class B Shares" and "How to Buy Shares -
Buying Class C Shares," below for more information on the contingent deferred
sales charge.
o 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, OppenheimerFunds, Inc. (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.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
- ------------------------------------------------------------------------------
Management Fees 0.65% 0.65% 0.65% 0.65%
- ------------------------------------------------------------------------------
12b-1 Plan Fees 0.18% 1.00% 1.00% None
- ------------------------------------------------------------------------------
Other Expenses 0.18% 0.19% 0.19% 0.12%
- ------------------------------------------------------------------------------
Total Fund Operating Expenses 1.01% 1.84% 1.84% 0.77%
The numbers in the chart above are based upon the Fund's business expenses
in its fiscal year ended August 31, 1997. These amounts are shown as a
percentage of the average net assets of each class of the Fund's shares for that
year. The actual expenses for each class of shares in future years may be more
or less than the numbers in the chart, depending on a number of factors,
including the actual amount of the Fund's assets represented by each class of
shares. The "12b-1 Plan Fees" for Class A shares are service fees (the maximum
fee is 0.25% of average annual net assets of that class). Currently, the Board
of Trustees has set the maximum fee at 0.15% for assets representing Class A
shares sold before April 1, 1991, and 0.25% for assets representing Class A
shares sold on or after that date. For Class B and Class C shares, the 12b-1
Plan Fees are the service fees (the maximum service fee is 0.25% of average
annual net assets of that class) and the asset-based sales charge of 0.75%.
o EXAMPLES. To try to show the effect of these expenses on an investment
over time, we have created the hypothetical examples shown below. Assume that
you make a $1,000 investment in each class of shares of the Fund, that the
Fund's annual return is 5%, and that its operating expenses for each class are
the ones shown in the Annual Fund Operating Expenses table above. If you were to
redeem your shares at the end of each period shown below, your investment would
incur the following expenses by the end of 1, 3, 5 and 10 years:
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
- ------------------------------------------------------------------------------
Class A Shares $67 $88 $110 $174
- ------------------------------------------------------------------------------
Class B Shares $69 $88 $120 $174
- ------------------------------------------------------------------------------
Class C Shares $29 $58 $100 $216
- ------------------------------------------------------------------------------
Class Y Shares $8 $25 $43 $95
If you did not redeem your investment, it would incur the following
expenses:
1 YEAR 3 YEARS 5 YEARS 10 YEARS*
- ------------------------------------------------------------------------------
Class A Shares $67 $88 $110 $174
- ------------------------------------------------------------------------------
Class B Shares $19 $58 $100 $174
- ------------------------------------------------------------------------------
Class C Shares $19 $58 $100 $216
- ------------------------------------------------------------------------------
Class Y Shares $8 $25 $43 $95
*In the first example, expenses include the Class A initial sales charge and the
applicable Class B or Class C contingent deferred sales charge. In the second
example, Class A expenses include the initial sales charge, but Class B and
Class C expenses do not include contingent deferred sales charges. The Class B
expenses in years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into Class A shares
after 6 years. Because of the effect of the asset-based sales charge and the
contingent deferred sales charge imposed on Class B and Class C shares,
long-term holders of Class B and Class C shares could pay the economic
equivalent of more than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the likelihood that
this will occur. Please refer to "How to Buy Shares -Buying Class B Shares" for
more information.
THESE EXAMPLES SHOW THE EFFECT OF EXPENSES ON AN INVESTMENT, BUT ARE NOT
MEANT TO STATE OR PREDICT ACTUAL OR EXPECTED COSTS OR INVESTMENT RETURNS OF THE
FUND, ALL OF WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
<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.
o WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund's investment objective
is to seek capital appreciation.
o WHAT DOES THE FUND INVEST IN? To seek capital appreciation, the Fund
primarily invests in common stocks (these are called "equity securities"), and
short-term debt securities for defensive purposes. The Fund may also use futures
contracts for hedging purposes to try to manage investment risks. These
investments are more fully explained in "Investment Objective and Policies"
starting on page 12.
o WHO MANAGES THE FUND? The Fund's investment adviser (the "Manager") is
OppenheimerFunds, Inc., which (including a subsidiary) manages investment
company portfolios currently having over $75 billion in assets at September 30,
1997. The Manager is paid an advisory fee by the Fund, based on its net assets.
The Fund has a portfolio manager, Robert C. Doll, Jr., who is employed by the
Manager and 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 17 for more information about the Manager and its fees.
o HOW RISKY IS THE FUND? All investments carry risks to some degree. It is
important to remember that the Fund is designed for long-term investors. The
Fund's investments in stocks are subject to changes in their value from a number
of factors such as changes in general stock market movements. A change in value
of particular stocks may result from an event affecting the issuer, or changes
in interest rates that can affect stock prices. The Fund's investments in
foreign securities are subject to additional risks associated with investing
abroad, such as the effect of currency rate changes on stock values. These
changes affect the value of the Fund's investments and its share prices for each
class of its shares. In the Oppenheimer funds spectrum, the Fund is generally
considered more aggressive than the money market or growth and income funds
because it invests for capital appreciation in common stocks, emphasizing
"growth" stocks that tend to be more volatile than other investments. 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 objectives and your shares may be worth more or less than their
original cost when you redeem them. Please refer to "Investment Risks" starting
on page 13 for a more complete discussion of the Fund's investment risks.
o 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 23 for more
details.
o WILL I PAY A SALES CHARGE TO BUY SHARES? The Fund has four classes of
shares. Each class of shares has 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 shares and Class C shares are
offered without a front-end sales charge, but may be subject to a contingent
deferred sales charge if redeemed within 6 years or 12 months, respectively, of
purchase. There is also an annual asset-based sales charge on Class B shares and
Class C shares. Class Y shares are offered at net asset value without sales
charge only to certain institutional investors. Please review "How to Buy
Shares" starting on page 23 for more details, including a discussion about
factors you and your financial advisor should consider in determining which
class may be appropriate for you.
<PAGE>
o 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 40. The Fund also offers exchange
privileges to other Oppenheimer funds, described in "How to Exchange Shares" on
page 42.
o 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 market index, which we have done on pages 21 and 22. 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 and 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 August 31, 1997, is included in
the Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
------------------------------------------------------------------
YEAR ENDED AUGUST 31, YEAR ENDED JUNE 30,
1997 1996(2) 1996 1995
=======================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $33.69 $33.43 $30.80 $26.65
- -----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .62 .08 .44 .36
Net realized and unrealized gain (loss) 10.37 .18 5.70 6.83
------ ------ ------ ------
Total income (loss) from investment operations 10.99 .26 6.14 7.19
- -----------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.49) -- (.41) (.24)
Distributions from net realized gain (3.77) -- (3.10) (2.80)
------ ------ ------ ------
Total dividends and distributions to shareholders (4.26) -- (3.51) (3.04)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $40.42 $33.69 $33.43 $30.80
====== ====== ====== ======
=======================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 35.03% 0.78% 21.00% 29.45%
=======================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,590,927 $1,127,836 $1,120,046 $860,736
- -----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,369,406 $1,101,233 $1,018,022 $727,102
- -----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.74% 1.50%(6) 1.43% 1.31%
Expenses 1.01% 1.03%(6) 1.06% 1.05%
- -----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 25.3% 6.3% 38.0% 35.4%
Average brokerage commission rate(8) $0.0592 $0.0595 $0.0583 --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to June 30, 1994.
2. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
3. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
4. For the period from August 17, 1993 (inception of offering) to June 30, 1994.
Per share amounts calculated based on the weighted average number of shares
outstanding during the period.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988
==================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$27.34 $24.94 $21.88 $20.60 $18.90 $17.13 $20.37
- --------------------------------------------------------------------------------------------------
.16 .19 .29 .47 .64 .62 .67
(.05) 4.03 3.13 1.36 1.76 1.78 (.89)
------ ------ ------ ------ ------ ------ ------
.11 4.22 3.42 1.83 2.40 2.40 (.22)
- --------------------------------------------------------------------------------------------------
(.16) (.25) (.36) (.55) (.70) (.59) (1.27)
(.64) (1.57) -- -- -- (.04) (1.75)
------ ------ ------ ------ ------ ------ ------
(.80) (1.82) (.36) (.55) (.70) (.63) (3.02)
- --------------------------------------------------------------------------------------------------
$26.65 $27.34 $24.94 $21.88 $20.60 $18.90 $17.13
====== ====== ====== ====== ====== ====== ======
==================================================================================================
0.27% 16.88% 15.69% 9.39% 12.98% 14.54% (1.03)%
==================================================================================================
$656,934 $743,830 $630,767 $550,480 $551,295 $542,250 $552,863
- --------------------------------------------------------------------------------------------------
$720,765 $710,391 $624,527 $520,335 $547,090 $529,699 $570,250
- --------------------------------------------------------------------------------------------------
0.56% 0.72% 1.14% 2.20% 3.07% 3.31% 3.78%
1.07% 0.93% 0.90% 0.94% 0.92% 0.97% 0.95%
- --------------------------------------------------------------------------------------------------
19.8% 23.2% 36.7% 31.1% 27.6% 27.1% 120.3%
-- -- -- -- -- -- --
</TABLE>
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended August 31, 1997 were $249,853,081 and $549,224,265, respectively.
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS B
----------------------------------------------------------------------
YEAR ENDED AUGUST 31, YEAR ENDED JUNE 30,
1997 1996(2) 1996 1995 1994(4)
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $32.94 $32.74 $30.36 $26.44 $27.02
- --------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .36 .04 .23 .20 (.04)
Net realized and unrealized gain (loss) 10.08 .16 5.53 6.65 .21
------ ------ ------ ------ ------
Total income (loss) from investment operations 10.44 .20 5.76 6.85 .17
- --------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.27) -- (.28) (.13) (.11)
Distributions from net realized gain (3.77) -- (3.10) (2.80) (.64)
------ ------ ------ ------ ------
Total dividends and distributions to shareholders (4.04) -- (3.38) (2.93) (.75)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $39.34 $32.94 $32.74 $30.36 $26.44
====== ====== ====== ====== ======
==========================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 33.93% 0.61% 19.95% 28.22% (0.20)%
==========================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $284,227 $137,437 $129,484 $43,267 $8,747
- --------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $203,518 $131,142 $ 90,501 $18,722 $5,119
- --------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.92% 0.61%(6) 0.60% 0.44% (0.22)%(6)
Expenses 1.84% 1.92%(6) 1.89% 2.02% 1.98%(6)
- --------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 25.3% 6.3% 38.0% 35.4% 19.8%
Average brokerage commission rate(8) $0.0592 $0.0595 $0.0583 -- --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to June 30, 1994.
2. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
3. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
4. For the period from August 17, 1993 (inception of offering) to June 30, 1994.
Per share amounts calculated based on the weighted average number of shares
outstanding during the period.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
<PAGE>
<TABLE>
<CAPTION>
CLASS C CLASS Y
- ----------------------------------------- -----------------------------------------------------------------
PERIOD
ENDED
YEAR ENDED AUGUST 31, JUNE 30, YEAR ENDED AUGUST 31, YEAR ENDED JUNE 30,
1997 1996(2) 1996(3) 1997 1996(2) 1996 1995 1994(1)
================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$33.42 $33.22 $33.44 $33.69 $33.42 $30.80 $26.64 $28.08
- ----------------------------------------------------------------------------------------------------------------
.42 .02 .40 .66 .08 .46 .30 .02
10.17 .18 2.88 10.42 .19 5.70 6.92 (1.46)
------ ------ ------ ------ ------ ------ ------ ------
10.59 .20 3.28 11.08 .27 6.16 7.22 (1.44)
- ----------------------------------------------------------------------------------------------------------------
(.37) -- (.40) (.57) -- (.44) (.26) --
(3.77) -- (3.10) (3.77) -- (3.10) ( 2.80) --
------ ------ ------ ------ ------ ------ ------ ------
(4.14) -- (3.50) (4.34) -- (3.54) (3.06) --
- ----------------------------------------------------------------------------------------------------------------
$39.87 $33.42 $33.22 $40.43 $33.69 $33.42 $30.80 $26.64
====== ====== ====== ====== ====== ====== ====== ======
================================================================================================================
33.93% 0.60% 10.07% 35.36% 0.81% 21.10% 29.59% (5.13)%
================================================================================================================
$28,145 $5,034 $3,593 $96,679 $18,497 $16,110 $3,189 $ 9
- ----------------------------------------------------------------------------------------------------------------
$13,705 $4,105 $1,804 $62,619 $16,792 $ 9,384 $ 536 $10
- ----------------------------------------------------------------------------------------------------------------
0.95% 0.44%(6) 0.65%(6) 2.00% 1.67%(6) 1.56% 1.54% 1.09%(6)
1.84% 2.10%(6) 1.81%(6) 0.77% 0.87%(6) 0.94% 1.04% 1.25%(6)
- ----------------------------------------------------------------------------------------------------------------
25.3% 6.3% 38.0% 25.3% 6.3% 38.0% 35.4% 19.8%
$0.0592 $0.0595 $0.0583 $0.0592 $0.0595 $0.0583 -- --
</TABLE>
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended August 31, 1997 were $249,853,081 and $549,224,265, respectively.
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
OBJECTIVE. The Fund invests its assets to seek capital appreciation for
shareholders. The Fund does not invest to seek current income to pay
shareholders.
INVESTMENT POLICIES AND STRATEGIES. The Fund seeks its investment objective by
emphasizing investment in common stocks issued by established mid- and large-
capitalization "growth companies" that, in the opinion of the Manager, have
above average earnings prospects but are selling at below-normal valuations.
Mid-cap companies generally have market capitalizations between $1 billion and
$5 billion, and large-cap companies generally have market capitalizations
greater than $5 billion.
"Growth companies" may be developing new products or services, or
expanding into new markets for their products. While they may have what the
Manager believes to be favorable prospects for the long-term, they normally
retain a large part of their earnings for research, development and investment
in capital assets. Therefore, they tend not to emphasize the payment of
dividends. In the event that economic or financial conditions adversely affect
equity securities, defensive investment methods may be stressed. Investment
opportunities may be sought among securities of smaller, less well known
companies, although the Fund's emphasis is on mid- and large-cap issuers.
The securities selected for defensive or liquidity purposes may include
cash, cash equivalents (such as commercial paper) and U.S. Government
securities. It is expected that the emphasis of this portion of the portfolio
will usually be on short-term debt securities (i.e., those maturing in one year
or less from date of purchase), since such securities usually may be quickly
disposed of at prices not involving significant gains or losses when the Manager
wishes to increase the portion of the portfolio invested in securities selected
for appreciation possibilities.
o 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 policies. The Fund's investment
policies and practices 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.
INVESTMENT RISKS
All investments carry risks to some degree, whether they are risks that market
prices of the investment will fluctuate (this is known as "market risk") or that
the underlying issuer will experience financial difficulties and may default on
its obligations under a fixed-income investment to pay interest and repay
principal (this is referred to as "credit risk"). These general investment
risks, and the special risks of certain types of investments that the Fund may
hold are described below. They affect the value of the Fund's investments, its
investment performance, and the prices of its shares. These risks collectively
form the risk profile of the Fund.
Because of the types of securities the Fund invests in and the investment
techniques the Fund uses, the Fund is designed for investors who are investing
for the long term. It is not intended for investors seeking assured income or
preservation of capital. While the Manager tries to reduce risks
<PAGE>
by diversifying investments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes in overall
market prices can occur at any time, and because the income earned on securities
is subject to change, there is no assurance that the Fund will achieve its
investment objective. When you redeem your shares, they may be worth more or
less than what you paid for them.
o STOCK INVESTMENT RISKS. Because the Fund invests 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.
o INTEREST RATE RISKS. Debt securities are subject to changes in their
values due to changes in prevailing interest rates. When prevailing interest
rates fall, the value of already-issued debt securities generally rise. When
interest rates rise, the values of already-issued debt securities generally
decline. The magnitude of these fluctuations will often be greater for
longer-term debt securities than shorter-term debt 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 the change on the
value of the Fund's portfolio of debt securities.
o FOREIGN SECURITIES HAVE SPECIAL RISKS. The Fund may invest up to 25% of
its total assets in foreign securities, but generally limits its investments in
foreign securities to no more than 10% of its total assets. While foreign
securities offer special investment opportunities, there are also special risks.
The change in 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. 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 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. More information about the
risks and potential rewards of investing in foreign securities is contained in
the Statement of Additional Information.
o BORROWING FOR LEVERAGE. The Fund may borrow money from banks to buy
securities. The Fund will borrow only if it can do so without putting up assets
as security for a loan. This is a speculative investment method known as
"leverage." This investing technique may subject the Fund to greater risks and
costs than funds that do not borrow. These risks may include the possibility
that the Fund's net asset value per share will fluctuate more than funds that
don't borrow. Borrowing for leverage is subject to limits under the Investment
Company Act, described in more detail in "Borrowing for Leverage" in the
Statement of Additional Information. Under the Investment Company Act, the Fund
can borrow only if it maintains a 300% ratio of net assets to borrowing at all
times.
o HEDGING INSTRUMENTS CAN BE VOLATILE INVESTMENTS AND MAY INVOLVE SPECIAL
RISKS. The use of futures for hedging purposes 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 positions were not correlated with its other investments or if it
could not close out a position because the market for the future was illiquid.
These risks are described in greater detail in the Statement of Additional
Information.
<PAGE>
INVESTMENT TECHNIQUES AND STRATEGIES
The Fund may also use the investment techniques and strategies described below,
which involve certain risks. The Statement of Additional Information contains
more information about these practices, including limitations on their use that
are designed to reduce some of the risks.
o SMALL, UNSEASONED COMPANIES. The Fund may invest in securities of small,
unseasoned companies. These are companies that, together with the operations of
predecessors, have been in operation for less than three years. 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. As a matter of fundamental policy, the Fund
will not make an investment that will result in more than 15% of the Fund's
total assets being invested in securities of such companies. The Fund currently
intends to invest no more than 5% of its total assets in securities of small,
unseasoned issuers.
o FOREIGN SECURITIES. The Fund may purchase equity securities issued or
guaranteed by foreign companies or foreign governments or their agencies. The
Fund may invest up to 25% of its total assets in foreign securities, but
generally limits its investments in foreign securities to no more than 10% of
its total assets. The Fund may buy securities in any country, developed or
underdeveloped. Investments in securities of issuers in underdeveloped countries
generally involve more risk and may be considered highly speculative.
o SHORT-TERM DEBT SECURITIES. When the Manager believes it is appropriate
(for example, for defensive purposes during unstable market conditions), the
Fund can hold cash or invest without limit in money market instruments. The Fund
will invest in high quality, short-term money market instruments such as U.S.
Treasury and agency obligations; commercial paper (short-term, unsecured,
negotiable promissory notes of a domestic or foreign company); short-term debt
obligations of corporate issuers; and certificates of deposit and bankers'
acceptances (time drafts drawn on commercial banks usually in connection with
international transactions) of domestic or foreign banks and savings and loan
associations. The issuers of foreign money market instruments purchased by the
Fund must have at least $1 billion (U.S.) of assets.
o 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
currently intends not to invest more than 10% of its net assets in illiquid or
restricted securities (the Board may increase that limit to 15%). The Manager
monitors holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
o LOANS OF PORTFOLIO SECURITIES. To raise cash for liquidity purposes, the
Fund may lend its portfolio securities to brokers, dealers and other types of
financial institutions approved by the Board of Trustees. The Fund must receive
collateral for a loan. After any loan, the value of the securities loaned must
not exceed 25% of the value of the Fund's total assets. There are some risks in
connection with securities lending. The Fund might experience a delay in
receiving additional collateral to secure a loan, or a delay in recovery of the
loaned securities if the borrower defaults. The Fund presently does not intend
to make loans of portfolio securities that will exceed 5% of the value of the
Fund's total assets in the coming year.
o REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements. In
a repurchase transaction, the Fund buys a security and simultaneously sells it
to the vendor for delivery at a future date. They are used primarily for cash
purposes. There is no limit on the amount of the
<PAGE>
Fund's net assets that may be subject to repurchase agreements of seven days or
less. 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 (the Board may increase that limit to 15%).
o HEDGING. The Fund may purchase and sell futures contracts that relate to
broadly-based securities indices (these are referred to as Financial Futures and
are also referred to as "hedging instruments"). While the Fund currently does
not engage extensively in hedging, the Fund may use these instruments for
hedging purposes.
The Fund may buy and sell 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 equity securities market as a temporary substitute for purchasing individual
securities. Selling futures hedges the Fund's portfolio against price
fluctuations. Buying futures tends to increase the Fund's exposure to the
securities market.
o DERIVATIVE INVESTMENTS. In general, a "derivative investment" is a
specially designed investment. Its performance is linked to the performance of
another investment or security. In the broadest sense, futures contracts
(discussed in "Hedging," above) may be considered "derivative investments."
OTHER INVESTMENT RESTRICTIONS. The Fund has other investment restrictions which
are fundamental policies. Under these fundamental policies, the Fund cannot do
any of the following:
o The Fund cannot, as to 75% of its assets, invest in the securities of
any one issuer (other than the U.S. Government or 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.
o The Fund cannot concentrate investments in any particular industry;
therefore the Fund will not purchase the securities of companies in any one
industry if, thereafter, more than 25% of the value of the Fund's assets would
consist of securities of companies in
that industry.
o The Fund cannot deviate from the percentage restrictions listed under
"Small, Unseasoned Companies," "Loans of Portfolio Securities," and "Borrowing
For Leverage."
Unless the Prospectus states that a percentage restriction applies
continuously, it applies only at the time the Fund makes an investment, and the
Fund need not sell securities to meet the percentage limits if the value of the
investment increases in proportion to the size of the Fund. Other investment
restrictions are listed in "Investment Restrictions" in the Statement of
Additional Information.
HOW THE FUND IS MANAGED
ORGANIZATION AND HISTORY. The Fund was organized in 1972 as a Maryland
corporation but was reorganized in 1985 as a Massachusetts business trust. The
Fund is an open--end management investment company.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The Trustees
meet periodically 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
the officers of the Fund and provides more information about them .
<PAGE>
Although the Fund will not normally hold annual meetings of its shareholders, it
may hold shareholder meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Trustee or to take
other action described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval, to
divide unissued shares of the Fund into two or more classes. The Board has done
so, and the Fund currently has four classes of shares, Class A, Class B, Class C
and Class Y. All classes invest in the same investment portfolio. Only certain
institutional investors may elect to purchase Class Y shares. Each class has its
own dividends and distributions and pays certain expenses which may be different
from the other classes. Each class may have a different net asset value.
Therefore, each share has one vote at shareholder meetings, with fractional
shares voting proportionally in matters submitted to the vote of shareholders.
Shares of each class may have separate voting rights on matters in which
interests of one class are different from interests of another class, and shares
of a particular class vote as a class on matters that affect that class alone.
Shares are freely transferrable.
THE MANAGER AND ITS AFFILIATES. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handles its day--to-day business. The Manager carries out its
duties, subject to the policies established by the Board of Trustees, under an
Investment Advisory Agreement which states the Manager's responsibilities. The
Agreement sets forth the fees paid by the Fund to the Manager, and describes the
expenses that the Fund is responsible for paying to conduct its business.
The Manager has operated as an investment adviser since 1959. The Manager
(including subsidiaries) currently manages investment companies, including other
Oppenheimer funds, with assets of more than $75 billion as of September 30,
1997, and with more than 3 million shareholder accounts. The Manager is owned by
Oppenheimer Acquisition Corp., a holding company that is owned in part by senior
officers of the Manager and controlled by Massachusetts Mutual Life Insurance
Company.
o PORTFOLIO MANAGER. The Portfolio Manager of the Fund is Robert C. Doll,
Jr. He has been the person principally responsible for the day-to-day management
of the Fund's portfolio since September, 1987. Mr. Doll is an Executive Vice
President and Director of Equity Investments of the Manager.
o FEES AND EXPENSES. Under the investment advisory agreement, as amended
per a resolution of the Board of Trustees dated December 14, 1995 to reduce the
fee on assets in excess of $1.5 billion (the "Investment Advisory Agreement"),
the Fund pays the Manager a monthly fee at the following annual rates, which
decline on additional assets as the Fund grows: 0.75% of the first $200 million
of average annual net assets; 0.72% of the next $200 million; 0.69% of the next
$200 million; 0.66% of the next $200 million; 0.60% of the next $700 million;
and 0.58% of average annual net assets in excess of $1.5 billion. The Fund's
management fee for its fiscal year ended August 31, 1997 was 0.65% of average
annual net assets for each class of shares that were offered.
The Fund pays expenses related to its daily operations, such as custodian
fees, Trustees' fees, transfer agency fees, legal 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.
<PAGE>
o THE DISTRIBUTOR. The Fund's shares are sold through dealers, brokers and
other financial institutions that have a sales agreement with OppenheimerFunds
Distributor, Inc., a subsidiary of the Manager that acts as the Fund's
Distributor. The Distributor also distributes the shares of the other
"Oppenheimer funds" managed by the Manager and is sub-distributor for funds
managed by a subsidiary of the Manager.
o THE TRANSFER AGENT. The Fund's Transfer Agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund on an "at-cost" basis. It also acts as the shareholder
servicing agent for other Oppenheimer funds. Shareholders should direct
inquiries about their account to the Transfer Agent at the address and toll-free
numbers shown below in this Prospectus and on the back cover.
PERFORMANCE OF THE FUND
EXPLANATION OF PERFORMANCE TERMINOLOGY. The Fund uses the term "total return" to
illustrate its performance. The performance of each class of shares is shown
separately, because the performance of each class of shares 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
investment has done over time and to compare market indexes.
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. 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.
o TOTAL RETURNS. There are different types of "total returns" used to
measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares.
The cumulative total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do not show
the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, normally the current
maximum initial sales charge has been deducted. When total returns are shown for
Class B or Class C shares, normally the contingent deferred sales charge that
applies to the period for which total return is shown has been deducted.
However, total returns may also be quoted "at net asset value," without
considering the effect of either the front-end or the appropriate contingent
deferred sales charge, as applicable, and those returns would be less if sales
charges were deducted.
o MANAGEMENT'S DISCUSSION OF PERFORMANCE. During the Fund's fiscal year
ended August 31, 1997, its performance was affected principally by the overall
strong performance of the U.S. stock market brought on by the lowest level of
Inflation in nearly three decades worldwide. The Fund's performance was somewhat
constrained by its relatively large cash position. The portfolio manager found
few attractive investments among the larger, well-known companies as their
valuations rose to unprecedented levels. The portfolio manager allowed cash
reserves to accumulate while seeking more attractive investment opportunities.
However, some of the impact of the cash position was offset by the Fund's stock
selection strategy. The Fund focused its new investments in the technology and
financial services sectors, including brokerage firms and personal-computer
manufacturers and related stocks.
<PAGE>
HOW HAS THE FUND PERFORMED? Below is a discussion by the Manager of the Fund's
performance during its most recent fiscal year ended August 31, 1997, followed
by a graphical comparison of the Fund's performance to an appropriate
broad-based market index.
o COMPARING THE FUND'S PERFORMANCE TO THE MARKET. The graphs below show
the performance of a hypothetical $10,000 investment in Class A, Class B, Class
C and Class Y shares of the Fund held at August 31, 1997. In the case of Class A
shares, performance is measured over a ten-year period. In the case of Class B
shares, performance is measured from the inception of the class on August 17,
1993. In the case of Class C shares, performance is measured from inception of
the class on November 1, 1995. In the case of Class Y shares, performance is
measured from the inception of the class on June 1, 1994. The Fund's performance
reflects the deduction of the 5.75% current maximum initial sales charge on
Class A shares, the applicable contingent deferred sales charge on Class B and
Class C shares, and reinvestment of all dividends and capital gains
distributions.
The Fund's performance is compared to the performance of the S&P 500
Index, a broad -based index of equity securities widely regarded as a general
measure of the performance of the U.S. equity securities market. Index
performance reflects the reinvestment of dividends but does not consider the
effect of expenses or taxes. Also, the Fund's performance reflects the effect of
Fund business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the S&P 500 Index, which tend
to be securities of larger, well--capitalized companies. Moreover, the index
data does not reflect any assessment of the risk of the investments included in
the index.
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Growth Fund (Class A Shares) and S&P 500 Index
[Graph]
Average Annual Total Return of Class A shares of the Fund at 8/31/97(1)
1 YEAR 5 YEARS 10 YEARS
-------------------------------
27.26% 17.97% 13.91%
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Growth Fund (Class B Shares) and S&P 500 Index
<PAGE>
[Graph]
Average Annual Total Return of Class B Shares of the Fund at 8/31/97(2)
1 YEAR LIFE OF CLASS
---------------------------
28.93% 19.43%
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Growth Fund (Class C Shares) and S&P 500 Index
[Graph]
Average Annual Total Return of Class C shares at 8/31/97(3)
1 YEAR LIFE OF CLASS
-------------------------
32.94% 23.98%
CLASS Y SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Growth Fund (Class Y Shares) and S&P 500 Index
[Graph]
Average Annual Total Return of Class Y shares at 8/31/97(4)
1 YEAR LIFE OF CLASS
-----------------------
35.36% 24.37%
Total returns and the ending account values in the graphs show change in share
value and include reinvestment of all dividends and capital gains distributions.
The Fund's fiscal year has changed from 6/30 to 8/31.
1. The inception date of the Fund (Class A shares) was 3/15/73. Class A returns
are shown net of the applicable 5.75% current maximum initial sales charge.
2. Class B shares of the Fund were first publicly offered on 8/17/93. The
average annual total returns are shown net of the applicable 5% and 2%
contingent deferred sales charge, respectively, for the one-year period and the
life-of-the-class. The ending account value in the graph is net of the
applicable 2% contingent deferred sales charge.
3. Class C shares of the Fund were first publicly offered on 11/1/95. The
average annual total return for the one-year period is shown net of the
applicable 1% contingent deferred sales charge .
4. Class Y shares of the Fund, first publicly offered on 6/1/94, are offered at
net asset value without sales charges to certain institutional investors.
Past performance is not predictive of future performance.
Graphs are not drawn to same scales.
<PAGE>
ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
CLASSES OF SHARES. The Fund offers investors four different classes of shares.
Three classes, Class A, Class B and Class C, are available to non-institutional
investors. The fourth class, Class Y, is offered only to certain institutional
investors. 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.
o CLASS A SHARES. If you buy Class A shares, you may pay an initial sales
charge on investments up to $1 million (up to $500,000 for purchases by
"Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" on
page 28). If you purchase Class A shares as part of an investment of at least $1
million ($500,000 for Retirement Plans) in shares of one or more Oppenheimer
funds, you will not pay an initial sales charge, but if you sell any of those
shares within 12 months of buying them (18 months if the shares were purchased
prior to May 1, 1997), you may pay a contingent deferred sales charge. The
amount of that sales charge will vary depending on the amount you invested.
Sales charge rates are described in "Buying Class A Shares," below.
o CLASS B SHARES. If you buy Class B shares, you pay no sales charge at
the time of purchase, but if you sell your shares within six years of buying
them, you will normally pay a contingent deferred sales charge. That sales
charge varies depending on how long you own your shares as described in "Buying
Class B Shares" below.
o CLASS C SHARES. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1% as
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 to consider are how much you plan to invest and how long you plan to
hold your investment. If your goals and objectives change over time and you plan
to purchase additional shares, you should re-evaluate those factors to see if
you should consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We assumed you are an
individual investor, and therefore ineligible to purchase Class Y shares. We
used the sales charge rates that apply to Class A, Class B and Class C shares
and considered the effect of the annual asset-based sales charge on Class B and
Class C expenses (which, like all expenses, will affect your investment return).
For the sake of comparison, we have assumed that there is a 10% rate of
appreciation in the investment each year.
Of course, the actual performance of your investment cannot be predicted and
will vary, based on the Fund's actual investment returns and the operating
expenses borne by each class of shares, and which class of shares 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.
o 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
17
<PAGE>
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 shares of Class B or Class C shares for which no
initial sales charge is paid.
o 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 within 7 years, as well as the effect of the Class B asset-based
sales charge on the investment return for that class in the -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 shares might be more advantageous than Class C (as well as Class B)
shares 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)
shares. If investing $500,000 or more, Class A shares 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 more of Class B shares or $1 million or more of
Class C shares from a single investor. 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 annual performance return
stated above, and therefore should not be relied on as rigid guidelines.
o 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 Class 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 annual performance return stated above, and therefore, you should
analyze your options carefully.
o ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU? Because
some account features may not be available 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 is better for you. For example, share
certificates are not available for Class B or Class C shares and if you are
considering using your shares as collateral for a loan, that may be a factor to
consider. Additionally, the dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne solely by those
classes, such as the asset-based sales charges described below and in the
Statement of Additional Information.
18
<PAGE>
o 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 of shares
than for selling another class. It is important that investors understand that
the purposes of the Class B and Class C contingent deferred sales charge and
asset-based sales charges is the same as the purpose of the front-end sales
charge on sales of Class A shares: to compensate the Distributor for commissions
it pays to dealers and financial institutions for selling shares. The
Distributor may pay additional periodic compensation from its own resources to
securities dealers or financial institutions based upon the value of shares of
the Fund owned by the dealer or financial institution for its own account or for
its customers.
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.
o 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.
o Under pension and profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
o There is no minimum investment requirement if you are buying shares by
reinvesting dividends or distributions 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.
o HOW ARE SHARES PURCHASED? You can buy shares several ways -- through any
dealer, broker or financial institution that has a sales agreement with the
Distributor, or directly through the Distributor, or automatically from your
bank account through an Asset Builder Plan under the OppenheimerFunds
AccountLink service. The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders. WHEN YOU BUY
SHARES, BE SURE TO SPECIFY CLASS A, CLASS B OR CLASS C SHARES. IF YOU DO NOT
CHOOSE, YOUR INVESTMENT WILL BE MADE IN CLASS A SHARES.
o BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your order with
the Distributor on your behalf.
o BUYING SHARES THROUGH THE DISTRIBUTOR. Complete an OppenheimerFunds New
Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, it is recommended that you discuss your
investment first with a financial advisor, to be sure that it is appropriate for
you.
o PAYMENT BY FEDERAL FUNDS WIRE. Shares may be purchased by Federal Funds
wire. The minimum investment is $2,500. You must FIRST call the Distributor's
Wire Department at 1-800-525-7041 to notify the Distributor of the wire, and
receive further instructions.
o 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, AND TO TRANSMIT DIVIDENDS AND DISTRIBUTIONS.
Shares are purchased for your account on AccountLink on the regular
business day the
<PAGE>
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.
o 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.
o 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 , or the order is received and transmitted to the Distributor
by an entity authorized by the Fund to accept purchase or redemption orders. The
Fund has authorized the Distributor, certain broker-dealers and agents or
intermediaries designated by the Distributor or those broker-dealers to accept
orders. In most cases, to enable you to receive that day's offering price, the
Distributor or an authorized entity 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, normally your order
must be transmitted to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. THE
DISTRIBUTOR, IN ITS SOLE DISCRETION, MAY REJECT ANY PURCHASE ORDER FOR THE
FUND'S SHARES .
SPECIAL SALES CHARGE ARRANGEMENTS FOR CERTAIN PERSONS. Appendix A to this
Prospectus sets forth conditions for the waiver of, or exemption from, sales
charges or the special sales charge rates that apply to purchases of shares of
the Fund (including purchases by exchange) by a person who was a shareholder of
one of the Former Quest for Value Funds (as defined in that Appendix).
BUYING CLASS A SHARES. Class A shares are sold at their offering price, which is
normally net asset value plus an initial sales charge. However, in some cases,
described below, purchases are not subject to an initial sales charge, and the
offering price will be the net asset value. In some cases, reduced sales charges
may be available, as described below. Out of the amount you invest, the Fund
receives the net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales charge may be
retained by the Distributor and allocated to your dealer as commission. The
current sales charge rates and commissions paid to dealers and brokers are as
follows:
FRONT-END SALES FRONT-END SALES
CHARGE AS A CHARGE AS A COMMISSION AS
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- ------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
- ------------------------------------------------------------------------------
$25,000 or more but
less than $50,000 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%
<PAGE>
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.
o 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:
o Purchases aggregating $1 million or more.
o Purchases by a retirement plan qualified under sections 401(a) or 401(k)
of the Internal Revenue Code, by a non-qualified deferred compensation plan (not
including Section 457 plans), employee benefit plan, group retirement plan (see
"How to Buy Shares Retirement Plans" in the Statement of Additional Information
for further details), an employee's 403(b)(7) custodial plan account, SEP IRA,
SARSEP, or SIMPLE plan (all of these plans are collectively referred to as
"Retirement Plans"); that: (1) buys shares costing $500,000 or more or (2) has,
at the time of purchase, 100 or more eligible participants, or (3) certifies
that it projects to have annual plan purchases of $200,000 or more.
o Purchases by an OppenheimerFunds Rollover IRA if the purchases are made
(1) through a broker, dealer, bank or registered investment adviser that has
made special arrangements with the Distributor for these purchases, or (2) by a
direct rollover of a distribution from a qualified retirement plan if the
administrator of that plan has made special arrangements with the Distributor
for those purchases.
o Purchases by a retirement plan qualified under Section 401(a) if the
retirement plan has total plan assets of $500,000 or more.
The Distributor pays dealers of record commissions on those purchases in
an amount equal to (i) 1.0% for non-Retirement Plan accounts, and (ii) for
Retirement Plan accounts, 1.0% of the first $2.5 million, plus 0.50% of the next
$2.5 million, plus 0.25% of purchases over $5 million, calculated on a calendar
year basis. That commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer commission. No sales
commission will be paid to the dealer, broker or financial institution on sales
of Class A shares purchased with the redemption proceeds of shares of a mutual
fund offered as an investment option in a Retirement Plan in which Oppenheimer
funds are also offered as investment options under a special arrangement with
the Distributor if the purchase occurs more than 30 days after the addition of
the Oppenheimer funds as an investment option to the Retirement Plan.
If you redeem any of those shares purchased prior to May 1, 1997 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. A Class A contingent deferred sales
charge may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12 months of the end
of the calendar month of their purchase. That sales charge may be equal to 1.0%
of the lesser of (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gains
distributions) or (2) the original offering price (which is the original net
asset value) of the redeemed shares. However, the Class A contingent deferred
sales charge will not exceed the aggregate amount of the commissions the
Distributor paid to your dealer on all Class A shares of all Oppenheimer funds
you purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
<PAGE>
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 contingent deferred
sales charge will apply.
o SPECIAL ARRANGEMENTS WITH DEALERS. The Distributor may advance up to 13
months' commissions to dealers that have established special arrangements with
the Distributor for Asset Builder Plans for their clients.
REDUCED SALES CHARGES FOR CLASS A SHARE PURCHASES. You may be eligible to buy
Class A shares at reduced sales charge rates in one or more of the following
ways:
o 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 Distributor will add the value,
at current offering price, of the shares you previously purchased and currently
own to the value of current purchases to determine the sales charge rate that
applies. 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.
o LETTER OF INTENT. Under a Letter of Intent, if you purchase Class A 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.
o 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. In
order to receive a waiver of the Class A contingent deferred sales charge, you
must notify the Transfer Agent which conditions apply.
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:
o the Manager or its affiliates;
22
<PAGE>
o 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;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o 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;
o 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);
o dealers, brokers, banks 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 shares of the Fund);
o (1) investment advisors and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients, (2) Retirement Plans and deferred compensation
plans and trusts used to fund those Plans (including, for example, plans
qualified or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own accounts, in
each case if those purchases are made through a broker or agent or other
financial intermediary that has made special arrangements with the Distributor
for those purchases; and (3) clients of such investment advisors or financial
planners (that have entered into an agreement for this purpose with the
Distributor) who buy shares for their own accounts may also purchase shares
without sales charge but only if their accounts are linked to a master account
of their investment advisor or financial planner on the books and records of the
broker, agent or financial intermediary with which the Distributor has made such
special arrangements (each of these investors may be charged a fee by the
broker, agent or financial intermediary for purchasing shares);
o directors, trustees, officers or full-time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit sharing or
other benefit plan which beneficially owns shares for those persons;
o accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts;
o any unit investment trust that has entered into an appropriate
agreement with the
Distributor;
o a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund were
exchanged for Class A shares of that Fund due to the termination of the Class A
shares of that Fund due to the termination of the Class B and TRAC-2000 program
on November 24, 1995; or
o qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds at
net asset value, with such shares to be held through DCXchange, a sub-transfer
agency mutual fund clearinghouse, provided that such arrangements were
consummated and share purchases commenced by December 31, 1996.
<PAGE>
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:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o 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;
o 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;
o shares purchased and paid for with the proceeds of shares redeemed in
the past 30 days from a mutual fund (other than a fund managed by the Manager or
any of its subsidiaries) on which an initial sales charge or contingent deferred
sales charge was paid (this waiver also applies to shares purchased by exchange
of shares of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the purchase order is
placed for your shares of the Fund, and the Distributor may require evidence of
your qualification for this waiver; or
o shares purchased with the proceeds of maturing principal of units of any
Qualified Unit Investment Liquid Trust Series.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN
REDEMPTIONS. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
o to make Automatic Withdrawal Plan payments that are limited annually to
no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time of purchase of shares (prior to May 1, 1997) the dealer
agreed in writing to accept the dealer's portion of the sales commission 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);
o if, at the time of purchase of shares (on or after May 1, 1997) the
dealer agrees in writing to accept the dealer's portion of the sales commission
in installments of 1/12th of the commission per month (and no further commission
will be payable if the shares are redeemed within 12 months of purchase);
o for distributions from a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program; or
o for distributions from Retirement Plans, deferred compensation plans or
other employee benefit plans for any of the following purposes: (1) following
the death or disability (as defined in the Internal Revenue Code) of the
participant or beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess contributions; (3)
to return contributions made due to a mistake of fact; (4) hardship withdrawals,
as defined in the plan; (5) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (6) to meet
24
<PAGE>
the minimum distribution requirements of the Internal Revenue Code; (7) to
establish "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual fund (other than
a fund managed by the Manager or its subsidiary) offered as an investment option
in a Retirement Plan in which Oppenheimer funds are also offered as investment
options under a special arrangement with the Distributor; or (11) plan
termination or "in-service distributions", if the redemption proceeds are rolled
over directly to an OppenheimerFunds IRA;
o for distributions from Retirement Plans having 500 or more eligible
participants, except distributions due to termination of all of the Oppenheimer
funds of as an investment option under the Plan; or
o for distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor allowing this waiver.
o 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 of an annual rate
that may not exceed 0.25% of the average annual net assets of Class A shares of
the Fund. The Fund's Board of Trustees has set the annual rate for assets
representing Class A shares of the fund sold on or after April 1, 1991 at 0.25%,
and has set the annual rate for assets representing Class A shares sold before
April 1, 1991 at 0.15% (the Board has authority to increase that rate to no more
than 0.25%). 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 of 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 of an initial sales charge. However, if Class B shares are redeemed
within six years of their purchase, a contingent deferred sales charge will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based on the lesser
of the net asset value of the redeemed shares at the time of redemption or the
original offering price (which is the original net asset value). The contingent
deferred sales charge is not imposed on the amount of your account value
represented by of an increase in net asset value over the initial purchase
price. The Class B contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related services to the Fund
in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over six 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:
25
<PAGE>
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)
- ------------------------------------------------------------------------------
0 - 1 5.0%
- ------------------------------------------------------------------------------
1 - 2 4.0%
- ------------------------------------------------------------------------------
2 - 3 3.0%
- ------------------------------------------------------------------------------
3 - 4 3.0%
- ------------------------------------------------------------------------------
4 - 5 2.0%
- ------------------------------------------------------------------------------
5 - 6 1.0%
- ------------------------------------------------------------------------------
6 and following None
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which the
purchase was made.
o AUTOMATIC CONVERSION OF CLASS B SHARES. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and Class
C Shares" in the Statement of Additional Information.
o 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. This Plan is described
below under "Buying Class C Shares - Distribution and Service Plans for Class B
and Class C Shares".
o WAIVERS OF CLASS B SALES CHARGES. The Class B contingent deferred sales
charge will not apply to shares purchased in certain types of transactions, nor
will it apply to shares redeemed in certain circumstances, as described below
under "Waivers of Class B and Class C Sales Charges."
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without assessment of an initial sales charge. However, if the Class C shares
are redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or capital
gains distributions. The contingent deferred sales charge will be based on the
lesser of the net asset value of the redeemed shares at the time of redemption
or the original offering price (which is the original net asset value). The
contingent deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial purchase
price. The Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12 -month period.
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
reimburse and compensate the Distributor, respectively, for distributing Class B
and Class C shares and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year on Class B
shares and on Class C shares. The Distributor also receives a service fee of up
to 0.25% per year under the Class B Plan, and receives a service fee of 0.25%
per year under the Class C Plan.
26
<PAGE>
Under each Plan, both fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The asset-based sales charge and service
fees increase Class B expenses by up to 1.00%, and increase Class C expenses by
1.00%, of the net assets per year of that class.
The Distributor uses the service fees to compensate dealers for providing
personal services for accounts that hold Class B or Class C shares. Those
services are similar to those provided under the Class A Service Plan, described
above. The Distributor pays the 0.25% service fees to dealers in advance for the
first year after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the shares have
been held for a year, the Distributor pays the service fees to dealers on a
quarterly basis.
The asset-based sales charge allows investors to buy Class B or Class C
shares without a front-end sales charge while allowing the Distributor to
compensate dealers that sell those shares. The Fund pays the asset-based sales
charges to the Distributor for its services rendered in distributing Class B and
Class C shares. Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B and Class C shares.
The Distributor currently pays sales commissions of 3.75% of the purchase
price of Class B shares to dealers from its own resources at the time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class B shares is 4.00% of the
purchase price. The Distributor retains the Class B -based sales charge. The
Distributor may pay the Class B service fee and the asset-based sales charge to
the dealer quarterly in lieu of paying the sales commission and service fee
advance at the time of purchase.
The Distributor currently pays sales commissions of 0.75% of the purchase
price to dealers from its own resources at the time of sale of Class C shares.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of sale of Class C shares is 1.00% of the
purchase price. The Distributor plans to pay the asset-based sales charge as of
an ongoing commission to the dealer on Class C shares that have been outstanding
for a year or more. The Distributor may pay the Class C service fee and
asset-based sales charge to the dealer quarterly in lieu of paying the sales
commission and service fee advance at the time of purchase.
The Distributor's actual expenses in selling Class B and 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 Plans for Class B and Class C shares. If the Fund terminates either
Plan, the Board of Trustees may allow the Fund to continue payments of the asset
- -based sales charge to the Distributor for distributing shares before the Plan
was terminated. At August 31, 1997, the end of the Class B Plan year, the
Distributor had incurred unreimbursed expenses under the Class B Plan of
$6,440,567 (equal to 2.27%, of the Fund's net assets represented by Class B
shares), which have been carried over into the present plan year. At August 31,
1997, the end of the Class C Plan year, the Distributor had incurred
unreimbursed expenses under the Class C Plan of $262,813 (equal to 0.93%, of the
Fund's net assets represented by Class C shares), which have been carried over
into the present plan year.
O WAIVERS OF CLASS B AND CLASS C SALES CHARGES. The Class B and Class C
contingent deferred sales charges will not be applied to shares purchased in
certain types of transactions nor will it apply to Class B and Class C shares
redeemed in certain circumstances as described below. The reasons for this
policy are discussed in "Reduced Sales Charges" in the Statement of Additional
Information. In order to receive a waiver of the Class B or Class C contingent
deferred sales charge, you must notify the Transfer Agent which conditions
apply.
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<PAGE>
WAIVERS FOR REDEMPTIONS OF SHARES IN CERTAIN CASES. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases:
o 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);
o redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder, including a trustee of a
"grantor" trust or revocable living trust for which the trustee is also sole
beneficiary (the death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of
disability by the Social Security Administration);
o returns of excess contributions to Retirement Plans;
o to make distributions from retirement plans that qualify as
"substantially equal periodic payments" under Section 72(t) of the Internal
Revenue Code , provided the distributions do not exceed 10% of the account value
annually, measured from the date the Transfer Agent receives the request;
o shares redeemed involuntarily, as described in "Shareholder Account Rules
and Policies";
o distributions from OppenheimerFunds prototype 401(k) plans and from
certain Massachusetts Mutual Life Insurance Company 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; (5) for separation from service; or (6) for loans to participants or
beneficiaries; or
o distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special agreement with the Distributor allowing this waiver.
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:
o shares sold to the Manager or its affiliates;
o 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; or
o shares issued in plans of reorganization to which the Fund is a
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
<PAGE>
investments under Asset Builder Plans, and sending dividends and distributions
or Automatic Withdrawal Plan payments directly to your bank account. Please
call the Transfer Agent for more information.
AccountLink privileges should be requested 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.
o 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.
o PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system
that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number:
1--800--533-3310.
o 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.
o EXCHANGING SHARES. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer fund account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares,"
below, for details.
o 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.
SHAREHOLDER TRANSACTIONS BY FAX. Beginning May 30, 1997, requests for certain
account transactions may be sent to the Transfer Agent by fax (telecopier).
Please call 1-800-525-7048 for information about which transactions are
included. Transaction requests submitted by fax are subject to the same rules
and restrictions as written and telephone requests described in this Prospectus.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that enable
you to sell shares automatically or exchange them to another Oppenheimer fund
account on a regular basis:
o 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 Statement of Additional Information for more
details.
o 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
<PAGE>
minimum purchase for each other Oppenheimer funds account is $25. These
exchanges are subject to the terms of the exchange privilege, described below.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares of the Fund, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or of other Oppenheimer funds
without paying a sales charge. This privilege applies to Class A shares that you
purchased subject to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed them. This
privilege 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:
o INDIVIDUAL RETIREMENT ACCOUNTS including rollover IRAs, for individuals
and their spouses and SIMPLE IRAs offered by employers
o 403(B)(7) CUSTODIAL PLANS for employees of eligible tax-exempt
organizations, such as
schools, hospitals and charitable organizations
o SEP-IRAS (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SAR-SEP IRAs
o PENSION AND PROFIT-SHARING PLANS for self-employed persons and
other employers
o 401(K) PROTOTYPE RETIREMENT PLANS for businesses
Please call the Distributor for the OppenheimerFunds plan documents, which
contain important information and applications.
CLASS Y SHARES. Class Y Shares are sold at net asset value per share without the
imposition of a sales charge at the time of purchase to separate accounts of
insurance companies, other registered investment companies and other
institutional investors having an agreement with the Manager or the Distributor.
The intent of these agreements is to allow tax-qualified institutional investors
to invest indirectly (through separate accounts ) in Class Y shares and to allow
institutional investors to invest directly in Class Y shares . Individual
investors are not permitted to invest directly in Class Y shares. While Class Y
shares are not subject to a contingent deferred sales charge, asset-based sales
charge or service fee, an insurance company purchasing Class Y shares may impose
charges on its separate accounts investing in those shares.
None of the instructions described elsewhere in this Prospectus or the
Statement of Additional Information for the purchase, redemption, reinvestment,
exchange or transfer of shares of the Fund or the reinvestment of dividends
apply to its Class Y shares. Clients of Class Y Sponsors must request their
Sponsor to effect all transactions in Class Y shares on their behalf.
HOW TO SELL SHARES
You can arrange to take money out of your account by selling (redeeming) some or
all of your shares on any regular business day. Your shares will be sold at the
next net asset value calculated after your
30
<PAGE>
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.
o 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.
o 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):
o You wish to redeem more than $50,000 worth of shares and receive a
check
o The redemption check is not payable to all shareholders listed on
the account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to a Fund account with a different
owner or name
o Shares are redeemed by someone other than the owners (such as an
Executor)
o 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 AS A FIDUCIARY OR ON BEHALF OF A
CORPORATION, PARTNERSHIP OR OTHER BUSINESS, YOU MUST ALSO INCLUDE YOUR TITLE IN
THE SIGNATURE.
SELLING SHARES BY MAIL. Write a "letter of instructions" that includes:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling,
o The signatures of all registered owners exactly as the account is
registered, and
o 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 SEND COURIER OR EXPRESS MAIL
<PAGE>
REQUESTS BY MAIL: REQUESTS TO:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 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.
o To redeem shares through a service representative, call
1-800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may
have the proceeds wired to that bank account.
o TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone, in any 7-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account statement.
This service is not available within 30 days of changing the address on an
account.
o TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK OR WIRE. 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 call your dealer for more
information about this procedure. Please refer to "Special Arrangements For
Repurchase of Shares From Dealers and Brokers" in the Statement of Additional
Information for more details.
HOW TO EXCHANGE SHARES
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence
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<PAGE>
o The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege
o 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
o You must meet the minimum purchase requirements for the fund you purchase
by exchange
o BEFORE EXCHANGING INTO A FUND, YOU SHOULD OBTAIN AND READ ITS
PROSPECTUS
SHARES OF A PARTICULAR CLASS OF THE FUND MAY BE EXCHANGED ONLY FOR SHARES
OF THE SAME CLASS IN THE OTHER OPPENHEIMER FUNDS. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At present,
Oppenheimer Money Market Fund, Inc. offers only one class of shares, which are
considered to be "Class A" shares for this purpose. In some cases, sales charges
may be imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
o 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."
o 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:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that is in proper form by the close
of The New York Stock Exchange that day, which is normally 4:00 P.M. but may be
earlier on some days. However, either fund may delay the purchase of shares of
the fund you are exchanging into up to seven days if it determines it would be
disadvantaged by a same day transfer of the proceeds to buy shares. For example,
the receipt of multiple exchange requests from a dealer in a "market-timing"
strategy might require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
o 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.
o 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.
o 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
33
<PAGE>
more information about taxes affecting exchanges, please refer to "How to
Exchange Shares" in the Statement of Additional Information.
o 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.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a result,
those exchanges may be subject to notice requirements, delays and other
limitations that do not apply to shareholders who exchange their shares directly
by calling or writing to the Transfer Agent.
SHAREHOLDER ACCOUNT RULES AND POLICIES
o NET ASSET VALUE PER SHARE is determined for each class of shares as of
the close of The New York Stock Exchange, which is normally 4:00 P.M. but may be
earlier on some days, on each day the Exchange is open by dividing the value of
the Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and obligations for
which market values cannot be readily obtained. These procedures are described
more completely in the Statement of Additional Information.
o 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.
o 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.
o 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 the Transfer Agent 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.
o 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.
o 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.
o 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, Class C and Class Y shares. Therefore, the
34
<PAGE>
redemption value of your shares may be more or less than their original cost.
o 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 FEDERAL FUNDS WIRE, CERTIFIED CHECK OR ARRANGE TO HAVE YOUR
BANK PROVIDE TELEPHONE OR WRITTEN ASSURANCE TO THE TRANSFER AGENT THAT YOUR
PURCHASE PAYMENT HAS CLEARED.
o INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by the Fund if the
account value has fallen below $500 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.
o 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.
o "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate of
31% from taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a correct and properly certified
Social Security or Employer Identification Number when you sign your
application, or if you underreport your income to the Internal Revenue Service .
o THE FUND DOES NOT CHARGE A REDEMPTION FEE, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How To Buy Shares," you may be subject to a
contingent deferred sales charges when redeeming certain Class A, Class B and
Class C shares.
o 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, Class C
and Class Y shares from net investment income on an annual basis and normally
pays those dividends to shareholders in December, but the Board of Trustees can
change that date. The Board may also cause the Fund to declare dividends after
the close of the Fund's fiscal year (which ends August 31st). Because the Fund
does not have an objective of seeking current income, the amounts of dividends
it pays, if any, will likely be small. Also, dividends paid on Class A and Class
Y shares generally are expected to be higher than for Class B and Class C shares
because expenses allocable to Class B and Class C shares will generally be
higher.
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 dividends and capital gains following the end of its fiscal
year. Long-term capital gains will be separately identified in the tax
information the Fund sends you after the end of the year. Short-term capital
35
<PAGE>
gains are treated as dividends for tax purposes. 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:
o 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.
o REINVEST LONG-TERM CAPITAL GAINS ONLY. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or have
them sent to your bank account on AccountLink.
o 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.
o REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMER FUND ACCOUNT. You can
reinvest all distributions in the same class of shares of another Oppenheimer
Fund account you have established.
TAXES. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in the Fund. The Fund's
distributions from long-term capital gains are taxable to shareholders as
long-term capital gains, no matter how long you held your shares. Dividends paid
by the Fund from short-term capital gains and net investment income are taxable
as ordinary income. These dividends and distributions are subject to Federal
income tax and may be subject to state or local taxes. Your distributions are
taxable as described above, whether you reinvest them in additional shares or
take them in cash. Corporate shareholders may be entitled to the corporate
dividends received deduction for some portion of the Fund's distributions
treated as ordinary income, subject to applicable limitations under the Internal
Revenue Code. Every year the Fund will send you and the IRS a statement showing
the aggregate amount of each taxable distribution you received in the previous
year. So that the Fund will not have to pay taxes on the amounts it distributes
to shareholders as dividends and capital gains, the Fund intends to manage its
investments so that it will qualify as a "regulated investment company" under
the Internal Revenue Code, although it reserves the right not to qualify in a
particular year.
o "BUYING A DIVIDEND": 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, respectively.
o 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.
o 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.
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<PAGE>
APPENDIX A
SPECIAL SALES CHARGE ARRANGEMENTS FOR SHAREHOLDERS OF THE FUND WHO
WERE SHAREHOLDERS OF THE FORMER QUEST FOR VALUE FUNDS
The initial and contingent sales charge rates and waivers for Class A, Class B
and Class C shares of the Fund described elsewhere in this Prospectus are
modified as described below for those shareholders of (i) Oppenheimer Quest for
Value Fund, Inc., Oppenheimer Quest for Value Growth & Income Fund, Oppenheimer
Quest Opportunity Value Fund, Oppenheimer Quest Small Cap Value Fund and
Oppenheimer Quest Global Value Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those funds, and (ii)
Quest for Value U.S. Government Income Fund, Quest for Value Investment Quality
Income Fund, Quest for Global Income Fund, Quest for Value New York Tax -Exempt
Fund, Quest for Value National Tax-Exempt Fund and Quest for Value California
Tax -Exempt Fund when those funds merged into various Oppenheimer funds on
November 24, 1995. The funds listed above are referred to in this Prospectus as
the "Former Quest for Value Funds." The waivers of initial and contingent
deferred sales charges described in this Appendix apply to shares of the Fund
(i) acquired by such shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds or (ii)
purchased by such shareholder by exchange of shares of other Oppenheimer funds
that were acquired pursuant to the merger of any of the Former Quest for Value
Funds into an Oppenheimer fund on November 24, 1995.
CLASS A SALES CHARGES
o REDUCED CLASS A INITIAL SALES CHARGE RATES FOR CERTAIN FORMER QUEST
SHAREHOLDERS
o PURCHASES BY GROUPS, ASSOCIATIONS AND CERTAIN QUALIFIED RETIREMENT PLANS. The
following table sets forth the initial sales charge rates for Class A shares
purchased by a "Qualified Retirement Plan" through a single broker, dealer or
financial institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement Plan or that
Association purchased shares of any of the Former Quest for Value Funds or
received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
FRONT-END SALES FRONT-END SALES
NUMBER OF CHARGE AS A CHARGE AS A COMMISSION AS
ELIGIBLE EMPLOYEES PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF
OR MEMBERS OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
- ------------------------------------------------------------------------------
9 or fewer 2.50% 2.56% 2.00%
- ------------------------------------------------------------------------------
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having 50 or
more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages 28 and 29 of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the sales
charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 million or
A-1
<PAGE>
more each year. Individuals who qualify under this arrangement for reduced sales
charge rates as members of Associations, or as eligible employees in Qualified
Retirement Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the Fund's
Distributor.
O WAIVER OF CLASS A SALES CHARGES FOR CERTAIN SHAREHOLDERS
Class A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
o Shareholders of the Fund who were shareholders of the AMA Family of Funds
on February 28, 1991 and who acquired shares of any of the Former Quest for
Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders of the Fund who acquired shares of any Former Quest for
Value Fund by merger of any of the portfolios of the Unified Funds.
O WAIVER OF CLASS A CONTINGENT DEFERRED SALES CHARGE IN CERTAIN
TRANSACTIONS
The Class A contingent deferred sales charge will not apply to redemptions
of Class A shares of the Fund purchased by the following investors who were
shareholders of any Former Quest for
Value Fund:
o Investors who purchased Class A shares from a dealer that is not or was
not permitted to receive a sales load or redemption fee imposed on a shareholder
with whom that dealer has a fiduciary relationship under the Employee Retirement
Income Security Act of 1974 and regulations adopted under that law.
o Participants in Qualified Retirement Plans that purchased shares of any
of the Former Quest For Value Funds pursuant to a special "strategic alliance"
with the distributor of those funds. The Fund's Distributor will pay a
commission to the dealer for purchases of Fund shares as described above in
"Class A Contingent Deferred Sales Charge."
CLASS A, CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE WAIVERS
O WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED PRIOR TO MARCH 6, 1995. In the
following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, B or C shares of the Fund acquired by merger of a Former
Quest for Value Fund into the Fund or by exchange from an Oppenheimer fund that
was a Former Quest for Value Fund or into which such fund merged, if those
shares were purchased prior to March 6, 1995: in connection with (i)
distributions to participants or beneficiaries of plans qualified under Section
401(a) of the Internal Revenue Code or from custodial accounts under Section
403(b)(7) of the Code, Individual
A-2
<PAGE>
Retirement Accounts, deferred compensation plans under Section 457 of the Code,
and other employee benefit plans, and returns of excess contributions made to
each type of plan, (ii) withdrawals under an automatic withdrawal plan holding
only either Class B or C shares if the annual withdrawal does not exceed 10% of
the initial value of the account, and (iii) liquidation of a shareholder's
account if the aggregate net asset value of shares held in the account is less
than the required minimum value of such accounts.
O WAIVERS FOR REDEMPTIONS OF SHARES PURCHASED ON OR AFTER MARCH 6, 1995 BUT
PRIOR TO NOVEMBER 24, 1995. In the following cases, the contingent deferred
sales charge will be waived for redemptions of Class A, B or C shares of the
Fund acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For Value Fund or into
which such fund merged, if those shares were purchased on or after March 6,
1995, but prior to November 24, 1995: (1) distributions to participants or
beneficiaries from Individual Retirement Accounts under Section 408(a) of the
Internal Revenue Code or retirement plans under Section 401(a), 401(k), 403(b)
and 457 of the Code, if those distributions are made either (a) to an individual
participant as a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or beneficiary; (2)
returns of excess contributions to such retirement plans; (3) redemptions other
than from retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability by the U.S.
Social Security Administration); (4) withdrawals under an automatic withdrawal
plan (but only for Class B or C shares) where the annual withdrawals do not
exceed 10% of the initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the required minimum account value. A shareholder's account
will be credited with the amount of any contingent deferred sales charge paid on
the redemption of any Class A, B or C shares of the Fund described in this
section if within 90 days after that redemption, the proceeds are invested in
the same Class of shares in this Fund or another Oppenheimer fund.
A-3
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER GROWTH FUND
Graphic material included in Prospectus of Oppenheimer Growth Fund:
"Comparison of Total Return of Oppenheimer Growth Fund with the S&P 500 Index -
Change in Value of a $10,000 Hypothetical Investment"
A linear graph will be included in the Prospectus of Oppenheimer Growth
Fund (the "Fund") depicting the initial account value and subsequent account
value of a hypothetical $10,000 investment in the Fund. In the case of the
Fund's Class A shares, that graph will cover each of the Fund's last ten fiscal
years from 8/31/87 through 8/31/97. In the case of the Fund's Class B shares
will cover the period from the inception of the class (August 17, 1993) through
August 31, 1997. In the case of the Fund's Class C shares will cover the period
from the inception of the Class (November 1, 1995 ) through August 31, 1997. In
the case of the Fund's Class Y shares will cover the period from the inception
of the Class (June 1, 1994) through August 31, 1997. The graph will compare such
values with hypothetical $10,000 investments over the same time periods in the
S&P 500 Index.
Set forth below are the relevant data points that will appear on the
linear graph. Additional information with respect to the foregoing, including a
description of the S&P 500 Index, is set forth in the Prospectus under
"Performance of the Fund - Comparing the Fund's Performance to the Market."
Fiscal Year Oppenheimer S&P
(PERIOD) ENDED GROWTH FUND A 500 INDEX
06/30/87 $9,425 $10,000
06/30/88 $9,328 $9,307
06/30/89 $10,684 $11,217
06/30/90 $12,071 $13,061
06/30/91 $13,205 $14,024
06/30/92 $15,276 $15,902
06/30/93 $17,855 $18,066
06/30/94 $17,903 $18,319
06/30/95 $23,174 $23,087
06/30/96 $28,040 $29,086
08/31/96(1) $28,258 $28,389
08/31/97 $38,156 $39,921
Fiscal Oppenheimer S&P
PERIOD ENDED GROWTH FUND B 500 INDEX
08/17/93(2) $10,000 $10,000
06/30/94 $9,980 $9,810
06/30/95 $12,796 $12,363
06/30/96 $15,349 $15,575
08/31/96(1) $15,244 $15,202
08/31/97 $20,483 $21,378
<PAGE>
Fiscal Oppenheimer S&P
PERIOD ENDED GROWTH FUND C 500 INDEX
11/01/95(3) $10,000 $10,000
06/30/96 $11,006 $11,713
08/31/96(1) $11,073 $11,432
08/31/97 $14,830 $16,077
Fiscal Oppenheimer S&P
PERIOD ENDED GROWTH FUND Y 500 INDEX
06/01/94(4) $10,000 $10,000
06/3094 $9,487 $9,755
06/30/95 $12,295 $12,295
06/30/96 $14,889 $15,489
08/31/96(1) $15,009 $15,118
08/31/97 $20,317 $21,259
(1) The Fund changed its fiscal year end from June to August.
(2) Class B shares of the Fund were first publicly offered on August 17, 1993.
(3) Class C shares of the Fund were first publicly offered on November 1, 1995.
(4) Class Y shares of the Fund were first publicly offered on June 1, 1994.
<PAGE>
OPPENHEIMER GROWTH FUND
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
INVESTMENT ADVISER
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
TRANSFER AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
The Bank of New York
One Wall Street
New York, New York 10015
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
LEGAL COUNSEL
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
NO DEALER, BROKER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR THE STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR
MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUND, OPPENHEIMERFUNDS, INC., OPPENHEIMERFUNDS
DISTRIBUTOR, INC. OR ANY AFFILIATE THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER IN SUCH STATE.
PRO270.001.11/97 * Printed on recycled paper
<PAGE>
OPPENHEIMER GROWTH FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 1, 1997
This Statement of Additional Information of Oppenheimer Growth Fund is not
a Prospectus. This document contains additional information about the Fund and
supplements information in the Prospectus dated December 1, 1997. It should be
read together with the Prospectus, which may be obtained by writing to the
Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver,
Colorado 80217 or by calling the Transfer Agent at the toll-free number shown
above.
CONTENTS
PAGE
ABOUT THE FUND
Investment Objective and Policies....................................... 2
Investment Policies and Strategies...................................... 2
Other Investment Techniques and Strategies.............................. 4
Other Investment Restrictions........................................... 8
How the Fund is Managed ................................................ 9
Organization and History................................................ 9
Trustees and Officers of the Fund....................................... 9
The Manager and Its Affiliates.......................................... 15
Brokerage Policies of the Fund.......................................... 17
Performance of the Fund................................................. 19
Distribution and Service Plans.......................................... 22
ABOUT YOUR ACCOUNT
How To Buy Shares....................................................... 24
How To Sell Shares...................................................... 32
How To Exchange Shares.................................................. 36
Dividends, Capital Gains and Taxes...................................... 38
Additional Information About the Fund................................... 40
FINANCIAL INFORMATION ABOUT THE FUND
Independent Auditors' Report............................................ 41
Financial Statements.................................................... 42
Appendix: Industry Classifications...................................... A-1
<PAGE>
ABOUT THE FUND
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT POLICIES AND STRATEGIES. The investment objective and policies of the
Fund are described in the Prospectus. Set forth below is supplemental
information about those policies and the types of securities in which the Fund
may invest, as well as the strategies the Fund may use to try to achieve its
objective. Certain capitalized terms used in this Statement of Additional
Information have the same meanings as those terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's investment
advisor, OppenheimerFunds, Inc. referred to as (the "Manager"), evaluates the
merits of securities primarily through the exercise of its own investment
analysis. This may include, among other things, evaluation of the history of the
issuer's operations, prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product developments and
developments by competitors, the effect of general market and economic
conditions on the issuer's business, and legislative proposals or new laws that
might affect the issuer. Current income is not a consideration in the selection
of portfolio securities for the Fund, whether for appreciation, defensive or
liquidity purposes. The fact that a security has a low yield or does not pay
current income will not be an adverse factor in selecting securities to try to
achieve the Fund's investment objective of capital appreciation unless the
Manager believes that the lack of yield might adversely affect appreciation
possibilities.
The portion of the Fund's assets allocated to securities and methods
selected for capital appreciation will depend upon the judgment of the Manager
as to the future movement of the equity securities markets. If the Manager
believes that economic conditions favor a rising market, the Fund will emphasize
securities and investment methods selected for high capital growth. If the
Manager believes that a market decline is likely, defensive securities and
investment methods will be emphasized.
O FOREIGN SECURITIES. As noted in the Prospectus, the Fund may invest in
securities (which may be denominated in U.S. dollars or non-U.S. currencies)
issued or guaranteed by foreign corporations, certain supranational entities
(described below) and foreign governments or their agencies or instrumentalities
and in securities issued by U.S. corporations denominated in non-U.S.
currencies. The types of foreign debt obligations and other securities in which
the Fund may invest are the same types of debt and equity securities identified
above. Foreign securities are subject however, to additional risks not
associated with domestic securities, as discussed below. These additional risks
may be more pronounced as to investments in securities issued by emerging market
countries or by companies located in emerging market countries.
"Foreign securities" include equity and debt securities of companies
organized under the laws of countries other than the United States and debt
securities of foreign governments that are traded on foreign securities
exchanges or in the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American Depository Receipts or that are listed
on a U.S. securities exchange or traded in the U.S. over-the-counter markets are
not considered "foreign securities" for the purpose of the Fund's investment
allocations, because they are not subject to many of the special considerations
and risks, discussed below, that apply to foreign securities traded and held
abroad.
Investing in foreign securities offer potential benefits not available
from investing solely in securities of domestic issuers, including the
opportunity to invest in foreign issuers that appear to offer growth potential,
or in foreign countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by taking
advantage of foreign stock markets that do not move in a manner parallel to U.S.
markets. 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. If the
Fund's portfolio securities are held abroad, the sub-custodians or depositories
holding them must be
<PAGE>
approved by the Fund's Board of Trustees to the extent that approval is required
under applicable rules of the Securities and Exchange Commission.
o RISKS OF FOREIGN INVESTING. Investing in foreign securities involves
special additional risks and considerations not typically associated with
investing in securities of issuers traded in the U.S. These include: reduction
of income by foreign taxes; fluctuation in value of foreign portfolio
investments due to changes in currency rates and control regulations (e.g.,
currency blockage); transaction charges for currency exchange; lack of public
information about foreign issuers; lack of uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
issuers; less volume on foreign exchanges than on U.S. exchanges; greater
volatility and less liquidity on foreign markets than in the U.S.; less
regulation of foreign issuers, stock exchanges and brokers than in the U.S.;
greater difficulties in commencing lawsuits against foreign issuers; higher
brokerage commission rates than in the U.S.; increased risks of delays in
settlement of portfolio transactions or loss of certificates for portfolio
securities because of the lesser speed and reliability of mail service between
the U.S. and foreign countries than within the U.S.; possibilities in some
countries of expropriation or nationalization of assets, confiscatory taxation,
political, financial or social instability or adverse diplomatic developments;
and differences (which may be favorable or unfavorable) between the U.S. economy
and foreign economies. From time to time, U.S. Government policies have
discouraged certain investments abroad by U.S. investors, through taxation or
other restrictions, and it is possible that such restrictions could be
re-imposed. If the Fund's securities are held abroad, the countries in which
such securities may be held and the sub-custodians holding them must be approved
by the Fund's Board of Trustees under applicable SEC rules.
o 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, 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 that
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 periods of substantial borrowings, its expenses may increase more
than funds that do not borrow.
OTHER INVESTMENT TECHNIQUES AND STRATEGIES
o 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
that invest in these types of securities trade the same securities when the Fund
attempts to dispose of its holdings, the Fund may receive lower prices than
might be obtained, because of the thinner market for such securities.
o ILLIQUID AND RESTRICTED SECURITIES. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the Fund
may have to cause those securities to be registered. The expenses of
registration of restricted securities may be negotiated by the Fund with the
issuer at the time such securities are purchased by the Fund, if such
registration is required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the security, a
considerable period may elapse between the time the decision is made to sell the
securities and the time the Fund would be permitted to sell them. The Fund would
bear the risks of any downward price fluctuation during that period. The Fund
may also acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability to dispose of
such securities and might lower the amount realizable upon the sale of such
<PAGE>
securities. Illiquid securities include repurchase agreements maturing in more
than seven days, or certain participation interests in other than those with
puts exercisable within seven days.
The Fund has percentage limitations that apply to purchases of restricted
securities, as stated in the Prospectus. Those percentage restrictions do not
limit purchases of restricted securities that are eligible for sale to qualified
institutional purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by the Board of
Trustees of the Fund or by the Manager under Board-approved guidelines. Those
guidelines take into account the trading activity for such securities and the
availability of reliable pricing information, among other factors. If there is a
lack of trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
o LOANS OF PORTFOLIO SECURITIES. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Repurchase
transactions are not considered "loans" for the purpose of the Fund's limit on
the percentage of its assets that can be loaned. 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. In a portfolio securities lending transaction, the
Fund receives from the borrower an amount equal to the interest paid or the
dividends declared on the loaned securities during the term of the loan as well
as the interest on the collateral securities, less any finders', administrative
or other fees the Fund pays in connection with the loan. 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.
o 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 which has been designated a primary dealer in
government securities which must meet credit requirements set by the Fund's
Board of Trustees from time to time. The repurchase 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.
o HEDGING WITH FUTURES CONTRACTS. The Fund may use hedging instruments for
the purposes described in the Prospectus. When hedging to attempt to protect
against declines in the market value of the Fund's portfolio, or to permit the
Fund to retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons, the
Fund may sell Financial Futures. When hedging to establish a position in the
equities market as a temporary substitute for the purchase of individual equity
securities, the Fund may buy Futures. Normally, the Fund would then purchase the
equity securities and terminate the hedging portion.
The Fund's strategy of hedging with Futures will be incidental to the
Fund's investment activities in the underlying cash market. In the future, the
Fund may employ hedging instruments and strategies that are not presently
contemplated but which may be developed, to the extent such investment methods
are consistent with the Fund's investment objective, and are legally permissible
<PAGE>
and disclosed in the Prospectus. Additional information about the hedging
instruments the Fund may use is provided below.
o FUTURES. The Fund may buy and sell futures contracts related to
financial indices, including stock indices (a "Financial Future"). A financial
index assigns relative values to the securities included in the index and
fluctuates with the changes in the market value of those securities. Financial
indices cannot be purchased or sold directly. The contracts obligate the seller
to deliver, and the purchaser to take, cash to settle the futures transaction or
to enter into an offsetting contract. No physical delivery of the securities
underlying the index is made on settling the futures obligation. No monetary
amount is paid or received by a Fund on the purchase or sale of a Financial
Future.
Upon entering into a Futures transaction, the Fund will be required to
deposit an initial margin payment in cash or U.S. Treasury bills with the
futures commission merchant (the "futures broker"). The initial margin payment
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.
Prior to expiration of the Future, if the Fund elects to close out its position
by taking an opposite position, a final determination of variation margin is
made, additional cash is required to be paid by or released to the Fund, and any
loss or gain is then realized for tax purposes. Although Financial Futures and
Interest Rate Futures by their terms call for settlement by delivery of cash or
securities, respectively, in most cases the obligation is fulfilled by entering
into an offsetting position. All futures transactions are effected through a
clearinghouse associated with the exchange on which the contracts are traded.
o 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 on Futures established by the Commodity Futures Trading
Commission ("CFTC"). In particular the Fund is exempted from registration with
the CFTC as a "commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not limit the
percentage of the Fund's assets that may be used for Futures margin and related
options 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 total assets for hedging strategies that are
not considered bona fide hedging strategies under the Rule. Under the Rule, the
Fund also must use short Futures and Futures options positions solely for "BONA
FIDE hedging purposes" within the meaning and intent of the applicable
provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations established
by each of the exchanges governing the maximum number of options which may be
written or held by a single investor or group of investors acting in concert,
regardless of whether the options were written or purchased on the same or
different exchanges or are held in one or more accounts or through one or more
different exchanges or futures brokers. Thus, the number of options which the
Fund may write or hold may be affected by options written or held by other
entities, including other investment companies having the same or an affiliated
investment adviser. Position limits also apply to Futures. An exchange may order
the liquidation of positions found to be in violation of those limits and may
impose certain other sanctions. Due to requirements under the Investment Company
Act of 1940 (the "Investment Company Act"), when the Fund purchases a Stock
Index Future, the Fund will maintain in a segregated account or accounts with
its Custodian, liquid assets 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.
o 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
<PAGE>
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).
o RISKS OF HEDGING WITH FUTURES. In addition to the risks associated with
respect to hedging that are discussed in the Prospectus and above, there is a
risk in using short hedging by selling Futures to attempt to protect declines in
the values of the fund's securities. the risk is that the prices of the Futures
will correlate imperfectly with the behavior of the cash (i.e., market value)
prices of the Fund's securities. The ordinary spreads between prices in the cash
and futures markets are subject to distortions due to differences in the natures
of those markets. First, all participants in the futures markets are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close out futures contracts through
off-setting 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
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 securities being hedged if the historical volatility of the prices of
such securities being hedged is more than the historical volatility of the
applicable index. It is also possible that where the Fund has used Hedging
Instruments in a short hedge, the market may advance and the value of securities
held in the Fund's portfolio may decline. If this occurred, the Fund would lose
money on the Hedging Instruments and also experience a decline in value in its
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
equities markets as a temporary substitute for the purchase of individual equity
securities (long hedging) by buying Futures, it is possible that the market may
decline. If the Fund then concludes not to invest in equity securities at that
time because of concerns as to a possible further market decline or for other
reasons, the Fund will realize a loss on the hedging instruments that is not
offset by a reduction in the price of the equity securities purchased.
o SHORT SALES AGAINST-THE-BOX. In this type of short sale, while the short
position is open, the Fund must own an equal amount of the securities sold
short, or by virtue of ownership of other securities have the right, without
payment of further consideration, to obtain an equal amount of the securities
sold short. As a result of recent changes to the Federal tax code, this
investment strategy generally can no longer be used 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.
OTHER INVESTMENT RESTRICTIONS
<PAGE>
The Fund's most significant investment restrictions are set forth in the
Prospectus. The following are fundamental policies, and together with the Fund's
fundamental policies described in the Prospectus, cannot be changed without the
vote of a "majority" of the Fund's outstanding voting securities. Such a
"majority" vote is defined in the Investment Company Act as the vote of the
holders of the lesser of (i) 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 (ii) more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
o lend money, but the Fund may invest in all or a portion of an issue of
bonds, debentures, commercial paper, or other similar corporate obligations; the
Fund may also make loans of portfolio securities subject to the restrictions set
forth in the Prospectus and above under the caption "Loans of Portfolio
Securities";
o underwrite securities of other companies, except insofar as it might be
deemed to be an underwriter for purposes of the Securities Act of 1933 in the
resale of any securities held in its own portfolio;
o invest in or hold securities of any issuer if those officers and
trustees or directors of the Fund or its adviser owning individually more than
1/2 of 1% of the securities of such issuer together own more than 5% of the
securities of such issuer;
o invest in commodities or commodity 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 commodity contract;
o invest in real estate or interests in real estate, but may purchase
readily marketable securities of companies holding real estate or interests
therein;
o purchase securities on margin; however, the Fund may make margin
deposits in connection with any of the hedging instruments permitted by any of
its other fundamental policies;
o mortgage, hypothecate or pledge any of its assets; however, this does
not prohibit the escrow arrangements or other collateral or margin arrangements
in connection with covered call writing or any of the hedging instruments
permitted by any of its other fundamental policies; or
o invest in other open-end investment companies, or invest more than 5% of
the value of its net assets in closed-end investment companies, including small
business investment companies, nor make any such investments at commission rates
in excess of normal brokerage commissions.
o NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. For purposes of the Fund's
policy not to concentrate its assets as described under the second investment
restriction in "Other Investment Restrictions" in the Prospectus, the Fund has
adopted the industry classifications set forth in Appendix A to this Statement
of Additional Information. This is not a fundamental policy.
In connection with the qualification of its shares in certain states, the
Fund has undertaken that in addition to the above, as a non-fundamental policy,
the Fund will not: (i) invest in interests in oil, gas, or other mineral
exploration or development programs, or (ii) invest more than 5% of its total
assets in securities of unseasoned issuers (including predecessors) which have
been in operation for less than three years.
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
<PAGE>
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
listed below. The address of each Trustee and officer is Two World Trade Center,
New York, New York 10048-0203, unless another address is listed below. Ms.
Macaskill is not a director of Oppenheimer Money Market Fund, Inc. All of the
Trustees are also trustees or directors of Oppenheimer Global Fund, Oppenheimer
Capital Appreciation Fund, Oppenheimer Discovery Fund, Oppenheimer Enterprise
Fund, Oppenheimer Global Growth & Income Fund, Oppenheimer Gold & Special
Minerals Fund, Oppenheimer International Growth Fund, Oppenheimer Municipal Bond
Fund, Oppenheimer New York Municipal Fund, Oppenheimer California Municipal
Fund, Oppenheimer Money Market Fund, Inc., Oppenheimer Multi-State Municipal
Trust, Oppenheimer Multiple Strategies Fund, Oppenheimer Series Fund, Inc.,
Oppenheimer U.S. Government Trust, Oppenheimer Multi-Sector Income Trust and
Oppenheimer World Bond Fund (collectively 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 November 17, 1997, the Trustees and officers of the Fund as a
group owned of record or beneficially less than 1% of the outstanding shares of
each class of the Fund. That statement does not reflect shares held of record by
an employee benefit plan for employees of the Manager (for which plan a Trustee
and an officer listed below, Ms. Macaskill, and Mr. Donohue, respectively, are
Trustees), 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: 72
31 West 52nd Street, New York, NY 10019
General Partner of Odyssey Partners, L.P. (investment partnership)(since
1982) and Chairman of Avatar Holdings, Inc. (real estate development).
<PAGE>
ROBERT G. GALLI, TRUSTEE;* Age: 64
Vice Chairman of OppenheimerFunds, Inc. (the "Manager") (since October 1995);
formerly he held the following positions: Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding company;
Executive Vice President , General Counsel and a director of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"), Vice President and a
director of HarbourView Asset Management Corporation ("HarbourView") and
Centennial Asset Management Corporation ("Centennial"), investment adviser
subsidiaries of the Manager, a director of Shareholder Financial Services, Inc.
("SFSI") and Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of
the Manager and an officer of other Oppenheimer funds.
BENJAMIN LIPSTEIN, TRUSTEE; AGE: 74
591 Breezy Hill Road, Hillsdale, N.Y. 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex Publishers, Inc
(Publishers of Psychology Today and Mother Earth News) and of Spy Magazine, L.P.
BRIDGET A. MACASKILL, PRESIDENT AND TRUSTEE;*# Age: 49
President (since June 1991), Chief Executive Officer (since September 1995) and
a Director (since December 1994) of the Manager and Chief Executive Officer
(since September 1995); President and director (since June 1991) of HarbourView;
Chairman and a director of SSI (since August 1994), and SFSI (September 1995);
President (since September 1995) and a director (since October 1990) of OAC;
President (since September 1995) and a director (since November 1989) of
Oppenheimer Partnership Holdings, Inc., a holding company subsidiary of the
Manager; a director of Oppenheimer Real Asset Management, Inc. (since July
1996); President and a director (since October 1997) of OppenheimerFunds
International Ltd., an offshore fund manager subsidiary of the Manager ("OFIL")
and Oppenheimer Millennium Funds plc (since October 1997); President and a
director of other Oppenheimer funds; a director of the NASDAQ Stock Market, Inc.
and of Hillsdown Holdings plc (a U.K. food company); formerly an Executive Vice
President of the Manager.
ELIZABETH B. MOYNIHAN, TRUSTEE; AGE: 68
801 Pennsylvania Avenue, N.W., Washington, D.C. 20004
Author and architectural historian; a trustee of the Freer Gallery of Art
(Smithsonian Institution), the Institute of Fine Arts (New York University),
National Building Museum; a member of the Trustees Council, Preservation League
of New York State, and of the Indo-U.S. Sub-Commission on Education and Culture.
KENNETH A. RANDALL, TRUSTEE; AGE: 70
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), Texan
Cogeneration Company (cogeneration company), Prime Retail, Inc. (real estate
investment trust); formerly President and Chief Executive Officer of The
Conference Board, Inc. (international economic and business research) and a
director of Lumbermens Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company.
EDWARD V. REGAN, TRUSTEE; AGE: 67
40 Park Avenue, New York, New York 10016
- --------
*Trustee who is "an interested person" of the Fund.
#Not a Director of Oppenheimer Money Market Fund, Inc.
<PAGE>
Chairman of Municipal Assistance Corporation for the City of New York; Senior
Fellow of Jerome Levy Economics Institute, Bard College; a member of the U.S.
Competitiveness Policy Council; a director of GranCare, Inc. (health care
provider); a director of River Bank America (real estate manager); Trustee,
Financial Accounting Foundation (FASB and GASB); formerly New York State
Comptroller and trustee, New York State and Local Retirement Fund.
RUSSELL S. REYNOLDS, JR., TRUSTEE; AGE: 65
8 Sound Shore Drive, Greenwich, Connecticut 06830
Founder Chairman of Russell Reynolds Associates, Inc. (executive recruiting);
Chairman of Directorship Inc. (corporate governance consulting); a director of
Professional Staff Limited (U.K.); a trustee of Mystic Seaport Museum,
International House and Greenwich Historical Society.
DONALD W. SPIRO, VICE CHAIRMAN AND TRUSTEE;* Age: 71
Chairman Emeritus (since August 1991) and a director (since January 1969) of the
Manager; formerly Chairman of the Manager and the Distributor.
PAULINE TRIGERE, TRUSTEE; AGE: 85
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: 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel , Hogan & Hartson (a law firm); a director of B.A.T. Industries, Ltd.
(tobacco and financial services), Caterpillar, Inc. (machinery), ConAgra, Inc.
(food and agricultural products), Farmers Insurance Company (insurance), FMC
Corp. (chemicals and machinery) and Texas Instruments, Inc. (electronics) ;
formerly (in descending chronological order) IMC Global Inc. (chemicals and
animal feed), Counsellor to the President (Bush) for Domestic Policy, Chairman
of the Republican National Committee, Secretary of the U.S. Department of
Agriculture, and U.S. Trade Representative.
ANDREW J. DONOHUE, SECRETARY; AGE: 47
Executive Vice President (since January 1993), General Counsel (since October
1991) and a Director (since September 1995) of the Manager ; Executive Vice
President (since September 1993), and a director (since January 1992) of the
Distributor; Executive Vice President, General Counsel and a director of
HarbourView, SSI, SFSI and Oppenheimer Partnership Holdings, Inc. since
(September 1995) and MultiSource Services, Inc. (a broker-dealer) (since
December 1995); President and a director of Centennial (since September 1995);
President and a director of Oppenheimer Real Asset Management, Inc. (since July
1996); General Counsel (since May 1996) and Secretary (since April 1997) of OAC;
Vice President of OFIL and Oppenheimer Millennium Funds plc (since October
1997); an officer of other Oppenheimer funds.
- --------
*Trustee who is an "interested person" of the Fund.
-16-
<PAGE>
ROBERT C. DOLL, JR., VICE PRESIDENT AND PORTFOLIO MANAGER; AGE: 43
Executive Vice President and Director of the Manager (since January 1993) ;
Executive Vice President of HarbourView (since January 1993); Vice President and
a director of OAC (since September 1995); an officer of other Oppenheimer funds.
GEORGE C. BOWEN, TREASURER; AGE: 61
6803 South Tucson Way, Englewood, Colorado 80112 Senior Vice President (since
September 1987) and Treasurer (since March 1985) of the Manager; Vice President
(since June 1983) and Treasurer (since March 1985) of the Distributor ; Vice
President (since October 1989) and Treasurer (since April 1986) of HarbourView;
Senior Vice President (since February 1992), Treasurer (since July 1991)and a
director (since December 1991) of Centennial; President, Treasurer and a
director of Centennial Capital Corporation (since June 1989); Vice President and
Treasurer (since August 1978) and Secretary (since April 1981) of SSI; Vice
President, Treasurer and Secretary of SFSI (since November 1989); Treasurer of
OAC (since June 1990); Treasurer of Oppenheimer Partnership Holdings, Inc.
(since November 1989); Vice President and Treasurer of Oppenheimer Real Asset
Management, Inc. (since July 1996); Chief Executive Officer, Treasurer and a
director of MultiSource Services, Inc., a broker-dealer (since December 1995);
an officer of other Oppenheimer funds.
ROBERT G. ZACK, ASSISTANT SECRETARY; AGE: 49
Senior Vice President (since May 1985) and Associate General Counsel (since May
1981) of the Manager, Assistant Secretary of SSI (since May 1985), and SFSI
(since November 1989); Assistant Secretary of Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
ROBERT J. BISHOP, ASSISTANT TREASURER; AGE: 39
6803 South Tucson Way, Englewood, Colorado 80112 Vice President of the
Manager/Mutual Fund Accounting (since May 1996); an officer of other Oppenheimer
funds; formerly an Assistant Vice President of the Manager/Mutual Fund
Accounting (April 1994-May 1996), and a Fund Controller for the Manager .
SCOTT T. FARRAR, ASSISTANT TREASURER; AGE: 32
6803 South Tucson Way, Englewood, Colorado 80112 Vice President of the
Manager/Mutual Fund Accounting (since May 1996); Assistant Treasurer of
Oppenheimer Millennium Funds plc (since October 1997); an officer of other
Oppenheimer funds; formerly an Assistant Vice President of the Manager/Mutual
Fund Accounting (April 1994-May 1996), and a Fund Controller for the Manager .
o REMUNERATION OF TRUSTEES. The officers of the Fund and certain Trustees
are affiliated with the Manager. They and the Trustees of the Fund (Ms.
Macaskill and Messrs. Galli and Spiro are also officers) who are affiliated with
the Manager receive no salary or fee from the Fund. The remaining Trustees of
the Fund received the compensation shown below from the Fund . The compensation
from the Fund was paid during the fiscal year ended August 31, 1997. The
compensation from all of the New York-based Oppenheimer funds
-17-
<PAGE>
includes the Fund and is compensation received as a director, trustee, or member
of a committee of the Board of those funds during the calendar year 1996.
Retirement
Benefits Total
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From the Fund Fund Expenses Oppenheimer Funds
Leon Levy, $7,563 ($6,015) $152,750
Chairman and Trustee
Benjamin Lipstein $4,523 ($3,597) $91,350
Study Committee Member
and Trustee
Elizabeth B. Moynihan, $4,523 ($3,597) $91,350
Study Committee Member
and Trustee
Kenneth A. Randall, $4,132 ($3,286) $83,450
Audit Committee Chairman
and Trustee
Edward V. Regan, $3,869 ($3,078) $78,150
Proxy Committee Chairman,(2)
Audit Committee Member
and Trustee
Russell S. Reynolds, Jr., $2,911 ($2,316) $58,800
Proxy Committee Member
and Trustee
Pauline Trigere, Trustee $2,738 ($2,178) $55,300
Clayton K. Yeutter, $2,911 ($2,316) $58,800
Proxy Committee Member
and Trustee
- ----------------------
1For the 1996 calendar year.
2Committee position held during a portion of the period shown.
DEFERRED COMPENSATION PLAN. The Board of Trustees has adopted a Deferred
Compensation Plan for disinterested trustees that enables them to elect to defer
receipt of all or a portion of the annual fees they are entitled to receive from
the Fund. Under the plan, the compensation deferred by a Trustee is periodically
adjusted as though an equivalent amount had been invested in shares of one or
more Oppenheimer funds selected by the Trustee. The amount paid to the Trustees
under the plan will be determined based upon the performance of the selected
funds. Deferral of Trustees' fees under the plan will not materially affect the
Fund's assets, liabilities and net income per share. The plan will not
materially affect the Fund's assets, liabilities and net income per share. The
plan will not obligate the Fund to retain the services of any Trustee or to pay
any particular level of compensation to any Trustee. Pursuant to any Order
issued by the Securities and Exchange Commission, the Fund may invest in the
funds selected by the Trustee under the plan without shareholder approval for
the limited purpose of determining the value of the Trustee's deferred fee
account.
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was received.
A Trustee must serve in that capacity for any of the New York- based Oppenheimer
funds for at least 15 years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the Trustee's future
compensation and length of service, the amount of those benefits cannot be
determined at this time, nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits. During the
fiscal year ended August 31, 1997, a credit of $32,462 was made for the Fund's
projected benefit obligations and payments of $11,314 were made to retired
trustees, resulting in an accumulated liability of $204,733 at August 31, 1997.
<PAGE>
o MAJOR SHAREHOLDERS. As of November 17, 1997, no person owned of record
or was known by the Fund to own beneficially 5% or more of the Fund's
outstanding shares except Merrill Lynch Pierce Fenner & Smith, 4800 Deer Lake
Drive EF13, Jacksonville, Florida, who owned of record 97,546.772 Class C shares
5.11%(11.15% of the Fund's outstanding shares of that class). As of that same
date the only person who owned of record or was known by the Fund to own
beneficially 5% or more of the Fund's outstanding Class Y shares was
Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111, which owned 2,556,132.274 Class Y shares (representing 100%
of the Class Y shares then outstanding). Massachusetts Mutual Life Insurance
Company's affiliation with the Manager is described below.
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
three of whom (Ms. Macaskill and Messrs. Galli and Spiro) serve as Trustees of
the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
o Portfolio Management. The Portfolio Manager of the Fund is Robert Doll,
Jr., who is principally responsible for the day-to-day management of the Fund's
portfolio. Mr. Doll's background is described in the Prospectus under "Portfolio
Manager." Other members of the Manager's Equity Portfolio Department,
particularly Jane Putnam provide the Portfolio Manager with counsel and support
in managing the Fund's portfolio.
o 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 Investment Advisory
Agreement or by the Distributor under the General Distributors Agreement are
paid by the Fund. The Investment 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 June 30, 1995, June 30, 1996, the fiscal
period ended August 31, 1996 and the fiscal year ended August 31, 1997, the
management fees paid by the Fund to the Manager were $5,274,276, $7,558,069,
$1,415,789 and $10,710,424, respectively.
The Investment Advisory Agreement contains no expense limitation. However,
because of state regulations limiting fund expenses that previously applied, the
Manager had voluntarily undertaken that the Fund's total expenses in any fiscal
year (including the management investment advisory fee but exclusive of taxes,
interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses , including litigation)
-20-
<PAGE>
would not exceed the most stringent state regulatory limitation applicable to
the Fund. Due to changes in federal securities laws, such state regulations no
longer apply and the Manager's undertaking is therefore inapplicable and has
been withdrawn. During the Fund's last fiscal year, the Fund's expenses did not
exceed the most stringent state regulatory limit and the voluntary undertaking
was not invoked.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard for its obligations and duties under the advisory agreement,
the Manager is not liable for any loss resulting from a good faith error or
omission on its part with respect to any of its duties thereunder. The advisory
agreement permits the Manager to act as investment adviser for any other person,
firm or corporation and to use the name "Oppenheimer" in connection with 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.
o 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, Class C and Class Y shares but
is not obligated to sell a specific number of shares. Expenses normally
attributable to sales, 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 June 30, 1995,
June 30, 1996, the fiscal period ended August 31, 1996 and the fiscal year ended
August 31, 1997, the aggregate sales charges on sales of the Fund's Class A
shares were $1,831,787, $1,238,892, $3,462,100 , $424,452 and $3,942,208,
respectively, of which the Distributor and an affiliated broker-dealer retained
in the aggregate $370,067, $956,825, $134,309 and $1,118,329 in those respective
years. During the Fund's fiscal year ended August 31, 1997, the contingent
deferred sales charges collected on the Fund's Class B shares totaled $378,950,
[all of which was retained by the Distributor]. During the Fund's fiscal year
ended August 31, 1997, contingent deferred sales charges collected on the Fund's
class C shares totaled $6,169, [all of which was retained by the Distributor].
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.
o THE TRANSFER AGENT. OppenheimerFunds 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 Investment 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
-21-
<PAGE>
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.
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. In either case, 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 and/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.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. Instead of using a broker for those
transactions, the Fund normally deals directly with the selling or purchasing
principal or market maker unless it determines that a better price or execution
can be obtained by using a broker. Purchases of these securities from
underwriters include a commission or concession paid by the issuer to the
underwriter. Purchases from dealers include a spread between the bid and asked
price. The Fund seeks to obtain prompt execution of these orders at the most
favorable net price.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates, and
investment research received for the commissions of those other accounts may be
useful both to the Fund and one or more of such other accounts. Such research,
which may be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as well as
market or economic trends and portfolio strategy, receipt of market quotations
for portfolio evaluations, information systems, computer hardware and similar
products and services. If a research service also assists the Manager in a
non-research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the Manager in
the investment decision-making process may be paid for in commission dollars.
The 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 the 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.
-22-
<PAGE>
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 Investment
Advisory Agreement or the Distribution and Service 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 June 30, 1995 , June 30, 1996, the
fiscal period ended August 31, 1996, and the fiscal year ended August 31, 1997,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $1,073,321,
$708,331 , $142,075 and $1,046,055, respectively. During the fiscal year ended
June 30, 1996, the fiscal period ended August 31, 1996 and the fiscal year ended
August 31, 1997, $405,118, $64,496 and $764,188, respectively, were paid to
brokers as commissions in return for research services; the aggregate dollar
amount of those transactions was $230,621,176 , $37,461,550 and $458,409,805,
respectively. 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.
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 advertised class of shares of the Fund for the 1, 5, and
10-year periods (or the life of the class, if less) ending as of the most
recently-ended calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the performance of
other funds for the same periods. However, a number of factors should be
considered before using such information as a basis for comparison with other
investments. An investment in the Fund is not insured; its returns and share
prices are not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their original
cost. Returns for any given past period are not a prediction or representation
by the Fund of future returns. The returns of each class of 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.
o 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:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
o 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
-23-
<PAGE>
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). In calculating total returns for Class B shares, the payment
of the contingent deferred sales charge, (5% for the first year, 4% for the
second year, 3% for the third and fourth years, 2% for the fifth year, 1% for
the sixth year and none thereafter) is applied to the investment result for the
period shown. For Class C shares, the 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 at net asset value per share, and that the investment
is redeemed at the end of the period.
o 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, Class C or Class Y 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.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B, Class C or Class Y shares. However,
when comparing total return of an investment in Class A, Class B, Class C or
Class Y shares of the Fund with that of other alternatives, investors should
understand that as the Fund is an 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.
CLASS A SHARES
AVERAGE ANNUAL TOTAL RETURN AT 8/31/97:
1 YEAR 5 YEARS 10 YEARS
--------------------------------
27.27% 17.97% 13.91%
AVERAGE ANNUAL TOTAL RETURN (NET ASSET VALUE) AT 8/31/97:
1 YEAR 5 YEARS 10 YEARS
--------------------------------
35.03% 19.37% 14.58%
CLASS B SHARES
AVERAGE ANNUAL TOTAL RETURN AT 8/31/97:
1 YEAR LIFE(1)
--------------------
28.93% 19.43%
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (NET ASSET VALUE) AT 8/31/97:
1 YEAR LIFE(1)
-------------------
33.93% 19.71%
CLASS C SHARES
CUMULATIVE TOTAL RETURN AT 8/31/97:
1 YEAR LIFE(2)
-------------------
32.93% 48.30%
CUMULATIVE TOTAL RETURN (AT NET ASSET VALUE) AT 8/31/97:
1 YEAR LIFE(2)
-----------------
33.93 48.30%
CLASS Y SHARES
AVERAGE ANNUAL TOTAL RETURN AT 8/31/97:
1 YEAR LIFE(3)
-------------------
35.36% 24.37%
- ----------------
(1)Class B shares of the Fund were first publicly offered on 8/17/96.
(2)Class C shares of the Fund were first publicly offered on 11/1/95.
(3)Class Y Shares, first publicly offered on 6/1/94, are offered at net asset
value without sales charge to certain institutional investors.
OTHER PERFORMANCE COMPARISONS. From time to time the Fund may publish the star
rankings of the performance of its Class A, Class B, Class C [or Class Y] shares
by Morningstar, Inc., an independent mutual fund monitoring service. Morningstar
ranks mutual funds
in broad investment categories, domestic stock funds, international stock funds,
taxable bond funds and municipal bond funds, based on risk-adjusted total
investment returns. The Fund is ranked among [category] funds. Investment return
measures a fund's or class's one, three, five and ten-year average annual total
returns (depending on the inception of the fund or class) in excess of 90-day
U.S. Treasury bill returns after considering the fund's sales charges and
expenses. Risk measures a fund's or class's performance below 90-day U.S.
Treasury bill returns. Risk and investment return are combined to produce star
rankings reflecting performance relative to the average fund in the fund's
category. Five stars is the "highest ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" '(next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%). The current star
ranking is the fund's or class's 3-year ranking or its
-25-
<PAGE>
combined 3- and 5-year ranking (weighted 60%/40%, respectively), or its combined
3-, 5- and 10- year ranking (weighted 40%, 30% and 30%, respectively), depending
on the inception of the fund or class. Rankings are subject to change monthly.
The Fund may also compare its performance to that of other funds in its
Morningstar Category. In addition to its star rankings, Morningstar also
categorizes and compares a fund's 3-year performance based on Morningstar's
classification of the fund's investments style, rather than how a fund defines
its investment objective. Morningstar's four broad categories (domestic, equity,
international equity, municipal bond and taxable bond) are each further
subdivided into categories based on types of investments and investment styles.
Those comparisons by Morningstar are based on the same risk and return
measurements as its star rankings but do not consider the effect of sales
charges.
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, using its
own 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 of the Fund under Rule 12b-1 of the
Investment Company Act, pursuant to which the Fund makes payments to the
Distributor in connection with the distribution and/or servicing of the shares
of that class, as described in the Prospectus. Each Plan has been
approved by a vote of (i) the Board of Trustees of the Fund, including a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on that Plan, and (ii) the holders of a "majority" (as defined
in the Investment Company Act) of the shares of each class. For the Distribution
and Service Plans 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. Each 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.
None of the Plans 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 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 payments under the plan. Such
approval must be by a "majority" of the Class A and Class B shares (as defined
in the Investment Company Act) voting separately by class. All material
amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports
<PAGE>
to the Fund's Board of Trustees at least quarterly for its review, detailing the
amount of all payments made pursuant to each Plan, the purpose for which
payments were made and the identity of each Recipient that received any payment.
The reports for the Class B and Class C Plans shall also include the
distribution costs for that quarter, and such costs for previous fiscal periods
that have been carried forward, as explained in the Prospectus and below. 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 does 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 fee at the maximum rate and set no
minimum amount. However, while the maximum fee rate under the Class A Plan is
0.25% of average annual net assets of the fund, the Board of Trustees has set
the maximum rate for assets representing Class A shares of the Fund acquired
before April 1, 1991 at 0.15%, and for assets representing Class A shares
acquired on or after April 1, 1991, at 0.25%.
For the fiscal year ended August 31, 1997, payments under the Class A Plan
totaled $2,431,503, all of which was paid by the Distributor to Recipients,
including respectively, $82,960 paid to MML Investor Services, Inc., an
affiliate of the Distributor. Any unreimbursed expenses incurred by the
Distributor with respect to Class A shares for any fiscal year may not be
recovered in subsequent years. Payments received by the Distributor under the
Class A Plan 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 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 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 for those shares to the Distributor. Payments made under the
Class B Plan during the fiscal year August 31, 1997 totaled $2,030,245 of which
$1,720,803 was retained by the Distributor and $16,174 was paid to a dealer
affiliated with the Distributor. Payments made under the Class C Plan for the
fiscal year ended August 31, 1997, totaled $136,351 of which $102,938 was
retained by the Distributor and $438 was paid to a dealer affiliated with the
Distributor. At fiscal year-end August 31, 1997, the Distributor had incurred
unreimbursed expenses under the Class B and Class C Plans of $6,440,567 and
$262,813, respectively (equal to 2.27% and 0.93% of the Fund's net assets
represented by Class B and Class C shares on that date) which have been carried
over into the present Plan year.
Although the Class B and Class C Plans permit the Distributor to retain
both the asset-based sales charges and the service fee on such shares, or to pay
Recipients the service fee on a quarterly basis without payment in advance, the
Distributor intends to pay the service fee to Recipients in the manner described
above. A minimum holding period may be established from time to time under the
Class B and the Class C Plans by the Board. Initially, the Board has set no
minimum holding period. All payments under the Class B Plan 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
<PAGE>
payments of asset-based sales charges and service fees. The Distributor
anticipates that it will take a number of years for its to recoup (from the
Fund's payments to the Distributor under the Class B or Class C Plan and from
the contingent deferred sales charges collected on redeemed Class B or Class C
shares) the sales commissions paid to authorized dealers or brokers.
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 an investor to choose the method
of purchasing shares that is more beneficial to the investor depending on the
amount of the purchase, the length of time the investor expects to hold shares
and other relevant circumstances. Investors should understand that the purpose
and function of the deferred sales charge and asset-based sales charge with
respect to Class B and Class C shares are the same as those of the initial sales
charge with respect to Class A shares. Any salesperson or other person entitled
to receive compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other. The Distributor
normally will not accept any order for $500,000 or more of Class B shares or any
order for $1 million or more of Class C shares 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. A fourth class of shares may be purchased only by certain
institutional investors at net asset value per share (the "Class Y shares").
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, Class C and Class Y shares
recognizes two types of expenses. General expenses that do not pertain
specifically to any one 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 (i) Distribution Plan fees, (ii) incremental transfer and shareholder
servicing agent fees and expenses, (iii) registration fees and (iv) 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
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<PAGE>
B, Class C and Class Y shares of the Fund are determined as of the close of
business of The New York Stock Exchange (the "NYSE") on each day that the NYSE
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 NYSE normally closes at 4:00
P.M., but may close earlier on some other days (for example, in case of weather
emergencies or days falling before a holiday). The NYSE's most recent annual
announcement (which is subject to change) states that it will close on New
Year's Day, Martin Luther King Jr. 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 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 NYSE is closed. Because the Fund's
price and net asset value will not be calculated on those days, the Fund's net
asset values per share 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 U.S. securities exchange or on the Automated Quotation System ("NASDAQ") of
the Nasdaq Stock Market, Inc. for which last sale information is regularly
reported are valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values based on the
last sale prices of the preceding trading day or closing bid prices that day);
(ii) securities traded on a foreign securities exchange are valued generally at
the last sales price available to the pricing service approved by the Fund's
Board of Trustees or to the Manager as reported by the principal exchange on
which the security is traded at its last trading session on or immediately
preceding the valuation date, or at the mean between "bid" and "asked" prices
obtained from the principal exchange or two active market makers in the security
on the basis of reasonable inquiry; (iii) long-term debt securities having a
remaining maturity in excess of 60 days are valued based on the mean between the
"bid" and "asked" prices determined by a portfolio pricing service approved by
the Fund's Board of Trustees or obtained by the Manager from two active market
makers in the security on the basis of reasonable inquiry; (iv) debt instruments
having a maturity of more than 397 days or less when issued, and non-money
market type instruments having a maturity of 397 days or less when issued, which
have a remaining maturity of 60 days or less are valued at the mean between the
"bid" and "asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained by the Manager from two active market makers in
the security on the basis of reasonable inquiry; (v) money market-type debt
securities held by a non-money market fund that had a maturity of less than 397
days when issued that have a remaining maturity of 60 days or less , and debt
instruments held by a money market fund that have a remaining maturity of 397
days or less, shall be valued at cost, adjusted for amortization of premiums and
accretion of discount; and (vi) securities (including restricted securities) not
having readily-available market quotations are valued at fair value determined
under the Board's procedures. If the Manager is unable to locate two market
makers willing to give quotes (see (ii), (iii) and (iv) above), the security may
be priced at the mean between the "bid" and "asked" prices provided by a single
active market maker (which in certain cases may be the "bid" price if no "asked"
price is available).
In the case of U.S. Government Securities and mortgage-backed securities,
where last sale information is not generally available, such pricing procedures
may include "matrix" comparisons to the prices for comparable instruments on the
basis of quality, yield, maturity and other special factors involved. The
Manager may use pricing services approved by the Board of Trustees to price U.S.
Government Securities or mortgage-backed securities for which last sale
information is not generally available. The Manager will monitor the accuracy of
such pricing services, which may include comparing prices used for portfolio
evaluation to actual sales prices of selected securities.
Trading in securities on European and Asian exchanges and over-the-counter
markets is normally completed before the close of the New York Stock Exchange.
Events affecting the values of foreign securities traded in securities markets
that occur between the time their prices are determined and the close of the New
York Stock Exchange will not be reflected in the Fund's calculation of net asset
value unless the Board of Trustees or the Manager, under procedures established
by the Board of Trustees, determines that the particular event is likely to
effect a material
-29-
<PAGE>
change in the value of such security. Foreign currency, including forward
contracts, will be valued at the closing price in the London foreign exchange
market that day as provided by a reliable bank, dealer or pricing service. The
values of securities denominated in foreign currency will be converted to U.S.
dollars at the closing price in the London foreign exchange market that day as
provided by a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on the
principal exchange on which they are traded or on NASDAQ, as applicable, as
determined by a pricing service approved by the Board of Trustees or by the
Manager. If there were no sales that day, value shall be the last sale price on
the preceding trading day if it is within the spread of the closing "bid" and
"ask" prices on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing "bid" price on the principal exchange or on
NASDAQ on the valuation date. If the put, call or future is not traded on an
exchange or on NASDAQ, it shall be valued at the mean between "bid" and "ask"
prices obtained by the Manager from two active market makers (which in certain
cases may be the "bid" price if no "ask" price is available).
ACCOUNTLINK. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House transfer to
buy shares. Dividends will begin to accrue on such shares on the day the Fund
receives Federal Funds for the purchase through the ACH system before the close
of The New York Stock Exchange that day, which is normally three days after the
ACH transfer is initiated. 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 Letter
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, siblings, a sibling's spouse, a spouse's siblings, aunts,
uncles, nieces and nephews. Relation by virtue of a remarriage (step-children,
step-parents, etc.) are included.
o THE OPPENHEIMER FUNDS. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and include
the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
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<PAGE>
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Multiple Strategies Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Bond Fund for Growth
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income 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 Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer International Bond Fund
Oppenheimer International Small Company Fund
Oppenheimer Strategic Income Fund
Oppenheimer Real Asset Fund
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Oppenheimer World Bond Fund
Oppenheimer Multi-Sector Income Trust
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Value Fund
Rochester Fund Municipals
Limited Term New York Municipal Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
Oppenheimer Developing Markets Fund
Oppenheimer MidCap 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).
o 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 of the Fund or Class A and Class B shares of the Fund and other
Oppenheimer funds 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 by reinvestment of dividends or distributions of
capital gains and purchases made at net asset value without sales charge do not
count toward satisfying the amount of the Letter. A Letter enables an investor
to count the Class A and Class B shares purchased under the Letter to obtain the
reduced sales charge rate on purchases of Class A shares of the Fund (and other
Oppenheimer funds) that applies under the Right of Accumulation to current
purchases of Class A shares. Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of shares in the
intended purchase amount, as described in the Prospectus.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below
(as those terms may be amended from time to time). The investor agrees that
shares equal in value to 5% of the intended purchase amount will be held in
escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of the Prospectus, this Statement of Additional
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Information and the Application used for such Letter of Intent, and if such
terms are amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the Transfer
Agent will not hold shares in escrow. If the intended purchase amount under the
Letter entered into by an OppenheimerFunds prototype 401(k) plan is not
purchased by the plan by the end of the Letter of Intent period, there will be
no adjustment of commissions paid to the broker-dealer or financial institution
of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of Intent period do
not equal or exceed the intended purchase amount, the commissions previously
paid to the dealer of record for the account and the amount of sales charge
retained by the Distributor will be adjusted to the rates applicable to actual
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.
o 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 up 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.
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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 of other Oppenheimer funds 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 Oppenheimer funds
that were acquired subject to a Class A initial or contingent deferred sales
charge or (ii) Class B shares of one of the other Oppenheimer funds that were
acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in the
section of the Prospectus entitled "How to Exchange Shares," and the escrow will
be transferred to that other fund.
ASSET BUILDER PLANS. To establish an Asset Builder Plan from a bank account, a
check (minimum $25) for the initial purchase must accompany the Application.
Shares purchased by Asset Builder Plan payments from bank accounts are subject
to the redemption restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable shareholders of the
Fund to use those accounts for monthly automatic purchases of shares of up to
four other Oppenheimer funds. If you make payments from your bank account to
purchase shares of the Fund, your bank account will be automatically debited
normally four to five business days prior to the investment dates selected in
the Account Application. Neither the Distributor, the Transfer Agent nor the
Fund shall be responsible for any delays in purchasing shares resulting from
delays in ACH transmission.
There is a front-end sales charge on the purchase of certain Oppenheimer
funds, or a contingent deferred sales charge may apply to shares purchased by
Asset Builder payments. An application should be obtained from the Distributor,
completed and returned, and a prospectus of the selected fund(s) should be
obtained from the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may be changed or
the automatic investments may be terminated at any time by writing to the
Transfer Agent. A reasonable period (approximately 15 days) is required after
the Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans at any
time without prior notice.
CANCELLATION OF PURCHASE ORDERS. Cancellation of purchase orders for the Fund's
shares (for example, when a purchase check is returned to the Fund unpaid)
causes a loss to be incurred when the net asset value of the Fund's shares on
the cancellation date is less than on the purchase date. That loss is equal to
the amount of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming
shares from any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
RETIREMENT PLANS. In describing certain types of employee benefit plans that may
purchase Class A shares without being subject to the Class A contingent differed
sales charge, the term "employee benefit plan" means any plan or arrangement,
whether or not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which Class A
shares are purchased by a fiduciary or other person for the account of
participants who are employees of a single employer or of affiliated employers,
if the Fund account is registered in the name of the fiduciary or other person
for the benefit of participants in the plan.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans other than
public school 403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or association or
other organized group of persons (the members of which may include other
groups), if the group or association has made special arrangements with the
Distributor and all members of the group or association participating in or who
are eligible to participate in the
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plan(s) purchase Class A shares of the Fund through a single investment dealer,
broker or other financial institution designated by the group. "Group retirement
plan" also includes qualified retirement plans and non-qualified deferred
compensation plans and IRAs that purchase Class A shares of the Fund through a
single investment dealer, broker, or other financial institution, if that
broker-dealer has made special arrangements with the Distributor enabling those
plans to purchase Class A shares of the Fund at net asset value but subject to a
contingent deferred sales charge.
In addition to the discussion in the Prospectus relating to the ability of
Retirement Plans to purchase Class A shares at net asset value in certain
circumstances, there is no initial sales charge on purchases of Class A shares
of any one or more of the Oppenheimer funds by a Retirement Plan in the
following cases:
(i) the recordkeeping for the Retirement Plan is performed on a daily
valuation basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill
Lynch") and, on the date the plan sponsor signs the Merrill Lynch
recordkeeping service agreement, the Retirement Plan has $3 million or
more in assets invested in mutual funds other than those advised or
managed by Merrill Lynch Asset Management, L.P. ("MLAM") that are made
available pursuant to a Service Agreement between Merrill Lynch and the
mutual fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments"); or
(ii) the recordkeeping for the Retirement Plan is performed on a daily
valuation basis by an independent record keeper whose services are
provided under a contract or arrangement between the Retirement Plan and
Merrill Lynch. On the date the plan sponsor signs the Merrill Lynch record
keeping service agreement, the Plan must have $3 million or more in
assets, excluding assets held in money market funds, invested in
Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by the
Merrill Lynch plan conversion manager on the date the plan sponsor signs
the Merrill Lynch
record keeping service agreement.
If a Retirement Plan's records are maintained on a daily valuation basis
by Merrill Lynch or an independent record keeper under a contract or alliance
arrangement with Merrill Lynch, and if on the date the plan sponsor signs the
Merrill Lynch record keeping service agreement the Retirement Plan has less than
$3 million in assets, excluding money market funds, invested in Applicable
Investments, then the Retirement Plan may purchase only Class B shares of one or
more of the Oppenheimer funds. Otherwise, the Retirement Plan will be permitted
to purchase Class A shares of one or more of the Oppenheimer funds. Any of those
Retirement Plans that currently invest in Class B shares of the Fund will have
their Class B shares be converted to Class A shares of the Fund once the Plan's
Applicable Investments have reached $5 million.
Any redemptions of shares of the Fund held by Retirement Plans whose
records are maintained on a daily valuation basis by Merrill Lynch or an
independent record keeper under a contract with Merrill Lynch that are currently
invested in Class B shares of the Fund shall not be subject to the Class B CDSC.
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.
o 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 $500 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
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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.
o 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
"Determination of Net Asset Values Per Share" and that valuation will be made as
of the time the redemption price is determined.
SELLING SHARES BY WIRE. The wire of redemption proceeds may be delayed if a
Fund's Custodian bank is not open for business on a day when the Fund would
normally authorize the wire to be made, which is usually the Fund's next regular
business day following the redemption. In those circumstances, the wire will not
be transmitted until the next bank business day on which the Fund is open for
business. No dividends will be paid on the proceeds of redeemed shares awaiting
transfer by wire.
REINVESTMENT PRIVILEGE. Within six months of a redemption, a shareholder may
reinvest all or part of the redemption proceeds of (i) Class A shares that you
purchased subject to an initial sales charge, or (ii) Class B shares that were
subject to the Class B contingent deferred sales charge when redeemed. 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
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Shares" for the imposition of the Class B or Class C contingent deferred sales
charge will be followed in determining the order in which shares are
transferred.
DISTRIBUTIONS FROM RETIREMENT PLANS. Requests for distributions from
OppenheimerFunds- sponsored IRAs, SEP-IRAs, SAR-SEPs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be addressed to
"Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its
address listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the reason
for the distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the plan and
the Fund's other redemption requirements. Participants (other than self-employed
persons maintaining a plan account in their own name) in
OppenheimerFunds-sponsored prototype pension, profit-sharing, or 401(k) plans
may not directly redeem or exchange shares held for their account under those
plans. The employer or plan administrator must sign the request. Distributions
from pension and profit sharing plans are subject to special requirements under
the Internal Revenue Code and certain documents (available from the Transfer
Agent) must be completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal Revenue Code
requires that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the Distributor, the
Trustee and the Transfer Agent assume no responsibility to determine whether a
distribution satisfies the conditions of applicable tax laws and will not be
responsible for any tax penalties assessed in connection with a distribution.
SPECIAL ARRANGEMENTS FOR REPURCHASE OF SHARES FROM DEALERS AND BROKERS. The
Distributor is the Fund's agent to repurchase its shares from authorized dealers
or brokers on behalf of their customers. The shareholder should contact the
broker or dealer to arrange this type of redemption. The repurchase price per
share will be the net asset value next computed after the Distributor receives
the order placed by the dealer or broker, except that if the Distributor
receives a repurchase order from a dealer or broker after the close of The New
York Stock Exchange on a regular business day, it will be processed at that
day's net asset value if the order was received by the dealer or broker from its
customer prior to the time the Exchange closed (normally, that is 4:00 P.M., but
may be earlier 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 documents 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. Shares are
normally redeemed pursuant to an Automatic Withdrawal Plan three business days
before the date you select in the Account Application. If a contingent deferred
sales charge applies to the redemption, the amount of the check or payment will
be reduced accordingly. 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
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notice. Because of the sales charge assessed on Class A share purchases,
shareholders should not make regular additional Class A share purchases while
participating in an Automatic Withdrawal Plan. Class B and Class C shareholders
should not establish withdrawal plans that would require the redemption of
shares held less than 6 years or 12 months, respectively, because of the
imposition of the Class B or Class C contingent deferred sales charge on such
withdrawals (except where the Class B or Class C contingent deferred sales
charge is waived as described in the Prospectus under "Waivers of Class B and
Class C Sales Charges."
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below 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.
o 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.
o 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.
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
AccountLink payments of the proceeds of Plan withdrawals will normally be
transmitted three business days prior to the date selected for receipt of the
payment (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
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a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing to the
Transfer Agent. A Plan may also be terminated at any time by the Transfer Agent
upon receiving directions to that effect from the Fund. The Transfer Agent will
also terminate a Plan upon receipt of evidence satisfactory to it of the death
or legal incapacity of the Planholder. Upon termination of a Plan by the
Transfer Agent or the Fund, shares that have not been redeemed from the account
will be held in uncertificated form in the name of the Planholder, and the
account will continue as a dividend- reinvestment, uncertificated account unless
and until proper instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the Planholder
may request issuance of a portion of the shares in certificated form. Upon
written request from the Planholder, the Transfer Agent will determine the
number of shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated shares needed
to continue payments. However, should such uncertificated shares become
exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent to act
as agent in
administering the Plan.
HOW TO EXCHANGE SHARES
As stated in the Prospectus, shares of a particular class of Oppenheimer
funds having more than one class of shares may be exchanged only for shares of
the same class of other Oppenheimer funds. Shares of Oppenheimer funds that have
a single class without a class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, B and C shares except
Oppenheimer Money Market Fund, Inc., Centennial 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. and
Daily Cash Accumulation Fund, Inc., which only offer Class A shares, and
Oppenheimer Main Street California Tax-Exempt Fund, which only offers Class A
and Class B shares (Class B and Class C shares of Oppenheimer Cash Reserves are
generally available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds sponsored 401(k) plans). A current
list showing which funds offer which class can be obtained by calling the
Distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding Class M shares
of Oppenheimer Bond Fund for Growth, Class M shares can be exchanged only for
Class A shares of other Oppenheimer funds . Exchanges to Class M shares of
Oppenheimer Bond Fund for Growth are permitted from Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves that were
acquired by exchange from Class M shares. Otherwise no exchanges of any class of
any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund purchased
without a sales charge may be exchanged for shares of Oppenheimer funds offered
with a sales charge upon payment of the sales charge (or, if applicable, may be
used to purchase shares of Oppenheimer funds subject to a contingent deferred
sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other
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of the Oppenheimer funds (except Oppenheimer Cash Reserves) or from any unit
investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for 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,
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. The Class
C contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial purchase of the
exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How To Buy Shares" in the Prospectus for the imposition
of the Class B or Class C contingent deferred sales charge will be followed in
determining the order in which the shares are exchanged. Shareholders should
take into account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the subsequent
redemption of remaining shares. SHAREHOLDERS OWNING SHARES OF MORE THAN ONE
CLASS MUST SPECIFY WHETHER THEY INTEND TO EXCHANGE CLASS A, CLASS B OR CLASS C
SHARES.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may be less
than the number requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this Statement of
Additional Information or 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
<PAGE>
consequences of reinvestment of redemption proceeds in such cases. The Fund, the
Distributor, and the Transfer Agent are unable to provide investment, tax or
legal advice to a shareholder in connection with an exchange request or any
other investment transaction.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. Dividends will be payable on shares of record held
at the time of the previous determination of net asset value, or as otherwise
described in "How to Buy Shares." Daily dividends on newly purchased shares will
not be declared or paid until such time as Federal Funds (funds credited to a
member bank's account at the Federal Reserve Bank) are available from the
purchase payment for such shares. Normally, purchase checks received from
investors are converted to Federal Funds on the next business day. Dividends
will be declared on shares repurchased by a dealer or broker for three business
days following the trade date (i.e., to and including the day prior to
settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid
together with the redemption proceeds.
Dividends, distributions and the proceeds of the redemption of Fund shares
represented by checks returned to the Transfer Agent by the Postal Service as
undeliverable will be invested in shares of Oppenheimer Money Market Fund, Inc.,
as promptly as possible after the return of such checks to the Transfer Agent,
to enable the investor to earn a return on otherwise idle funds.
The amount of a class's distributions may vary from time to time depending
on market conditions, the composition of a 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 than dividends on Class A shares as a result of the asset-based sales
charges on Class B and Class C shares, and will also differ in amount as a
consequence of any difference in net asset value between the classes.
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.
Corporate shareholders may be entitled to the corporate dividends received
deduction for some portion of the Fund's distributions treated as ordinary
income, subject to applicable limitations under the Internal Revenue Code.
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.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on amounts
paid by it as dividends and distributions. The Fund qualified as a regulated
investment company in its last fiscal year and intends to qualify in future
years, but reserves the right not to qualify. The Internal Revenue Code contains
a number of complex tests relating to qualification which the Fund might not
meet in a particular year.
-41-
<PAGE>
If it does not qualify, the Fund will be treated for tax purposes as an ordinary
corporation and will receive no tax deduction for payments of dividends and
distributions made to shareholders.
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.
DIVIDEND REINVESTMENT IN ANOTHER FUND. Shareholders of the Fund may elect to
reinvest all dividends and/or capital gains distributions in shares of the same
class of any of the other Oppenheimer funds listed in "Reduced Sales Charges,"
above, at net asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Distributor to establish an
account. The investment will be made at the net asset value per share in effect
at the close of business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the 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.
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 Growth Fund:
We have audited the accompanying statements of investments and assets and
liabilities of Oppenheimer Growth Fund as of August 31, 1997, and the related
statement of operations for the year then ended, the statements of changes in
net assets for the year then ended, the two-month period ended August 31, 1996
and the year ended June 30, 1996, and the financial highlights for the year
ended August 31, 1997, the two-month period ended August 31, 1996 and each of
the years in the four-year period ended June 30, 1996. 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 August 31, 1997 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 Growth Fund as of August 31, 1997, the
results of its operations for the year then ended, the changes in its net
assets for the year then ended, the two-month period ended August 31, 1996 and
the year ended June 30, 1996, and the financial highlights for the year ended
August 31, 1997, the two-month period ended August 31, 1996, and each of the
years in the four-year period ended June 30, 1996, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
September 22, 1997
<PAGE>
STATEMENT OF INVESTMENTS August 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS--54.1%
- ----------------------------------------------------------------------------------------------------
BASIC MATERIALS--2.2%
- ----------------------------------------------------------------------------------------------------
CHEMICALS--0.4%
Georgia Gulf Corp. 147,500 $ 4,240,625
- ----------------------------------------------------------------------------------------------------
Praxair, Inc. 30,000 1,603,125
- ----------------------------------------------------------------------------------------------------
Union Carbide Corp. 55,000 2,822,187
------------
8,665,937
- ----------------------------------------------------------------------------------------------------
METALS--0.8%
Bethlehem Steel Corp.(1) 320,500 3,846,000
- ----------------------------------------------------------------------------------------------------
LTV Corp. 717,500 9,327,500
- ----------------------------------------------------------------------------------------------------
USX-U.S. Steel Group, Inc. 92,500 3,249,062
------------
16,422,562
- ----------------------------------------------------------------------------------------------------
PAPER--1.0%
Bowater, Inc. 295,000 15,100,312
- ----------------------------------------------------------------------------------------------------
Stone Container Corp. 310,000 5,347,500
------------
20,447,812
- ----------------------------------------------------------------------------------------------------
CONSUMER CYCLICALS--5.5%
- ----------------------------------------------------------------------------------------------------
AUTOS & HOUSING--0.7%
Centex Corp. 26,100 1,419,187
- ----------------------------------------------------------------------------------------------------
Champion Enterprises, Inc.(1) 277,000 4,778,250
- ----------------------------------------------------------------------------------------------------
Ford Motor Co. 25,000 1,075,000
- ----------------------------------------------------------------------------------------------------
Magna International, Inc., Cl. A 20,000 1,325,000
- ----------------------------------------------------------------------------------------------------
Oakwood Homes Corp. 130,000 3,526,250
- ----------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 85,000 1,827,500
------------
13,951,187
- ----------------------------------------------------------------------------------------------------
LEISURE & ENTERTAINMENT--1.8%
Alaska Air Group, Inc.(1) 65,000 1,783,437
- ----------------------------------------------------------------------------------------------------
AMR Corp.(1) 20,000 2,015,000
- ----------------------------------------------------------------------------------------------------
ASA Holdings, Inc. 210,000 6,247,500
- ----------------------------------------------------------------------------------------------------
British Airways plc, Sponsored ADR 15,000 1,549,687
- ----------------------------------------------------------------------------------------------------
Brunswick Corp. 250,000 7,625,000
- ----------------------------------------------------------------------------------------------------
Callaway Golf Co. 220,000 7,411,250
- ----------------------------------------------------------------------------------------------------
Lone Star Steakhouse & Saloon, Inc.(1) 50,000 859,375
- ----------------------------------------------------------------------------------------------------
Northwest Airlines Corp., Cl. A(1) 80,000 2,925,000
- ----------------------------------------------------------------------------------------------------
Outback Steakhouse, Inc.(1) 130,000 3,136,250
- ----------------------------------------------------------------------------------------------------
Outboard Marine Corp. 90,000 1,608,750
- ----------------------------------------------------------------------------------------------------
Pancho's Mexican Buffet, Inc. 100,000 162,500
------------
35,323,749
</TABLE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDIA--0.4%
Reuters Holdings plc, Sponsored ADR 115,000 $ 7,000,625
- ----------------------------------------------------------------------------------------------------
RETAIL: GENERAL--1.2%
Dayton Hudson Corp. 10,000 570,000
- ----------------------------------------------------------------------------------------------------
Fruit of the Loom, Inc., Cl. A(1) 135,000 3,611,250
- ----------------------------------------------------------------------------------------------------
Jones Apparel Group, Inc.(1) 70,000 3,513,125
- ----------------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(1) 362,500 8,632,031
- ----------------------------------------------------------------------------------------------------
Neiman-Marcus Group, Inc. 20,000 617,500
- ----------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(1) 177,500 7,743,437
------------
24,687,343
- ----------------------------------------------------------------------------------------------------
RETAIL: SPECIALTY--1.4%
Bed Bath & Beyond, Inc.(1) 335,000 10,385,000
- ----------------------------------------------------------------------------------------------------
Claire's Stores, Inc. 545,000 11,445,000
- ----------------------------------------------------------------------------------------------------
Hechinger Co., Cl. A(1) 60,000 123,750
- ----------------------------------------------------------------------------------------------------
Lands' End, Inc.(1) 30,000 789,375
- ----------------------------------------------------------------------------------------------------
Rocky Mountain Chocolate Factory, Inc.(1) 100,000 487,500
- ----------------------------------------------------------------------------------------------------
Ross Stores, Inc. 50,000 1,468,750
- ----------------------------------------------------------------------------------------------------
TJX Cos., Inc. 98,000 2,695,000
------------
27,394,375
- ----------------------------------------------------------------------------------------------------
CONSUMER NON-CYCLICALS--6.6%
- ----------------------------------------------------------------------------------------------------
FOOD--1.0%
Fleming Companies, Inc. 149,700 2,825,587
- ----------------------------------------------------------------------------------------------------
IBP, Inc. 180,000 4,128,750
- ----------------------------------------------------------------------------------------------------
Richfood Holdings, Inc. 85,000 1,912,500
- ----------------------------------------------------------------------------------------------------
Safeway, Inc.(1) 150,000 7,640,625
- ----------------------------------------------------------------------------------------------------
Smith's Food & Drug Centers, Inc., Cl. B(1) 70,000 3,832,500
------------
20,339,962
- ----------------------------------------------------------------------------------------------------
HEALTHCARE/DRUGS--1.9%
Biogen, Inc.(1) 15,000 590,625
- ----------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 98,200 7,463,200
- ----------------------------------------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(1) 25,000 890,625
- ----------------------------------------------------------------------------------------------------
Johnson & Johnson 216,300 12,261,506
- ----------------------------------------------------------------------------------------------------
Merck & Co., Inc. 110,400 10,136,100
- ----------------------------------------------------------------------------------------------------
Pfizer, Inc. 15,000 830,625
- ----------------------------------------------------------------------------------------------------
Schering-Plough Corp. 140,000 6,720,000
------------
38,892,681
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTHCARE/SUPPLIES & SERVICES--1.8%
Collagen Corp. 50,000 $962,500
- ----------------------------------------------------------------------------------------------------
HealthCare COMPARE Corp.(1) 300,000 16,725,000
- ----------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 280,000 6,982,500
- ----------------------------------------------------------------------------------------------------
Lincare Holdings, Inc.(1) 15,000 715,312
- ----------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc.(1) 55,000 4,021,875
- ----------------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc.(1) 125,000 5,992,187
- ----------------------------------------------------------------------------------------------------
Summit Technology, Inc.(1) 140,000 927,500
------------
36,326,874
- ----------------------------------------------------------------------------------------------------
TOBACCO--1.9%
Philip Morris Cos., Inc. 571,800 24,944,775
- ----------------------------------------------------------------------------------------------------
RJR Nabisco Holdings Corp. 112,300 3,909,444
- ----------------------------------------------------------------------------------------------------
UST, Inc. 300,000 8,662,500
37,516,719
- ----------------------------------------------------------------------------------------------------
ENERGY--2.7%
- ----------------------------------------------------------------------------------------------------
ENERGY SERVICES & PRODUCERS--1.4%
Global Marine, Inc.(1) 185,000 5,260,937
- ----------------------------------------------------------------------------------------------------
Oryx Energy Co.(1) 30,000 793,125
- ----------------------------------------------------------------------------------------------------
Petroleum Geo-Services ASA, Sponsored ADR(1) 45,000 2,730,938
- ----------------------------------------------------------------------------------------------------
Smith International, Inc.(1) 65,000 4,728,750
- ----------------------------------------------------------------------------------------------------
Tidewater, Inc. 150,000 7,875,000
- ----------------------------------------------------------------------------------------------------
Transocean Offshore, Inc. 20,000 1,901,250
- ----------------------------------------------------------------------------------------------------
Varco International, Inc.(1) 105,000 4,173,750
------------
27,463,750
- ----------------------------------------------------------------------------------------------------
OIL-INTEGRATED--1.3%
Pennzoil Co. 25,000 1,929,688
- ----------------------------------------------------------------------------------------------------
Union Texas Petroleum Holdings, Inc. 355,000 8,275,938
- ----------------------------------------------------------------------------------------------------
Unocal Corp. 195,200 7,625,000
- ----------------------------------------------------------------------------------------------------
USX-Marathon Group 8,140,625
------------
25,971,251
</TABLE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL--14.1%
- ----------------------------------------------------------------------------------------------------
BANKS--4.1%
Banc One Corp. 490,000 $26,276,250
- ----------------------------------------------------------------------------------------------------
BankAmerica Corp. 30,000 1,974,375
- ----------------------------------------------------------------------------------------------------
BankBoston Corp. 280,000 23,275,000
- ----------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 118,928 13,223,307
- ----------------------------------------------------------------------------------------------------
NationsBank Corp. 125,000 7,421,875
- ----------------------------------------------------------------------------------------------------
Northern Trust Corp. 50,000 2,656,250
- ----------------------------------------------------------------------------------------------------
SouthTrust Corp. 120,000 5,370,000
- ----------------------------------------------------------------------------------------------------
Washington Mutual, Inc. 20,000 1,197,500
------------
81,394,557
- ----------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL--6.2%
Advanta Corp., Cl. A 345,000 11,428,125
- ----------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. 185,000 7,319,063
- ----------------------------------------------------------------------------------------------------
Fannie Mae 175,000 7,700,000
- ----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 298,400 9,716,650
- ----------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 640,000 28,120,000
- ----------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 315,000 13,820,625
- ----------------------------------------------------------------------------------------------------
Merrill Lynch & Co., Inc. 40,000 2,460,000
- ----------------------------------------------------------------------------------------------------
MGIC Investment Corp. 30,000 1,509,375
- ----------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 250,000 7,125,000
- ----------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates, Inc. 95,000 5,225,000
- ----------------------------------------------------------------------------------------------------
Student Loan Marketing Assn. 100,000 13,550,000
- ----------------------------------------------------------------------------------------------------
Travelers Group, Inc. 255,000 16,192,500
------------
124,166,338
- ----------------------------------------------------------------------------------------------------
INSURANCE--3.8%
AFLAC, Inc. 210,000 11,563,125
- ----------------------------------------------------------------------------------------------------
American International Group, Inc. 22,500 2,123,438
- ----------------------------------------------------------------------------------------------------
Cigna Corp. 15,000 2,750,625
- ----------------------------------------------------------------------------------------------------
Conseco, Inc. 200,000 8,600,000
- ----------------------------------------------------------------------------------------------------
Equitable Cos., Inc. 145,000 6,307,500
- ----------------------------------------------------------------------------------------------------
Loews Corp. 95,000 9,684,063
- ----------------------------------------------------------------------------------------------------
Reliastar Financial Corp. 135,000 10,091,250
- ----------------------------------------------------------------------------------------------------
SunAmerica, Inc. 445,000 23,974,375
------------
75,094,376
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INDUSTRIAL--4.2%
- ----------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.0%
C-Cube Microsystems, Inc.(1) 85,000 $ 2,550,000
- ----------------------------------------------------------------------------------------------------
Kemet Corp.(1) 440,000 12,815,000
- ----------------------------------------------------------------------------------------------------
Vishay Intertechnology, Inc. 173,250 4,623,609
------------
19,988,609
- ----------------------------------------------------------------------------------------------------
INDUSTRIAL MATERIALS--0.3%
Owens-Illinois, Inc.(1) 55,000 1,914,688
- ----------------------------------------------------------------------------------------------------
USG Corp.(1) 105,000 4,501,875
------------
6,416,563
- ----------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--0.8%
Comdisco, Inc. 352,500 9,583,594
- ----------------------------------------------------------------------------------------------------
Corrections Corp. of America(1) 140,000 5,180,000
- ----------------------------------------------------------------------------------------------------
Growth Environmental, Inc.(1) 2,100 32
- ----------------------------------------------------------------------------------------------------
Mercury Air Group, Inc. 151,250 916,953
------------
15,680,579
- ----------------------------------------------------------------------------------------------------
MANUFACTURING--0.5%
Aeroquip-Vickers, Inc. 50,000 2,793,750
- ----------------------------------------------------------------------------------------------------
Mark IV Industries, Inc. 99,750 2,506,219
- ----------------------------------------------------------------------------------------------------
Sealed Air Corp.(1) 70,000 3,631,250
- ----------------------------------------------------------------------------------------------------
U.S. Filter Corp.(1) 30,000 1,080,000
------------
10,011,219
- ----------------------------------------------------------------------------------------------------
TRANSPORTATION--1.6%
Canadian Pacific Ltd. (New) 400,000 11,675,000
- ----------------------------------------------------------------------------------------------------
CSX Corp. 82,600 4,723,688
- ----------------------------------------------------------------------------------------------------
Illinois Central Corp. 40,000 1,342,500
- ----------------------------------------------------------------------------------------------------
Navistar International Corp.(1) 555,000 13,770,938
------------
31,512,126
- ----------------------------------------------------------------------------------------------------
TECHNOLOGY--18.3%
- ----------------------------------------------------------------------------------------------------
AEROSPACE/DEFENSE--0.1%
Gencorp, Inc. 45,000 1,203,750
- ----------------------------------------------------------------------------------------------------
COMPUTER HARDWARE--9.4%
Adaptec, Inc.(1) 110,000 5,280,000
- ----------------------------------------------------------------------------------------------------
Applied Magnetics Corp.(1) 365,000 13,482,188
- ----------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 190,000 5,747,500
- ----------------------------------------------------------------------------------------------------
Compaq Computer Corp.(1) 437,500 28,656,250
- ----------------------------------------------------------------------------------------------------
Dell Computer Corp.(1) 100,000 8,206,250
- ----------------------------------------------------------------------------------------------------
EMC Corp.(1) 290,000 14,880,625
- ----------------------------------------------------------------------------------------------------
Gateway 2000, Inc.(1) 1,000,000 39,125,000
</TABLE>
STATEMENT OF INVESTMENTS (Continued)
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER HARDWARE (CONTINUED)
Intergraph Corp.(1) 10,000 $ 99,375
- ----------------------------------------------------------------------------------------------------
International Business Machines Corp. 120,000 12,105,000
- ----------------------------------------------------------------------------------------------------
Quantum Corp.(1) 140,000 4,908,750
- ----------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 535,000 20,430,313
- ----------------------------------------------------------------------------------------------------
Sun Microsystems, Inc.(1) 60,000 2,880,000
- ----------------------------------------------------------------------------------------------------
Tandem Computers, Inc(1) 180,000 6,120,000
- ----------------------------------------------------------------------------------------------------
Western Digital Corp.(1) 540,000 25,987,500
------------
187,908,751
- ----------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE--4.1%
Adobe Systems, Inc. 120,000 4,725,000
- ----------------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 425,000 26,615,625
- ----------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 210,000 14,043,750
- ----------------------------------------------------------------------------------------------------
GTech Holdings Corp.(1) 253,700 7,626,856
- ----------------------------------------------------------------------------------------------------
HBO & Co. 40,000 2,865,000
- ----------------------------------------------------------------------------------------------------
McAfee Associates, Inc.(1) 35,000 1,981,875
- ----------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 150,000 19,828,125
- ----------------------------------------------------------------------------------------------------
Netscape Communications Corp.(1) 1,200 47,775
- ----------------------------------------------------------------------------------------------------
Peoplesoft, Inc.(1) 70,000 3,937,500
------------
81,671,506
- ----------------------------------------------------------------------------------------------------
ELECTRONICS--3.9%
Advanced Micro Devices, Inc.(1) 95,000 3,556,563
- ----------------------------------------------------------------------------------------------------
Arrow Electronics, Inc.(1) 200,000 12,287,500
- ----------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 512,500 9,096,875
- ----------------------------------------------------------------------------------------------------
Dynatech Corp.(1) 115,000 4,398,750
- ----------------------------------------------------------------------------------------------------
Intel Corp. 200,000 18,425,000
- ----------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 250,000 28,656,250
- ----------------------------------------------------------------------------------------------------
SCI Systems, Inc.(1) 60,000 2,358,750
------------
78,779,688
- ----------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-TECHNOLOGY--0.8%
Ascend Communications, Inc.(1) 255,500 10,842,781
- ----------------------------------------------------------------------------------------------------
Pairgain Technologies, Inc.(1) 130,000 3,347,500
- ----------------------------------------------------------------------------------------------------
Sterling Commerce, Inc.(1) 45,000 1,487,813
------------
15,678,094
- ----------------------------------------------------------------------------------------------------
UTILITIES--0.5%
- ----------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.2%
PacifiCorp 75,000 1,556,250
- ----------------------------------------------------------------------------------------------------
Tucson Electric Power Co.(1) 40,000 637,500
- ----------------------------------------------------------------------------------------------------
Unicom Corp. 110,000 2,598,750
------------
4,792,500
</TABLE>
<TABLE>
<CAPTION>
MARKET VALUE
SHARES SEE NOTE 1
- ----------------------------------------------------------------------------------------------------
<S> <C>
TELEPHONE UTILITIES--0.3%
Telefonos de Mexico SA, Sponsored ADR 140,000 $ 6,422,500
==============
Total Common Stocks (Cost $515,070,459) 1,081,125,983
FACE
AMOUNT
====================================================================================================
SHORT-TERM NOTES--32.3%
- ----------------------------------------------------------------------------------------------------
American Express Credit Corp., 5.50%, 10/9/97(2) $ 50,000,000 49,709,722
- ----------------------------------------------------------------------------------------------------
Associates Corp. of North America, 5.51%, 9/16/97(2) 50,000,000 49,885,209
- ----------------------------------------------------------------------------------------------------
Beneficial Corp., 5.50%, 9/10/97(2) 50,000,000 49,931,250
- ----------------------------------------------------------------------------------------------------
BMW US Capital Corp., 5.50%, 9/18/97(2) 41,055,000 40,948,371
- ----------------------------------------------------------------------------------------------------
CIESCO, L.P., 5.50%, 9/29/97(2) 50,000,000 49,786,111
- ----------------------------------------------------------------------------------------------------
CIT Group Holdings, Inc., 5.50%, 9/2/97(2) 50,000,000 49,992,361
- ----------------------------------------------------------------------------------------------------
Countrywide Funding Corp., 5.55%, 10/6/97(2) 50,000,000 49,730,208
- ----------------------------------------------------------------------------------------------------
General Electric Capital Services, Inc., 5.48%, 9/8/97(2) 50,000,000 49,946,528
- ----------------------------------------------------------------------------------------------------
Goldman Sachs Group, L.P., 5.51%, 9/11/97(2) 50,000,000 49,923,472
- ----------------------------------------------------------------------------------------------------
Hertz Corp. (The), 5.51%, 10/2/97(2) 50,000,000 49,762,764
- ----------------------------------------------------------------------------------------------------
Household Finance Corp., 5.50%, 9/4/97(2) 50,000,000 49,977,083
- ----------------------------------------------------------------------------------------------------
International Lease Finance Corp., 5.50%, 10/8/97(2) 30,000,000 29,830,417
- ----------------------------------------------------------------------------------------------------
Prudential Funding Corp., 5.50%, 9/11/97(2) 50,000,000 49,923,611
- ----------------------------------------------------------------------------------------------------
Xerox Corp., 5.49%, 10/1/97(2) 27,445,000 27,319,439
--------------
Total Short-Term Notes (Cost $646,666,546) 646,666,546
====================================================================================================
REPURCHASE AGREEMENTS--13.9%
- ----------------------------------------------------------------------------------------------------
Repurchase agreement with J.P. Morgan Securities, Inc., 5.55%,
dated 8/29/97, to be repurchased at $278,371,557 on 9/2/97,
collateralized by U.S. Treasury Bonds, 7.25%-11.25%,
2/15/03-8/15/19, with a value of $265,435,787 and U.S. Treasury
Nts., 5.875%, 10/31/98, with a value of $18,599,397
(Cost $278,200,000) 278,200,000 278,200,000
- ----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,439,937,005) 100.3% 2,005,992,529
- ----------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.3) (6,014,127)
----------- --------------
NET ASSETS 100.0% $1,999,978,402
=========== ==============
</TABLE>
1. Non-income producing security.
2. Short-term notes are generally traded on a discount basis; the interest rate
is the discount rate at the time of purchase.
See accompanying Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES August 31, 1997
<TABLE>
<S> <C>
====================================================================================================
ASSETS
Investments, at value (including repurchase agreement of $278,200,000)
(cost $1,439,937,005)--see accompanying statement $2,005,992,529
- ----------------------------------------------------------------------------------------------------
Receivables:
Shares of beneficial interest sold 3,707,700
Interest and dividends 721,554
Investments sold 537,532
- ----------------------------------------------------------------------------------------------------
Other 13,384
--------------
Total assets 2,010,972,699
====================================================================================================
LIABILITIES
Bank overdraft 612,167
- ----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 9,135,216
Distribution and service plan fees 591,728
Trustees' fees--Note 1 210,643
Transfer and shareholder servicing agent fees 72,929
Other 371,614
--------------
Total liabilities 10,994,297
====================================================================================================
NET ASSETS $1,999,978,402
==============
====================================================================================================
COMPOSITION OF NET ASSETS
Paid-in capital $1,235,455,207
- ----------------------------------------------------------------------------------------------------
Undistributed net investment income 19,430,107
- ----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 179,037,564
- ----------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 566,055,524
--------------
Net assets $1,999,978,402
==============
</TABLE>
<TABLE>
<S> <C>
====================================================================================================
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$1,590,926,859 and 39,363,513 shares of beneficial interest outstanding) $40.42
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $42.89
- ----------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $284,227,458 and
7,225,050 shares of beneficial interest outstanding) $39.34
- ----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $28,145,301 and
705,980 shares of beneficial interest outstanding) $39.87
- ----------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $96,678,784 and 2,391,491 shares of beneficial interest outstanding) $40.43
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS For the Year Ended August 31, 1997
<TABLE>
<S> <C>
====================================================================================================
INVESTMENT INCOME
Interest $ 35,618,247
- ----------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $13,477) 9,767,297
------------
Total income 45,385,544
====================================================================================================
EXPENSES
Management fees--Note 4 10,710,424
- ----------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 2,431,503
Class B 2,030,245
Class C 136,351
- ----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4:
Class A 1,888,151
Class B 281,183
Class C 16,751
Class Y 23,223
- ----------------------------------------------------------------------------------------------------
Shareholder reports 551,820
- ----------------------------------------------------------------------------------------------------
Legal and auditing fees 75,300
- ----------------------------------------------------------------------------------------------------
Custodian fees and expenses 73,221
- ----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 12,136
Class B 23,006
Class C 3,634
Class Y 17,063
- ----------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 8,275
- ----------------------------------------------------------------------------------------------------
Other 80,194
------------
Total expenses 18,362,480
Less reimbursement and assumption of expenses by OppenheimerFunds, Inc.--Note 4 (42,131)
------------
Net expenses 18,320,349
====================================================================================================
NET INVESTMENT INCOME 27,065,195
====================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 218,882,361
Foreign currency transactions (742)
------------
Net realized gain 218,881,619
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 238,043,222
------------
Net realized and unrealized gain 456,924,841
====================================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $483,990,036
============
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, YEAR ENDED
1997 1996(1) JUNE 30, 1996
===========================================================================================================================
<S> <C> <C> <C>
OPERATIONS
Net investment income $ 27,065,195 $ 2,985,556 $ 15,202,596
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain 218,881,619 21,616,200 123,112,424
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation or depreciation 238,043,222 (16,129,626) 65,683,680
-------------- -------------- --------------
Net increase in net assets resulting
from operations 483,990,036 8,472,130 203,998,700
===========================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A (16,725,563) -- (12,145,385)
Class B (1,279,324) -- (763,600)
Class C (81,820) -- (8,006)
Class Y (744,288) -- (111,943)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (127,576,926) -- (92,881,153)
Class B (17,787,734) -- (8,596,317)
Class C (841,346) -- (61,792)
Class Y (4,909,715) -- (783,715)
===========================================================================================================================
BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets resulting from
beneficial interest transactions--Note 2:
Class A 202,853,918 307,757 176,397,622
Class B 108,268,225 7,152,701 81,183,295
Class C 20,188,749 1,404,159 3,526,653
Class Y 65,819,922 2,233,988 12,281,833
===========================================================================================================================
NET ASSETS
Total increase 711,174,134 19,570,735 362,036,192
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of period 1,288,804,268 1,269,233,533 907,197,341
-------------- -------------- --------------
End of period (including undistributed
net investment income of $19,430,107,
$11,195,907 and $8,210,351, respectively) $1,999,978,402 $1,288,804,268 $1,269,233,533
============== ============== ==============
</TABLE>
1. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
See accompanying Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
YEAR ENDED AUGUST 31, YEAR ENDED JUNE 30,
1997 1996(2) 1996 1995
==================================================================================================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning
of period $33.69 $33.43 $30.80 $26.65
- ------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .62 .08 .44 .36
Net realized and unrealized
gain (loss) 10.37 .18 5.70 6.83
---------- ---------- ---------- ----------
Total income (loss) from
investment operations 10.99 .26 6.14 7.19
- ------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.49) -- (.41) (.24)
Distributions from net realized gain (3.77) -- (3.10) (2.80)
---------- ---------- ---------- ----------
Total dividends and distributions
to shareholders (4.26) -- (3.51) (3.04)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $40.42 $33.69 $33.43 $30.80
========== ========== ========== ==========
==================================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 35.03% 0.78% 21.00% 29.45%
==================================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,590,927 $1,127,836 $1,120,046 $860,736
- ------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,369,406 $1,101,233 $1,018,022 $727,102
- ------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.74% 1.50%(6) 1.43% 1.31%
Expenses 1.01% 1.03%(6) 1.06% 1.05%
- ------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 25.3% 6.3% 38.0% 35.4%
Average brokerage commission rate(8) $0.0592 $0.0595 $0.0583 --
</TABLE>
1. For the period from June 1, 1994 (inception of offering) to June 30, 1994.
2. For the two months ended August 31, 1996. The Fund changed its fiscal year
end from June 30 to August 31.
3. For the period from November 1, 1995 (inception of offering) to June 30,
1996.
<TABLE>
<CAPTION>
CLASS B
- -------------------------- ------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, YEAR ENDED JUNE 30,
1994 1993 1997 1996(2) 1996 1995 1994(4)
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
$27.34 $24.94 $32.94 $32.74 $30.36 $26.44 $27.02
- --------------------------------------------------------------------------------------------------------------------
.16 .19 .36 .04 .23 .20 (.04)
(.05) 4.03 10.08 .16 5.53 6.65 .21
- -------- -------- -------- -------- -------- -------- --------
.11 4.22 10.44 .20 5.76 6.85 .17
- --------------------------------------------------------------------------------------------------------------------
(.16) (.25) (.27) -- (.28) (.13) (.11)
(.64) (1.57) (3.77) -- (3.10) (2.80) (.64)
- -------- -------- -------- -------- -------- -------- --------
(.80) (1.82) (4.04) -- (3.38) (2.93) (.75)
- --------------------------------------------------------------------------------------------------------------------
$26.65 $27.34 $39.34 $32.94 $32.74 $30.36 $26.44
======== ======== ======== ======== ======== ======== ========
====================================================================================================================
0.27% 16.88% 33.93% 0.61% 19.95% 28.22% (0.20)%
====================================================================================================================
$656,934 $743,830 $284,227 $137,437 $129,484 $43,267 $8,747
- --------------------------------------------------------------------------------------------------------------------
$720,765 $710,391 $203,518 $131,142 $ 90,501 $18,722 $5,119
- --------------------------------------------------------------------------------------------------------------------
0.56% 0.72% 0.92% 0.61%(6) 0.60% 0.44% (0.22)%(6)
1.07% 0.93% 1.84% 1.92%(6) 1.89% 2.02% 1.98%(6)
- --------------------------------------------------------------------------------------------------------------------
19.8% 23.2% 25.3% 6.3% 38.0% 35.4% 19.8%
-- -- $0.0592 $0.0595 $0.0583 -- --
</TABLE>
4. For the period from August 17, 1993 (inception of offering) to June 30,
1994. Per share amounts calculated based on the weighted average number of
shares outstanding during the period.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD ENDED
1997 1996(2) JUNE 30, 1996(3)
===============================================================================================================
<S> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $33.42 $33.22 $33.44
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .42 .02 .40
Net realized and unrealized
gain (loss) 10.17 .18 2.88
------- ------- -------
Total income (loss) from
investment operations 10.59 .20 3.28
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.37) -- (.40)
Distributions from net realized gain (3.77) -- (3.10)
------- ------- -------
Total dividends and distributions
to shareholders (4.14) -- (3.50)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $39.87 $33.42 $33.22
======= ======= =======
===============================================================================================================
TOTAL RETURN, AT NET ASSET VALUE(5) 33.93% 0.60% 10.07%
===============================================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $28,145 $5,034 $3,593
- ---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $13,705 $4,105 $1,804
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.95% 0.44%(6) 0.65%(6)
Expenses 1.84% 2.10%(6) 1.81%(6)
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 25.3% 6.3% 38.0%
Average brokerage commission rate(8) $0.0592 $0.0595 $0.0583
</TABLE>
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended August 31, 1997 were $249,853,081 and $549,224,265,
respectively.
<TABLE>
<CAPTION>
CLASS Y
- ----------------------------------------------------------------------------
YEAR ENDED AUGUST 31, YEAR ENDED JUNE 30,
1997 1996(2) 1996 1995 1994(1)
============================================================================
<S> <C> <C> <C> <C>
$33.69 $33.42 $30.80 $26.64 $28.08
- ----------------------------------------------------------------------------
.66 .08 .46 .30 .02
10.42 .19 5.70 6.92 (1.46)
- ------- ------- ------- ------- -------
11.08 .27 6.16 7.22 (1.44)
- ----------------------------------------------------------------------------
(.57) -- (.44) (.26) --
(3.77) -- (3.10) (2.80) --
- ------- ------- ------- ------- -------
(4.34) -- (3.54) (3.06) --
- ----------------------------------------------------------------------------
$40.43 $33.69 $33.42 $30.80 $26.64
======= ======= ======= ======= =======
============================================================================
35.36% 0.81% 21.10% 29.59% (5.13)
============================================================================
$96,679 $18,497 $16,110 $3,189 $ 9
- ----------------------------------------------------------------------------
$62,619 $16,792 $ 9,384 $ 536 $10
- ----------------------------------------------------------------------------
2.00% 1.67%(6) 1.56% 1.54% 1.09%(6)
0.77% 0.87%(6) 0.94% 1.04% 1.25%(6)
- ----------------------------------------------------------------------------
25.3% 6.3% 38.0% 35.4% 19.8%
$0.0592 $0.0595 $0.0583 -- --
</TABLE>
8. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period, divided by the total number of related
shares purchased and sold. Generally, non-U.S. commissions are lower than U.S.
commissions when expressed as cents per share but higher when expressed as a
percentage of transactions because of the lower per-share prices of many
non-U.S. securities.
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Oppenheimer Growth 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 objective is to seek capital appreciation,
primarily by investing in stocks of established growth companies. The Fund's
investment adviser is Oppenheimer Funds, Inc. (the Manager). The Fund offers
Class A, Class B, Class C and Class Y shares. Class A shares are sold with a
front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All classes of shares have identical rights
to earnings, assets and voting privileges, except that each class has its own
expenses directly attributable to that class and exclusive voting rights with
respect to matters affecting that class. Classes A, B and C have separate
distribution and/or service plans. No such plan has been adopted for Class Y
shares. Class B shares will automatically convert to Class A shares six years
after the date of purchase. The following is a summary of significant
accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
INVESTMENT VALUATION. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term "non-
money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is
reliable and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost
(or last determined market value) adjusted for amortization to maturity of any
premium or discount.
- --------------------------------------------------------------------------------
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 foreign securities and investment income are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The effect of changes in foreign currency exchange rates on
investments is separately identified from fluctuations arising from changes in
market values of securities held and reported with all other foreign currency
gains and losses in the Fund's Statement of Operations.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is
required to be at least 102% of
================================================================================
the resale price at the time of purchase. If the seller of the agreement
defaults and the value of the collateral declines, or if the seller enters an
insolvency proceeding, realization of the value of the collateral by the Fund
may be delayed or limited.
- --------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, AND GAINS AND LOSSES. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
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
August 31, 1997, a credit of $32,162 was made for the Fund's projected benefit
obligations and payments of $11,314 were made to retired trustees, resulting in
an accumulated liability of $204,733 at August 31, 1997.
- --------------------------------------------------------------------------------
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. The character of the distributions made during the year from net
investment income or net realized gains may differ from its 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 fiscal year in which the income or realized gain was recorded
by the Fund.
- --------------------------------------------------------------------------------
OTHER. Investment transactions are accounted for on the date the investments
are purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
2. SHARES OF BENEFICIAL INTEREST
The Fund has authorized an unlimited number of no par value shares of
beneficial interest. Transactions in shares of beneficial interest were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996(2) JUNE 30, 1996(1)
-------------------------------- ------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 7,438,778 $ 270,007,705 1,266,269 $ 42,270,466 8,407,775 $ 275,835,781
Dividends and
distributions
reinvested 4,120,561 140,121,073 -- -- 3,323,811 101,576,179
Issued in
conjunction with
the acquisition of
Jefferson-Pilot
Capital Appreciation
Fund, Inc.--Note 5 1,196,229 40,529,263 -- -- -- --
Redeemed (6,871,542) (247,804,123) (1,295,165) (41,962,709) (6,169,610) (201,014,338)
------------- ------------- ------------- ------------ ----------- -------------
Net increase
(decrease) 5,884,026 $ 202,853,918 (28,896) $ 307,757 5,561,976 $ 176,397,622
============= ============= ============= ============ =========== =============
- ---------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 3,854,380 $ 137,203,025 439,943 $ 14,333,878 3,119,546 $ 100,609,679
Dividends and
distributions
reinvested 542,057 18,050,580 -- -- 288,253 8,664,821
Redeemed (1,343,411) (46,985,380) (223,354) (7,181,177) (877,701) (28,091,205)
------------- ------------- ------------- ------------ ----------- -------------
Net increase 3,053,026 $ 108,268,225 216,589 $ 7,152,701 2,530,098 $ 81,183,295
============= ============= ============= ============ =========== =============
- ---------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 621,652 $ 22,634,387 45,312 $ 1,497,092 111,265 $ 3,624,375
Dividends and
distributions
reinvested 26,886 907,142 -- -- 2,287 69,761
Redeemed (93,205) (3,352,780) (2,825) (92,933) (5,392) (167,483)
------------- ------------- ------------- ------------ ----------- -------------
Net increase 555,333 $ 20,188,749 42,487 $ 1,404,159 108,160 $ 3,526,653
============= ============= ============= ============ =========== =============
- ---------------------------------------------------------------------------------------------------------------------------------
Class Y:
Sold 2,052,812 $ 73,903,563 101,673 $ 3,383,454 439,359 $ 14,330,346
Dividends and
distributions
reinvested 166,588 5,654,002 -- -- 29,328 895,658
Redeemed (376,914) (13,737,643) (34,706) (1,149,466) (90,199) (2,944,171)
------------- ------------- ------------- ------------ ----------- -------------
Net increase 1,842,486 $ 65,819,922 66,967 $ 2,233,988 378,488 $ 12,281,833
============= ============= ============= ============ =========== =============
</TABLE>
1. For the year ended June 30, 1996 for Class A, B and Y shares, and for the
period from November 1, 1995 (inception of offering) to June 30, 1996 for Class
C shares.
2. The Fund changed its fiscal year end from June 30 to August 31.
================================================================================
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
At August 31, 1997, net unrealized appreciation on investments of $566,055,524
was composed of gross appreciation of $573,225,386, and gross depreciation of
$7,169,862.
================================================================================
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 0.75% on the first
$200 million of average annual 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% on
average annual net assets in excess of $800 million. The Manager has
voluntarily undertaken to waive a portion of its management fee, whereby the
Fund shall pay an annual management fee of 0.58% of its average annual net
assets in excess of $1.5 billion.
For the year ended August 31, 1997, commissions (sales charges
paid by investors) on sales of Class A shares totaled $3,942,208, of which
$1,118,329 was retained by OppenheimerFunds Distributor, Inc. (OFDI), a
subsidiary of the Manager, as general distributor, and by an affiliated
broker/dealer. Sales charges advanced to broker/dealers by OFDI on sales of the
Fund's Class B and Class C shares totaled $4,099,347 and $189,986,
respectively, of which $292,631 and $3,941, respectively, was paid to an
affiliated broker/dealer. During the year ended August 31, 1997, OFDI received
contingent deferred sales charges of $378,950 and $6,169, respectively, upon
redemption of Class B and Class C shares as reimbursement for sales commissions
advanced by OFDI at the time of sale of such shares.
The Manager has agreed to reimburse Oppenheimer Growth Fund
for SEC fees incurred in connection with the acquisition of Jefferson-Pilot
Capital Appreciation Fund, Inc.
OppenheimerFunds Services (OFS), a division of the Manager, is
the transfer and shareholder servicing agent for the Fund and for other
registered investment companies. OFS's total costs of providing such services
are allocated ratably to these companies.
The Fund has adopted a Service Plan for Class A shares to
reimburse OFDI for a portion of its costs incurred in connection with the
personal service and maintenance of 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. OFDI uses
the service fee to reimburse brokers, dealers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares. During the year ended
August 31, 1997, OFDI paid $82,960 to an affiliated broker/dealer as
reimbursement for Class A personal service and maintenance expenses.
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
4. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED)
The Fund has adopted a Distribution and Service Plan for Class B shares to
reimburse OFDI for its services and costs in distributing Class B shares and
servicing accounts. Under the Plan, the Fund pays OFDI an annual asset-based
sales charge of 0.75% per year on Class B shares. OFDI also receives a service
fee of 0.25% per year to reimburse dealers for providing personal services for
accounts that hold Class B shares. Both fees are computed on the average annual
net assets of Class B shares, determined as of the close of each regular
business day. During the year ended August 31, 1997, OFDI paid $16,174 to an
affiliated broker/dealer as reimbursement for Class B personal service and
maintenance expenses and retained $1,720,803 and as reimbursement for Class B
sales commissions and service fee advances, as well as financing costs. 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 OFDI for distributing
shares before the Plan was terminated. As of August 31, 1997, OFDI had incurred
unreimbursed expenses of $6,440,567 for Class B.
The Fund has adopted a Distribution and Service Plan for Class
C shares to compensate OFDI for its services and costs in distributing Class C
shares and servicing accounts. Under the Plan, the Fund pays OFDI an annual
asset-based sales charge of 0.75% per year on Class C shares. OFDI also
receives a service fee of 0.25% per year to compensate dealers for providing
personal services for accounts that hold Class C shares. Both fees are computed
on the average annual net assets of Class C shares, determined as of the close
of each regular business day. During the year ended August 31, 1997, OFDI
retained $102,938 as compensation for Class C sales commissions and service fee
advances, as well as financing costs. 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 OFDI for distributing shares before the Plan was
terminated. As of August 31, 1997, OFDI had incurred unreimbursed expenses of
$262,813 for Class C.
================================================================================
5. ACQUISITION OF JEFFERSON-PILOT CAPITAL APPRECIATION FUND, INC.
On December 20, 1996, Oppenheimer Growth Fund acquired all the net assets of
Jefferson-Pilot Capital Appreciation Fund, Inc., pursuant to an agreement and
plan of reorganization approved by the Jefferson-Pilot Capital Appreciation
Fund, Inc. (J-P Capital) shareholders on December 3, 1996. The Fund issued
1,196,229 shares of beneficial interest valued at $40,529,263 in exchange for
the net assets of J-P Capital, resulting in combined net assets of
$1,559,572,986 on December 20, 1996. The net assets acquired included net
unrealized appreciation of $10,448,341. The exchange qualified as a tax-free
reorganization for federal income tax purposes.
APPENDIX
CORPORATE 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
Information Technology
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
Wireless Services
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INVESTMENT ADVISER
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048
DISTRIBUTOR
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048
TRANSFER AND SHAREHOLDER SERVICING AGENT
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
CUSTODIAN OF PORTFOLIO SECURITIES
The Bank of New York
One Wall Street
New York, NY 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
PX0270
