As filed with the Securities and Exchange Commission on May 15,
1995
Registration No. 2-69719
811-3105
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 1 / X /
OPPENHEIMER TARGET FUND
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
(Address of Principal Executive Offices)
212-323-0200
(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
Executive Vice President & General Counsel
Oppenheimer Management Corporation
Two World Trade Center, New York, New York 10048-0203
(212) 323-0256
(Name and Address of Agent for Service)
As soon as practicable after the Registration Statement becomes
effective.
(Approximate Date of Proposed Public Offering)
It is proposed that this filing will become effective on May 15, 1995,
pursuant to Rule 488.
No filing fee is due because the Registrant has previously registered
an indefinite number of shares under Rule 24f-2; a Rule 24f-2 notice
for the year ended December 31, 1994 was filed on February 27, 1995.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Part A
Proxy Statement for Oppenheimer Time Fund
and
Prospectus for Oppenheimer Target Fund
Part B
Statement of Additional Information
Part C
Other Information
Signatures
Exhibits
<PAGE>
FORM N-14
OPPENHEIMER TARGET FUND
Cross Reference Sheet
Part A of
Form N-14
Item No. Proxy Statement and Prospectus Heading and/or Title of
Document
- --------- -------------------------------------------------------------
1 (a) Cross Reference Sheet
(b) Front Cover Page
(c) *
2 (a) *
(b) Table of Contents
3 (a) Table of Fees
(b) Synopsis
(c) Principal Risk Factors
4 (a) Synopsis; Approval of the Reorganization; Comparison between
the Fund and Target Fund; Method of Carrying Out the
Reorganization; Miscellaneous Information
(b) Approval of the Reorganization - Capitalization Table
5 (a) Registrant's Prospectus; Additional Information
(b) *
(c) *
(d) *
(e) Comparison between the Fund and Target Fund
(f) Comparison between the Fund and Target Fund
6 (a) Prospectus of Oppenheimer Time Fund; Front Cover Page
(b) Comparison between the Fund and Target Fund
(c) *
(d) *
7 (a) Introduction; Synopsis
(b) *
(c) Introduction; Approval of the Reorganization
8 (a) Proxy Statement
(b) *
9 *
Part B of
Form N-14
Item No. Statement of Additional Information Heading
- --------- -------------------------------------------
10 Cover Page
11 Table of Contents
12 (a) Registrant's Statement of Additional Information
(b) *
13 (a) Statement of Additional Information about Oppenheimer Time
Fund
(b) *
14 Registrant's Statement of Additional Information; Statement
of Additional Information about Oppenheimer Time Fund; Annual
Report of Oppenheimer Time Fund at 6/30/94; Semi-Annual
Report of Oppenheimer Time Fund at 12/31/94; Registrant's
Annual Report at 12/31/94
Part C of
Form N-14
Item No. Other Information Heading
- --------- -------------------------
15 Indemnification
16 Exhibits
17 Undertakings
_______________
* Not Applicable or negative answer
<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant / x /
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ X / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Oppenheimer Target Fund
- ------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Oppenheimer Time Fund
- ------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-
6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee Computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- ------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
- ------------------------------------------------------------------
(1) Amount previously paid:
- ------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- ------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------
(4) Date Filed:
- -----------------------
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
May 1995
Dear Oppenheimer Time Fund Shareholder:
Several weeks ago, I sent a letter to let you know about some
positive changes being proposed for your Fund. A shareholder meeting
has been scheduled on June 14 and all shareholders of record as of
April 21st are being asked to vote either in person or by proxy. You
will find a notice of the meeting, a proxy statement detailing the
proposal, a ballot card, and a postage-paid return envelope enclosed
with this letter.
Your vote is very important because these decisions will affect
your investment. So we urge you to consider these issues carefully and
make your vote count.
How do you vote?
To cast your vote, simply mark, sign and date the enclosed proxy
ballot and return it in the postage-paid envelope today. Remember, it
can be expensive for the Fund -- and ultimately for you as a
shareholder -- to remail ballots if not enough responses are received
to conduct the meeting.
What is being proposed?
On March 16th, your Board of Trustees, which represents your
interests in the day-to-day management of the Fund, recommended
approval of the merger of Time Fund into another Oppenheimer fund,
Oppenheimer Target Fund.
Why does the Board of Trustees recommend this change?
While Time Fund and Target Fund have the same objective -- both
seek long-term capital appreciation by investing in companies that
present opportunities for long-term growth -- Time Fund has emphasized
investments in medium-sized companies, while Target Fund invests in
companies of all sizes with capital appreciation potential. Because of
this greater investment flexibility, the manager believes Target Fund -
- - which attempts to identify companies with above average earnings
growth at below normal valuation levels -- offers better opportunities
for capital appreciation over the long term.
Please contact your financial adviser or call us at 1-800-525-7048
if you have any questions.
As always, we appreciate your confidence in OppenheimerFunds and
thank you for allowing us to manage a portion of your investment
assets.
Sincerely,
(JSF signature)
<PAGE>
OPPENHEIMER TIME FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1995
To the Shareholders of Oppenheimer Time Fund:
Notice is hereby given that a Special Meeting of the Shareholders of
Oppenheimer Time Fund (the "Fund"), a registered management investment
company, will be held at 3410 South Galena Street, Denver, Colorado
80231, at 10:00 A.M., Denver time, on June 20, 1995, or any
adjournments thereof (the "Meeting"), for the following purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization
between the Fund and Oppenheimer Target Fund ("Target Fund") and which
contemplates the transfer of substantially all the assets of the Fund,
in exchange for Class A shares of Target Fund, the distribution of such
Class A shares to the shareholders of the Fund in complete liquidation
of the Fund, the de-registration of the Fund as an investment company
under the Investment Company Act of 1940, as amended, and the
cancellation of the outstanding shares of the Fund (The Proposal); and
2. To act upon such other matters as may properly come before the
Meeting.
Shareholders of record at the close of business on April 21, 1995 are
entitled to notice of, and to vote at, the Meeting. The Proposal is
more fully discussed in the Proxy Statement and Prospectus. Please
read it carefully before telling us, through your proxy or in person,
how you wish your shares to be voted. The Fund's Board of Trustees
recommends a vote in favor of the Proposal. WE URGE YOU TO SIGN, DATE
AND MAIL THE ENCLOSED PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
May 15, 1995
_______________________________________________________________________
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign
and return it in the accompanying postage-paid envelope. To avoid
unnecessary duplicate mailings, we ask your cooperation in promptly
mailing your proxy no matter how large or small your holdings may be.
320
<PAGE>
OPPENHEIMER TARGET FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
Oppenheimer Target Fund ("Target Fund") has filed with the Securities
and Exchange Commission (the "SEC") a Registration Statement on Form N-
14 relating to the registration of shares of Target Fund to be offered
to the shareholders of Oppenheimer Time Fund (the "Fund"), located at
Two World Trade Center, New York, New York 10048-0203 (telephone 1-
800-525-7048), pursuant to an Agreement and Plan of Reorganization (the
"Reorganization Agreement") between Target Fund and the Fund. This
Proxy Statement of the Fund relating to the Reorganization Agreement
and the transactions contemplated thereby (the "Reorganization") also
constitutes a Prospectus of Target Fund filed as part of such
Registration Statement. Target Fund is a mutual fund that seeks
capital appreciation as its investment objective by investing in
securities of "growth-type" companies and cyclical industries.
This Proxy Statement and Prospectus sets forth concisely information
about Target Fund that shareholders of the Fund should know before
voting on the Reorganization. A copy of the Prospectus for Target
Fund, dated May 1, 1995, is enclosed, and is incorporated herein by
reference. The following documents have been filed with the SEC and
are available without charge upon written request to Oppenheimer
Shareholder Services ("OSS"), the transfer and shareholder servicing
agent for Target Fund and the Fund, at P.O. Box 5270, Denver, Colorado
80217, or by calling the toll-free number shown above: (i) a Prospectus
for the Fund, dated October 21, 1994, supplemented April 13, 1995; (ii)
a Statement of Additional Information about the Fund, dated October 21,
1994, supplemented January 3, 1995; and (iii) a Statement of Additional
Information about Target Fund, dated May 1, 1995, (the "Target Fund
Additional Statement"). The Target Fund Additional Statement, which is
incorporated herein by reference, contains more detailed information
about Target Fund and its management. A Statement of Additional
Information relating to the Reorganization, dated May 15, 1995, has
been filed with the SEC as part of the Target Fund Registration
Statement on Form N-14 and is incorporated by reference herein, and is
available by written request to OSS at the same address immediately
above or by calling the toll-free number shown above.
Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated May 15, 1995.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
Page
Introduction
General
Record Date; Vote Required; Share Information
Proxies
Costs of the Solicitation and the Reorganization
Comparative Fee Table
Synopsis
Parties to the Reorganization
The Reorganization
Reasons for the Reorganization
Tax Consequences of the Reorganization
Investment Objectives and Policies
Investment Advisory and Service Plan Fees
Purchases, Exchanges and Redemptions
Principal Risk Factors
Approval of the Reorganization (The Proposal)
Reasons for the Reorganization
The Reorganization
Tax Aspects of the Reorganization
Capitalization Table (Unaudited)
Comparison Between the Fund and Target Fund
Investment Objectives and Policies
Special Investment Methods
Investment Restrictions
Portfolio Turnover
Brokerage Practices
Expense Ratios and Performance
Shareholder Services
Rights of Shareholders
Management and Distribution Arrangements
Target Fund Performance
Purchase of Additional Shares
Method of Carrying Out the Reorganization
Miscellaneous
Financial Information
Public Information
Other Business
Annex A - Agreement and Plan of Reorganization, dated March 16,
1995, by and between Oppenheimer Time Fund and Oppenheimer Target Fund
A-1
<PAGE>
OPPENHEIMER TARGET FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
Special Meeting of Shareholders to be held June 20, 1995
INTRODUCTION
General
This Proxy Statement and Prospectus is being furnished to the
shareholders of Oppenheimer Time Fund (the "Fund"), a registered
management investment company, in connection with the solicitation by
the Fund's Board of Trustees (the "Board") of proxies to be used at the
Special Meeting of Shareholders of the Fund to be held at 3410 South
Galena Street, Denver, Colorado 80231, at 10:00 A.M., Denver time, on
June 20, 1995, or any adjournments thereof (the "Meeting"). It is
expected that the mailing of this Proxy Statement and Prospectus will
commence on or about May 26, 1995.
At the Meeting, shareholders of the Fund will be asked to approve an
Agreement and Plan of Reorganization (the "Reorganization Agreement")
between the Fund and Oppenheimer Target Fund, including the transfer of
substantially all the assets of the Fund (consisting of Class A shares)
in exchange for Class A shares of Target Fund, the distribution of such
Class A shares to the shareholders of the Fund in complete liquidation
of the Fund, the deregistration of the Fund as an investment company
under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the cancellation of the outstanding shares of the
Fund. Target Fund currently offers Class A shares with a sales charge
imposed at the time of purchase (certain purchases aggregating $1.0
million or more are not subject to a sales charge, but may be subject
to a contingent deferred sales charge). Target Fund also offers Class
C shares which are offered without a sales or front-end sales charge,
although an investor may pay a sales charge when shares are redeemed,
depending on how long they are held. A contingent deferred sales
charge is imposed on most Class C shares redeemed within 12 months of
purchase. The Class A shares to be issued by Target Fund pursuant to
the Reorganization will be issued at net asset value without a sales
charge.
Record Date; Vote Required; Share Information
The Board has fixed the close of business on April 21, 1995 as the
record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. An affirmative
vote of the holders of a majority of the outstanding shares of the Fund
entitled to vote at the Meeting is required for approval of the
Proposal. An affirmative vote of the holders of a majority of the
outstanding shares of the Fund is defined as the vote of the holders of
the lesser of: (i) 67% or more of the voting securities present or
represented by proxy of the shareholder meeting if the holders of more
than 50% of the outstanding voting securities are present or
represented by proxy, or (ii) more than 50% of the outstanding voting
securities. Each shareholder will be entitled to one vote for each
share and a fractional vote for each fractional share held of record at
the close of business on the Record Date. Only shareholders of the
Fund will vote on the Reorganization. The vote of shareholders of
Target Fund is not being solicited.
At the close of business on the Record Date, there were approximately
20,700,306.546 shares of the Fund issued and outstanding,
13,517,341.701 shares of Class A of Target Fund issued and outstanding
and 96,636.869 shares of Class C of Target Fund issued and outstanding.
The presence in person or by proxy of the holders of a majority of such
shares constitutes a quorum for the transaction of business at the
Meeting. To the knowledge of the Fund, as of the Record Date, no
person owned of record or beneficially 5% or more of the outstanding
shares of the Fund or 5% or more of the outstanding Class A or Class C
shares of Target Fund. In addition, as of the record date, the
Trustees and officers owned less than 1% of the outstanding shares of
both the Fund or of the outstanding shares of Class A or Class C Target
Fund.
Proxies
The enclosed form of proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in
accordance with the choices specified thereon, and will be included in
determining whether there is quorum to conduct the Meeting. The proxy
will be voted in favor of the Proposal unless a choice is indicated to
vote against or to abstain from voting on the Proposal.
Shares owned of record by broker-dealers for the benefit of their
customers ("street account shares") will be voted by the broker-dealer
based on instructions received from its customers. If no instructions
are received, the broker-dealer may (if permitted under applicable
stock exchange rules), as record holder, vote such shares on the
Proposal in the same proportion as that broker-dealer votes street
account shares for which voting instructions were received in time to
be voted. If a shareholder executes and returns a proxy but fails to
indicate how the votes should be cast, the proxy will be voted in favor
of the Proposal. The proxy may be revoked at any time prior to the
voting thereof by: (i) writing to the Secretary of the Fund at Two
World Trade Center, 34th Floor, New York, New York 10048-0203; (ii)
attending the Meeting and voting in person; or (iii) signing and
returning a new proxy (if returned and received in time to be voted).
Costs of the Solicitation and the Reorganization
All expenses of this solicitation, including the cost of printing
and mailing this Proxy Statement and Prospectus, will be borne by the
Fund. Any documents such as existing prospectuses or annual reports
that are included in that mailing will be a cost of the fund issuing
the document. In addition to the solicitation of proxies by mail,
proxies may be solicited by officers of the Fund or officers and
employees of OSS, personally or by telephone or telegraph or may be
solicited by a proxy solicitation firm hired for such purpose. Any
expenses so incurred will be borne by OSS. Brokerage houses, banks and
other fiduciaries may be requested to forward soliciting material to
the beneficial owners of shares of the Fund and to obtain authorization
for the execution of proxies. For those services, if any, they will be
reimbursed by the Fund for their reasonable out-of-pocket expenses.
With respect to the Reorganization, the Fund and Target Fund will bear
the cost of their respective tax opinion. Any other out-of-pocket
expenses of the Fund and Target Fund associated with the
Reorganization, including legal, accounting and transfer agent
expenses, will be borne by the Fund and Target Fund, respectively, in
the amounts so incurred by each.
COMPARATIVE FEE TABLE
The Fund and Target Fund each pay a variety of expenses directly
for management of their assets, administration, distribution of their
shares and other services, and those expenses reflected in each fund's
net asset value per share. Shareholders pay other expenses directly,
such as sales charges. The following tables show the expenses of the
Fund and Target Fund and the pro forma expenses of a combined fund
after giving effect to the Reorganization.
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer Pro forma
Target Fund Time Fund Combined Fund
Class A Class C Class A Class A Class C
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None 5.75% 5.75% None
Sales Charge on Reinvested Dividends None None None None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 1.0%(2) None(1) None(1) 1.0%(2)
<FN>
________________________
(1) If you invest more than $1 million in Class A shares, you may have to pay a sales charge of up to 1% if you sell your
shares within 18 calendar months from the end of the calendar month during which you purchased those shares.
(2) If you redeem Class C shares within 12 months of buying them, you may have to pay a 1.0% contingent deferred sales
charge.
</TABLE>
The sales charge on purchases of the Fund, and the sales charge on
purchases of Class A shares of Target Fund, are identical, and are not
expected to change as a result of the reorganization.
The calculations are based on the Fund's business expenses for the
twelve month period ended December 31, 1994 and calculations for Target
Fund are based on expenses for its Class A and Class C shares for the
fiscal period ended December 31, 1994. The pro forma fees reflect the
combined funds at December 31, 1994, as if the Reorganization had
occurred on that date. These amounts are shown as a percentage of the
average net assets of each class of a fund's shares for that year.
<TABLE>
<CAPTION>
Pro forma
Oppenheimer Oppenheimer Combined
Target Fund Time Fund Fund
Class A Class C Class A Class A Class C
<S> <C> <C> <C> <C> <C>
Management Fees 0.74%+ 0.74%+ 0.74% 0.71% 0.71%
12b-1 Service Plan Fees 0.17%* 1.00% 0.16%* 0.16% 1.00%
Other Expenses 0.30% 0.42% 0.26% 0.27% 0.39%
Total Fund Operating 1.21% 2.16% 1.16% 1.14% 2.10%
Expenses
<FN>
___________________
+ Management fees for Target Fund have been restated in the fee table because the annual fees on the first and second
$200 million of net assets decreased to .75% and .70%, respectively, on July 1, 1994. The fees in the table are based on
expenses that would have been incurred if the lower management rate had been in effect for the twelve months ended
December 31, 1994.
* The 12b-1 Service Plan fees for Target Fund have been restated in the table because an amended Service Plan for
Target Fund shares took effect July 1, 1994. That applies to all shares of the Fund, regardless of the date on which the
shares were purchased. The fees in the table are based on expenses that would have been incurred if that plan had been in
effect during the twelve months ended December 31, 1994. Actual management fees for Target Fund for Class A shares
would have been .76%, and the Class A Service Plan fees would have been .10% and the total operating expenses would
have been 1.16% for Class A and 2.18% for Class C shares, respectively. The 12b-1 Service Plan fees for Time Fund have
been restated for the same reasons as described above. The actual Service Plan fees would have been .11%, and the total
fund operating expenses would have been 1.11%. Target Fund Class C shares have a 12b-1 Distribution and Service Plan
Fee which includes an asset-based sales charge. The maximum service fee is 0.25% of average net assets of that class and
the asset-based sales charge of 0.75%.
</TABLE>
To try and show the effect of these expenses, on an investment over
time, the hypotheticals shown below have been created. Assume that you
make a $1,000 investment in either the Fund or Target Fund or the new
combined fund and that the annual return is 5% and that the operating
expenses for each fund are the ones shown in the chart above. If you
were to redeem your shares at the end of
each period shown below, your investment would incur the following
expenses by the end of each period shown:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years(1)
<S> <C> <C> <C> <C>
Oppenheimer Target Fund
Class A Shares $69 $94 $120 $196
Class C Shares $32 $68 $116 $249
Oppenheimer Time Fund
Class A Shares $69 $92 $118 $190
Pro Forma Combined Fund
Class A Shares $68 $92 $117 $188
Class C Shares $31 $66 $113 $243
If you did not redeem your investment, it would incur the following expenses:
1 year 3 years 5 years 10 years(1)
Oppenheimer Target Fund
Class A Shares $69 $94 $120 $196
Class C Shares $22 $68 $116 $249
Oppenheimer Time Fund
Class A Shares $69 $68 $118 $190
Pro Forma Combined Fund
Class A Shares $68 $92 $117 $188
Class C Shares $21 $66 $113 $243
<FN>
_____________________
(1) Because of the asset-based sales charge imposed on Class C shares of Target Fund, long-term shareholders of Class C
shares could bear expenses that would be the economic equivalent of an amount greater than the maximum front-end
sales charges permitted under applicable regulatory requirements.
</TABLE>
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of the Fund to assist them
in determining whether to approve the Reorganization. This synopsis is
only a summary and is qualified in its entirety by the more detailed
information contained in or incorporated by reference in this Proxy
Statement and Prospectus and the Annex hereto. Shareholders should
carefully review this Proxy Statement and Prospectus and the Annex
hereto in their entirety and, in particular, the current Prospectus of
Target Fund which accompanies this Proxy Statement and Prospectus and
is incorporated by reference herein.
Parties to the Reorganization
The Fund is a diversified, open-end, management investment company.
Target Fund is a diversified, open-end, management investment company
which was reorganized as a Massachusetts business trust on April 30,
1987. The Fund and Target Fund are each located at Two World Trade
Center, New York, New York 10048-0203. The members of the Board of
the Fund and the Board of Trustees of Target Fund are the same.
Oppenheimer Management Corporation (the "Manager") acts as investment
adviser to the Fund and Target Fund (collectively referred to herein as
the "funds"). Additional information about the parties is set forth
below.
Shares to be Issued
Shareholders of the Fund will receive Class A shares of Target Fund.
The Board of Trustees of Target Fund have established two classes of
shares which are Class A and Class C. All classes vote together in the
aggregate as to certain matters, however shares of a particular class
vote together on matters that affect that class alone. With respect to
the Fund, there is only one class of shares and Fund shareholders vote
exclusively on all matters submitted to a vote of Fund shareholders.
The Reorganization
The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund, consisting of Class A shares, to Target
Fund in exchange for Class A shares of Target Fund. The net asset
value of Target Fund's Class A shares issued in the exchange will equal
the value of the assets of the Fund received by Target Fund. Following
the Closing Date (as hereafter defined) scheduled for the
Reorganization, the Fund will distribute the Class A shares of Target
Fund received by the Fund on the Closing Date to holders of Fund shares
issued and outstanding as of the Valuation Date (as hereinafter
defined) in complete liquidation of the Fund and the Fund will
thereafter be dissolved and deregistered under the Investment Company
Act. As a result of the Reorganization, each Fund shareholder will
receive that number of full and fractional Target Fund, Class A shares
equal in value to such shareholder's pro rata interest in the assets
transferred to Target Fund as of the Valuation Date. The Board has
determined that the interests of existing Fund shareholders will not be
diluted as a result of the Reorganization. For the reasons set forth
below under "The Reorganization - Reasons for the Reorganization," the
Board, including the trustees who are not "interested persons" of the
Fund (the "Independent Trustees'), as that term is defined in the
Investment Company Act, has concluded that the Reorganization is in the
best interests of the Fund and its shareholders and recommends approval
of the Reorganization by Fund shareholders. If the Reorganization is
not approved, the Fund will continue in existence and the Board will
determine whether to pursue alternative actions.
Reasons for the Reorganization
The Board of Trustees of the Fund (the "Board"), including the
Independent Trustees, at a meeting held on March 16, 1995, unanimously
approved and recommended to the shareholders of the Fund that they
approve the Reorganization and Reorganization Agreement. In
considering the Reorganization, the Board compared the Fund to Target
Fund with respect to size, investment objectives, management fees and
performance. Both the Fund and Target Fund are equity funds sharing
similar investment objectives of seeking capital appreciation through
emphasis on securities of "growth-type companies." Each of the funds
seeks its investment objective by investing in common stocks, preferred
stocks, convertible securities and rights and warrants which vary in
proportion from time to time. Both funds may invest in stocks that are
sensitive to changes in the business cycle, known as "cyclicals" if
they present opportunities for long term growth. The funds do not
invest to seek current income to pay shareholders. Among other
factors, the Board took into consideration that the schedule of
management fee rates are identical for both funds. The Board also
considered pro forma financial information which indicated that the
average management fee rate paid by shareholders in a combined fund
would likely be lower and that the expense ratio would be lower for
Class A shareholders of the combined fund. For the fiscal year ended
June 30, 1994, the expense ratio for Time Fund was .94% of average
annual net assets. For the fiscal year ended December 31, 1994, the
expense ratio was 1.16% of the average annual net assets for Class A
shares of Target Fund and it was 2.18% of the average annual net assets
for Class C shares. With respect to the six months ended December 31,
1994, the expense ratio for Time Fund was 1.29% of the average annual
net assets (annualized). The actual expenses of Time Fund for the
twelve month period ended December 31, 1994 were 1.11% of the average
annual net assets. For the fiscal year ended December 31, 1994, on a
pro forma basis, giving effect to the Reorganization, the expense ratio
for Target Fund as the surviving fund, would be 1.14% of the average
annual net assets for Class A shares and 2.10% of the average annual
net assets for Class C shares.
The Board also considered that the Fund consists solely of Class A
shares, while Target Fund offers Class A shares and Class C shares.
Class A shares of the Fund could easily be exchanged for Class A shares
of Target Fund. The Board compared the size of each fund. As of March
15, 1995, the net assets of the Fund were approximately $311 million
and the net assets of Target Fund were approximately $317 million.
While the funds are similar in size, it is expected that over time,
Target Fund will continue to grow and become the larger fund. In the
month of February, the Fund had over 7 million in net redemptions while
Target Fund had over 5 million in net purchases. In addition, as a
result of the Reorganization, the combined fund will be much larger and
shareholders of the Fund should benefit from the economies of scale
available to a larger fund. These economies of scale should result in
lower costs per account for each shareholder through lower operating
expenses and transfer agency expenses.
The Board also considered that there would be no sales charge imposed
in effecting the Reorganization, and that the Reorganization would be
effected as a tax-free exchange. The Board determined that it would be
in the best interests of Time Fund and its shareholders to combine with
Target Fund. The Board also determined that combining the funds would
not result in a dilution of the interests of Time Fund shareholders.
In determining to recommend approval of the reorganization to
shareholders, the Board also considered information on the historical
performance of both funds. Target Fund has enjoyed significantly
better performance than the Fund, for the one and five year periods
ended December 31, 1994. Although past performance is not predictive
of future results the Board determined that the shareholders of the
Fund would have the opportunity to be shareholders in a similar fund
with more favorable past performance.
Tax Consequences of the Reorganization
In the opinion of KPMG Peat Marwick LLP ("Peat Marwick"), tax adviser
to the Fund, the Reorganization will qualify as a tax-free
reorganization for Federal income tax purposes. As a result, no gain
or loss will be recognized by the Fund, Target Fund, or the
shareholders of the combined fund for Federal income tax purposes as a
result of the Reorganization. For further information about the tax
consequences of the Reorganization, see "Approval of the Reorganization
- - Tax Aspects" below.
Investment Objectives and Policies
As its investment objective, both the Fund and Target Fund seek capital
appreciation.
The Fund seeks its investment objective of capital appreciation by
emphasizing investment in "mid-capitalization" companies (those
generally with capitalization between $500 million and $5 billion, also
known as "mid-cap" companies) that are, in the Manager's opinion,
established, well managed companies with strong market positions, high
quality products and high earnings growth potential that have a proven
ability to translate growth in sales and market share into earnings.
The Fund's investments include common stocks, preferred stocks,
convertible securities, and rights and warrants in proportions which
vary from time to time. Of the companies whose stocks the Fund held
during the fiscal year ended June 30, 1994, some are categorized as
"consumer cyclicals" that do well in the early to middle stages of the
economic cycle; some fall into the technology sectors, others are
classified as financial services issues. In every case, however,
sector classifications are less important selection criteria for the
Fund than specific company characteristics.
Target Fund seeks its investment objective of capital appreciation by
emphasizing investment in common stocks or other equity securities,
including convertible securities or may, just as with the Fund, hold
warrants and rights. Target Fund may also seek to take advantage of
changes in the business cycle by investing in companies that are
sensitive to those changes, if the Manager believes they present
opportunities for long-term growth. For example, when the economy is
expanding, companies in the financial services and consumer products
industries may be in a position to benefit from changes in the business
cycle and may present long-term growth opportunities.
Both the Fund and Target Fund may purchase equity and debt securities
issued or guaranteed by foreign companies or foreign governments or
their agencies. The Fund may purchase securities in any country,
developed or underdeveloped. There is no limit on the amount of assets
each fund may invest in foreign securities, although as to Target Fund,
it does not normally "expect" to have more than 35% of its assets
invested in foreign securities. Foreign currency will be held by each
fund only in connection with the purchase or sale of foreign
securities.
The Manager considers many identical factors, when investing the assets
of the Fund or the assets of Target Fund, including general economic
conditions in the U.S. relative to foreign economies, and the trends in
domestic and foreign stock markets. Each of the funds may try to hedge
against losses in the value of its portfolio of securities by using
hedging strategies. When market conditions are unstable, each of the
funds may invest substantial amounts of their assets in debt
securities, such as money market instruments or government securities.
The Manager may, with respect to both funds, invest in securities of
companies that are in special situations that the Manager believes
presents opportunities for capital growth, such as a proposed merger or
reorganization. There is a risk that the price of a security may
decline if the anticipated development fails to occur. There is no
restriction on the amount of assets that each fund may invest in
special situations.
Because the type of securities each fund invests in, and the investment
techniques each fund uses, some of which may be speculative, both funds
are designed for investors who are willing to accept greater risks of
loss of their capital in the hope of achieving capital appreciation.
Neither fund is intended for investors seeking assured income and
preservation of capital.
Investment Advisory and Distribution Plan Fees
The funds both obtain investment management services from Oppenheimer
Management Corporation (the "Manager"). The management fee is payable
monthly and computed on the net asset value of each fund as of the
close of business each day. The Fund pays a management fee at the rate
of 0.75% of the first $200 million of net assets, 0.72% of the next
$200 million, 0.69% of the next $200 million, 0.66% of the next $200
million, and 0.60% of aggregate assets over $800 million. Target Fund
pays the identical management fee rate, however, prior to July 1, 1994
the annual management fee rate for Target Fund on the first and second
$200 million of the Target Funds aggregate net assets was 0.80% and
0.75% respectively. That rate was lowered subsequent to July 1, 1994
and Target Fund and the Fund now have the same management fee rates.
Both the Fund and Target Fund have service plans pursuant to Rule 12b-1
under the Investment Company Act. Specifically, Target Fund has
adopted a service plan for its Class A shares and a Distribution and
Service Plan for its Class C shares to compensate the Distributor for
its services and costs in distributing Class C shares and servicing
accounts. Fund shareholders, as a result of the reorganization will
become Class A shareholders of Target Fund and will not be affected by
the Distribution and Service Plan for Class C shares. The Service Plan
adopted by the Fund, and the Service Plan adopted by Target Fund for
its Class A shares (the "Service Plan") provide that each of the funds
reimburses Oppenheimer Funds Distributor, Inc. (the "Distributor"), the
distributor of each fund's shares, quarterly for all or a portion of
the Distributor's costs incurred in connection with the personal
service and maintenance of shareholder accounts that hold the funds'
shares. Time Fund amended its Service Plan, effective July 1, 1994.
The Service Plan, as amended, applies to all shares of the Fund
regardless of the date on which they were purchased. The current
maximum annual fee payable by Time Fund pursuant to its service plan is
0.25% of the average net asset value of the Fund's shares, and for
Target Fund it is 0.25% of the average net assets of Class A shares,
computed as of the close of each business day. See "Comparison Between
the Fund and Target Fund - Expense Ratios and Performance" below.
Purchases, Exchanges and Redemptions
The Fund and Target Fund are part of the OppenheimerFunds complex of
mutual funds. The procedures for purchases, exchanges and redemptions
of shares of the funds are substantially the same.
The maximum sales charge on shares of the Fund and Class A shares of
Target Fund is 5.75%, and is reduced for purchases of $25,000 or more.
For certain purchases of $1 million or more, the funds do not charge a
front-end sales charge but impose a contingent deferred sales charge of
a maximum of 1% on shares redeemed within 18 months of the end of the
calendar month of their purchase. Shares of Target Fund received in
the Reorganization will be issued at net asset value, without a sales
charge. Shareholders may purchase through AccountLink (whereby funds
are transmitted electronically from an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) up to
$100,000. Shareholders of the funds may exchange their shares at net
asset value for shares of any of over 30 equity, fixed-income and money
market funds for which the Distributor or an affiliate acts as the
distributor. Shares of any money market fund purchased without a sales
charge may be exchanged for shares of a fund offered with a sales
charge upon payment of the sales charge. However, shares of a
particular class may be exchanged only for shares of the same class in
other OppenheimerFunds. For example, shareholders of the Fund can only
exchange their Class A shares for Class A shares of another fund.
Shareholders of the funds may redeem their shares by written request or
by telephone request in an amount up to $50,000 in any seven-day
period, or they may arrange to have share redemption proceeds wired to
a pre-designated account at a U.S. bank or other financial institution
that is an ACH member ("AccountLink redemption"). Shareholders may
redeem shares automatically by calling PhoneLink and having redemption
proceeds wired to a pre-established AccountLink bank account.
Shareholders of the funds may reinvest redemption proceeds within six
months of a redemption at net asset value in shares of the funds or any
of numerous "Eligible Funds" within the OppenheimerFunds complex. The
Fund and Target Fund may redeem accounts valued at less than $500 and
$200, respectively, if the account has fallen below such stated amount
for reasons other than market value fluctuations. Both funds offer
Automatic Withdrawal and Exchange Plans.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in
Target Fund, shareholders should carefully consider the following risk
factors, which is a summary only, relating to both Target Fund and the
Fund, in addition to the other information set forth in this Proxy
Statement and Prospectus and the more complete description of risk
factors set forth in the documents incorporated by reference herein,
including the Prospectuses of the funds and their respective Statements
of Additional Information. As stated in their respective Prospectuses,
as a general matter, the Fund and Target Fund are both intended for
investors seeking capital appreciation who are willing to accept
greater risks of loss in the hopes of greater gains. The funds do not
invest to seek current income to pay shareholders. There is no
assurance that either the Fund or Target Fund will achieve its
investment objective.
Investment By The Funds in Foreign Securities
Each of the funds may invest in "foreign securities" which 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 market. The funds may purchase securities
country, developed or undeveloped. There is no limit on the amount of
each fund assets that may be invested in foreign securities, however,
Target Fund normally does not expect to have more than 35% of its
assets invested in foreign securities. The Fund may write and purchase
both covered and uncovered calls and puts on foreign currencies. The
Fund may also enter into Forward Contracts to protect against
uncertainty in the level of future exchange rates. Investments in
foreign securities present special additional risks and considerations
not typically associated with instruments in domestic securities. For
example, foreign issuers are not subject to the same accounting and
disclosure requirements that U.S. companies are subject to. The value
of foreign instruments may be affected by changes in foreign currency
rates, 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. Other
risks 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; higher brokerage
commission rates than in the U.S.; increased risks of delays in
settlement of portfolio transactions or loss of certificates for
portfolio securities; possibilities in some countries of expropriation,
confiscatory taxation, political, financial or social instability or
adverse diplomatic developments; and unfavorable differences between
the U.S. economy and foreign economies. In the past, U.S. Government
policies have discouraged certain investments abroad by U.S. investors,
through taxation or other restrictions, and it is possible that such
restrictions could be re-imposed.
Investment In Growth Type Companies
The funds both seek their investment of capital appreciation by
emphasizing investment in "growth-type" companies. Specifically, the
Fund invests in "mid-capitalization" companies those generally with
capitalization between $500 million and $5 billion, also known as "mid-
cap" companies. With respect to Target Fund, the Manager may emphasize
investment in companies in particular ranges of size. Both funds may
invest in companies of any size and capitalization, however, in general
capital appreciation is more likely to be found in the securities of
"growth-type" companies that have a proven ability to translate growth
in sales and market shares into earnings gain. Some of the investment
techniques used by the Funds (see Risks of Hedging With Options and
Futures, described below) may be considered to be speculative and may
increase the risks of investing in the funds, and may also increase
each funds' operating costs.
Special Situations
Each of the funds, may invest in securities of companies that are in
"special situations" that the Manager believes present opportunities
for capital growth. A "special situation" may be an event such as a
proposed merger, reorganization, or other unusual development that is
expected to occur and which may result in an increase in the value of a
company's securities regardless of general business conditions or the
movement of prices in the securities market as a whole. There is a
risk that the price of the security may decline if the anticipated
development fails to occur. There is no limit on the amount of assets
that each of the funds may invest in "special situations."
Borrowing for Leverage
The Fund and Target Fund may borrow up to 10% of the value of their
respective total assets from banks on an unsecured basis to buy
securities. This is a speculative investment method known as
"leverage." Leveraging may subject an investment in the fund to greater
risks and costs than funds that do not borrow. These risks may include
the possible reduction of income and increased fluctuation in the
fund's net asset value per share, since the fund pays interest on
borrowings.
Small, Unseasoned Companies. The funds may invest in securities of
small, unseasoned companies. These are companies that have been in
operation for less than three years, even after including the
operations of any predecessors. Securities of these companies may have
limited liquidity and may be subject to volatility in their prices.
Neither of the funds currently intends to invest no more than 5% of
their respective net assets in securities of small, unseasoned issuers.
Warrants and Rights
Each of the funds may invest in warrants, which are the option to
purchase stock at set prices that are valid for a limited period of
time. The Fund may invest up to 2% of its total assets in warrants or
rights. Target Fund may invest up to 5% of its total assets. These
restrictions do not include warrants or rights that have been acquired
in units or are attached to other securities. With respect to Target
Fund no more than 2% of its assets may be invested in warrants that are
not listed on the New York or American Stock Exchanges.
Risks of Hedging With Options and Futures
The funds may write covered call options and engage in hedging
transactions as described below in "Comparison Between the Fund and
Target Fund - Special Investment Methods". There are certain risks in
writing calls. If a call written by the fund is exercised, the fund
forgoes any profit from any increase in the market price above the call
price of the underlying investment on which the call was written. In
addition, the fund could experience capital losses which might cause
previously distributed short-term capital gains to be re-characterized
as a non-taxable return of capital to shareholders. In writing puts,
there is the risk that the fund may be required to buy the underlying
security at a disadvantageous price. The principal risks of trading
futures are (i) possible imperfect correlation between the prices of
the futures an the market value of the dept securities in the fund's
portfolio, (ii) possible lack of a liquid secondary market for closing
out a futures position, (iii) the need for additional skills and
techniques beyond those required for normal portfolio management and
(iv) losses on futures resulting from interest rate movements not
anticipated by the Manager. Writing covered calls and the buying and
selling of options and futures contracts are considered derivative
investments. A derivative investment is a specially designed
investment whose performance is linked to the performance of another
investment or security, such as an option, future, index or currency.
The risks of investing in derivative investments include not only the
ability of the company issuing the instrument to pay the amount due on
the maturity of the instrument, but also the risk that the underlying
investment or security might not perform the way the Manager expected
it to perform. The performance of derivative investments may also be
influenced by interest rate changes in the U.S. and abroad. All of
this can mean that the Fund will realize less income than expected.
Certain derivative instruments held by the Fund and Target Fund may
trade in the over-the-counter markets and may be illiquid. See
"Illiquid and Restricted Securities".
APPROVAL OF THE REORGANIZATION
(The Proposal)
Reasons for the Reorganization
The Board of Trustees of the Fund (the "Board"), including the
Independent Trustees, at a meeting held on March 16, 1995, unanimously
approved and recommended to the shareholders of the Fund that they
approve the Reorganization and Reorganization Agreement. In
considering the Reorganization, the Board compared the Fund to Target
Fund with respect to size, investment objectives, management fees and
performance. Both the Fund and Target Fund are equity funds sharing
similar investment objectives of seeking capital appreciation through
emphasis on securities of "growth-type companies." Each of the funds
seeks its investment objective by investing in common stocks, preferred
stocks, convertible securities and rights and warrants which vary in
proportion from time to time. Both funds may invest in stocks that are
sensitive to changes in the business cycle, known as "cyclicals" if
they present opportunities for long term growth. The funds do not
invest to seek current income to pay shareholders. Among other
factors, the Board took into consideration that the schedule of
management fee rates are identical for both funds. The Board also
considered pro forma financial information which indicated that the
average management fee rate paid by shareholders in a combined fund
would likely be lower and that the expense ratio would be lower for
Class A shareholders of the combined fund. For the fiscal year ended
June 30, 1994, the expense ratio for Time Fund was .94% of average
annual net assets. For the fiscal year ended December 31, 1994, the
expense ratio was 1.16% of the average annual net assets for Class A
shares of Target Fund and it was 2.18% of the average annual net assets
for Class C shares. With respect to the six months ended December 31,
1994, the expense ratio for Time Fund was 1.29% of the average annual
net assets (annualized). For the fiscal year ended December 31, 1994,
on a pro forma basis, giving effect to the Reorganization, the expense
ratio for Target Fund as the surviving fund, would be 1.14% of the
average annual net assets for Class A shares and 2.10% of the average
annual net assets for Class C shares.
The Board also considered that the Fund consists solely of Class A
shares, while Target Fund offers Class A shares and Class C shares.
Class A shares of the Fund could easily be exchanged for Class A shares
of Target Fund. The Board compared the size of each fund. As of March
15, 1995, the net assets of the Fund were approximately $311 million
and the net assets of Target Fund were approximately $317 million.
While the funds are similar in size, it is expected that over time,
Target Fund will continue to grow and become the larger fund. In the
month of February, the Fund had over 7 million in net redemptions while
Target Fund had over 5 million in net purchases. In addition, as a
result of the Reorganization, the combined fund will be much larger and
shareholders of the Fund should benefit from the economies of scale
available to a larger fund. These economies of scale should result in
lower costs per account for each shareholder through lower operating
expenses and transfer agency expenses.
The Board also considered that there would be no sales charge imposed
in effecting the Reorganization, and that the Reorganization would be
effected as a tax-free exchange. The Board determined that it would be
in the best interests of Time Fund and its shareholders to combine with
Target Fund. The Board also determined that combining the funds would
not result in a dilution of the interests of Time Fund shareholders.
In determining to recommend approval of the reorganization to
shareholders, the Board also considered information on the historical
performance of both funds. Target Fund has enjoyed significantly
better performance than the Fund, for the one and five year periods
ended December 31, 1994. Although past performance is not predictive
of future results the Board determined that the shareholders of the
Fund would have the opportunity to be shareholders in a similar fund
with more favorable past performance.
The Reorganization
The Reorganization Agreement (a copy of which is set forth in full as
Annex A to this Proxy Statement and Prospectus) contemplates a
reorganization under which (i) all of the assets of the Fund (other
than the cash reserve described below (the "Cash Reserve")) would be
transferred to Target Fund in exchange for Class A shares of Target
Fund, (ii) these shares would be distributed among the shareholders of
the Fund in complete liquidation of the Fund, (iii) the Fund would be
deregistered as an investment company under the Investment Company Act
and (iv) the outstanding shares of the Fund would be cancelled. Target
Fund will not assume any of the Fund's liabilities except for portfolio
securities purchased which have not settled and outstanding shareholder
redemption and dividend checks.
The result of effectuating the Reorganization would be that: (i)
Target Fund would add to its gross assets all of the assets (net of any
liability for portfolio securities purchased but not settled and
outstanding shareholder redemption and dividend checks) of the Fund
other than its Cash Reserve; and (ii) the shareholders of the Fund as
of the close of business on the Closing Date would become shareholders
of Target Fund.
The effect of the Reorganization will be that shareholders of the
Fund who vote their shares in favor of the Reorganization will be
electing to redeem their shares of the Fund (at net asset value on the
Valuation Date referred to below under "Method of Carrying Out the
Reorganization Plan," calculated after subtracting the Cash Reserve)
and reinvest the proceeds in Class A shares of Target Fund at net asset
value without sales charge and without recognition of taxable gain or
loss for Federal income tax purposes (see "Tax Aspects of the
Reorganization" below). The Cash Reserve is that amount retained by
the Fund which is sufficient in the discretion of the Board for the
payment of: (a) the Fund's expenses of liquidation, and (b) its
liabilities, other than those assumed by Target Fund. The Fund and
Target Fund will bear all of their respective expenses associated with
the Reorganization, as set forth under "Costs of the Solicitation and
the Reorganization" above. Management estimates that such expenses
associated with the Reorganization to be borne by the Fund will not
exceed $58,000. Liabilities as of the date of the transfer of assets
will consist primarily of accrued but unpaid normal operating expenses
of the Fund, excluding the cost of any portfolio securities purchased
but not yet settled and outstanding shareholder redemption and dividend
checks. See "Method of Carrying Out the Reorganization Plan" below.
The Reorganization Agreement provides for coordination between the
funds as to their respective portfolios so that, after the closing,
Target Fund will be in compliance with all of its investment policies
and restrictions. The Fund will recognize capital gain or loss on any
sales made pursuant to this paragraph. As noted in "Tax Aspects of the
Reorganization" below, if the Fund realizes net gain from the sale of
securities in 1994, such gain, to the extent not offset by capital loss
carry forward, will be distributed to shareholders prior to the Closing
Date and will be taxable to shareholders as capital gain.
Tax Aspects of the Reorganization
Immediately prior to the Valuation Date referred to in the
Reorganization Agreement, the Fund will pay a dividend or dividends
which, together with all previous such dividends, will have the effect
of distributing to the Fund shareholders all of the Fund's investment
company taxable income for taxable years ending on or prior to the
Closing Date (computed without regard to any deduction for dividends
paid) and all of its net capital gain, if any, realized in taxable
years ending on or prior to the Closing Date (after reduction for any
available capital loss carry-forward). Such dividends will be included
in the taxable income of the Fund's shareholders as ordinary income and
capital gain, respectively.
The exchange of the assets of the Fund for Class A shares of Target
Fund and the assumption by Target Fund of certain liabilities of the
Fund is intended to qualify for Federal income tax purposes as a tax-
free reorganization under Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Fund has represented to
Peat Marwick, tax adviser to the Fund, that there is no plan or
intention by any Fund shareholder who owns 5% or more of the Fund's
outstanding shares, and, to the Fund's best knowledge, there is no plan
or intention on the part of the remaining Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of Target Fund shares
received in the transaction that would reduce the Fund shareholders'
ownership of Target Fund Class A shares to a number of shares having a
value, as of the Closing Date, of less than 50% of the value of all the
formerly outstanding Fund shares as of the same date. The Fund and
Target Fund have each further represented to Peat Marwick that, as of
the Closing Date, the Fund and Target Fund will qualify as regulated
investment companies or will meet the diversification test of Section
368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Target Fund and
the Fund will receive the opinion of KPMG Peat Marwick, LLP to the
effect that, based on the Reorganization Agreement, the above
representations, existing provisions of the Code, Treasury Regulations
issued thereunder, current Revenue Rulings, Revenue Procedures and
court decisions, for Federal income tax purposes:
1. The transactions contemplated by the Reorganization Agreement will
qualify as a tax-free "reorganization" within the meaning of
Section 368(a)(1) of the Code.
2. The Fund and Target Fund will each qualify as "a party to a
reorganization" within the meaning of Section 368(b)(2) of the
Code.
3. No gain or loss will be recognized by the shareholders of the Fund
upon the distribution of Class A shares of beneficial interest in
Target Fund to the shareholders of the Fund pursuant to Section
354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by the Fund by reason of the transfer of its assets
solely in exchange for Class A shares of Target Fund.
5. Under Section 1032 of the Code no gain or loss will be recognized
by Target Fund by reason of the transfer of the Fund's assets
solely in exchange for Class A shares of Target Fund.
6. The shareholders of the Fund will have the same tax basis and
holding period for the Class A shares of beneficial interest in
Target Fund that they receive as they had for the Fund stock that
they previously held, pursuant to Sections 358(a) and 1223(1) of
the Code, respectively.
7. The securities transferred by the Fund to Target Fund will have
the same tax basis and holding period in the hands of Target Fund
as they had for the Fund, pursuant to Sections 362(b) and 1223(1)
of the Code, respectively.
Shareholders of the Fund should consult their tax advisors regarding
the effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the
Federal income tax consequences of the Reorganization, shareholders of
the Fund should also consult their tax advisers as to state and local
tax consequences, if any, of the Reorganization.
Capitalization Table (Unaudited)
The table below sets forth the capitalization of the Fund and Target
Fund and indicates the pro forma combined capitalization as of December
31, 1994 as if the Reorganization had occurred on that date.
<TABLE>
<CAPTION>
Net Asset
Shares Value
Net Assets Outstanding Per Share
<S> <C> <C> <C>
Oppenheimer Target Fund
Class A Shares $301,698,437 13,330,877 $22.63
Class C Shares $ 1,065,787 47,375 $22.50
Oppenheimer Time Fund
Class A Shares $326,410,301 21,387,554 $14.98
Pro Forma Combined Fund
Class A Shares $628,108,738 27,754,663 $27.63
Class C Shares $ 1,069,787 47,375 $22.50
<FN>
____________________
* Reflects issuance of 14,423,786 shares of Target Fund in a tax-free exchange for the net assets of the Fund, aggregating
$326,410,301.
</TABLE>
The pro forma ratio of expenses to average annual net assets of the
combined funds at December 31, 1994 would have been 1.14% with respect
to Class A shares and 2.10% with respect to Class C shares.
COMPARISON BETWEEN THE FUND AND TARGET FUND
Comparative information about the Fund and Target Fund is presented
below. Additional information about Target Fund is set forth in its
Prospectus, accompanying this Proxy Statement and Prospectus, and
additional information about both funds is set forth in documents that
may be obtained upon request of OSS or are available for review at the
offices of the SEC. See "Miscellaneous - Public Information."
Investment Objectives and Policies
As its investment objective, each of the Fund and Target Fund seeks
capital appreciation in the value of its shares. Current income is not
an objective of either fund. In seeking their investment objectives,
the Fund and Target Fund employ various investment policies as
described in detail below. The Manager is the investment adviser to
both the Fund and Target Fund.
The Fund. The Fund seeks its investment objective of capital
appreciation by emphasizing investment in "mid-capitalization"
companies (those generally with capitalization between $500 million and
$5 billion, also known as "mid-cap" companies) that are, in the
Manager's opinion, established, well-managed companies with strong
market positions, high quality products and high earnings growth
potential that have a proven ability to translate growth in sales and
market share into earnings gains.
The Fund's investments include common stocks, preferred stocks,
convertible securities, and rights and warrants in proportions which
vary from time to time. Of the companies whose stocks the Fund held
during the fiscal year ended June 30, 1994, some are categorized as
"consumer cyclicals" that do well in the early to middle stages of the
economic cycle; some fall into the technology sector, others are
considered healthcare companies and a few are classified as financial-
services issues. As a group, mid-cap stocks may be more vulnerable to
a weaker economy than other stock sectors. In every case, however,
sector classifications are a less important selection criterion for the
Fund than specific company characteristics.
When investing the Fund's assets, the Manager considers many factors,
including general economic conditions in the U.S. relative to foreign
economies, and the trends in domestic and foreign stock markets. The
Fund may try to hedge against losses in the value of its portfolio of
securities by using hedging strategies described below. When market
conditions are unstable, the Fund may invest substantial amounts of its
assets in debt securities, such as money market instruments or
government securities. Securities selected for defensive purposes may
include debt rated or unrated bonds and debentures, and preferred
stocks, cash or cash equivalents, such as U.S. Treasury Bills and other
short-term obligations of the U.S. government, its agencies or
instrumentalities, or commercial paper rated "A-1" or better by
Standard & Poor's Corporation or "P-1" or better by Moody's Investors
Services, Inc.
The Fund may enter into interest rate swaps. In an interest rate swap,
the Fund and another party exchange their respective commitments to pay
or receive interest on a security, e.g., an exchange of floating rate
payments for fixed rate payments. The Fund will not use interest rate
swaps for leverage. Swap transactions will be entered into only as to
security positions held by the Fund. The Fund may not enter into swap
transactions with respect to more than 25% of its total assets. The
Fund will segregate liquid assets equal to the net excess, if any, of
its obligations over its entitlements under the swap and will mark to
market that amount daily. There is a risk of loss on a swap equal to
the net amount of interest payments that the Fund is contractually
obligated to make. The credit risk of an interest rate swap depends on
the counterparty's ability to perform.
Target Fund
Target Fund invests its assets to seek capital appreciation for
shareholders. Target Fund does not invest to seek current income to
pay to shareholders.
Target Fund seeks its investment objective by emphasizing investment in
common stocks or other equity securities, including convertible
securities, and may hold warrants and rights. These may include
securities of U.S. companies or foreign companies.
Target Fund's investment adviser, Oppenheimer Management Corporation
(the "Manager"), looks for securities that it believes may appreciate
in value. The Fund may invest in companies of any size and
capitalization, and at times the Manager may emphasize investment in
companies in particular ranges of size. However, in general, capital
appreciation possibilities are more likely to be found in the
securities of "growth-type" companies than larger, more established
companies.
Target Fund may also seek to take advantage of changes in the business
cycle by investing in companies that are sensitive to those changes, if
the Manager believes they present opportunities for long-term growth.
For example, when the economy is expanding, companies in the financial
services and consumer products industries may be in a position to
benefit from changes in the business cycle and may present long-term
growth opportunities.
When investing Target Fund's assets, the Manager considers many
factors, including general economic conditions in the U.S. relative to
foreign economies, and the trends in domestic and foreign stock
markets. The Fund may try to hedge against losses in the value of its
portfolio of securities by using hedging strategies described below.
When market conditions are unstable, Target Fund may invest substantial
amounts of its assets in debt securities, such as money market
instruments or government securities. Securities selected for
defensive purposes may include debt securities, such as rated or
unrated bonds and debentures, and preferred stocks, cash or cash
equivalents, such as U.S. Treasury Bills and other short-term
obligations of the U.S. Government, its agencies or instrumentalities,
or commercial paper rated "A-1" or better by Standard & Poor's
Corporation or "P-1" or better by Moody's Investors Service, Inc. The
Fund's portfolio manager may employ special investment techniques in
selecting securities for the Fund.
Growth companies tend to be newer companies that 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.
Special Investment Methods
The Fund and Target Fund each use the special investment methods
summarized below.
Borrowing. The Fund and Target Fund may borrow up to 10% of the value
of their respective total assets from banks on an unsecured basis to
buy securities and invest the borrowed funds, subject to the 300% asset
coverage requirement to the Investment Company Act. This is a
speculative investment method known as "leveraging." Leveraging may
subject an investment in the Fund to greater risks and costs than funds
that do not borrow. These risks may include the possible reduction of
income and increased fluctuation in a fund's net asset value per share,
since the each fund pays interest on borrowings. Borrowing is subject
to regulatory limits.
Short Sales Against-the-Box. The funds may not sell securities short
except in transactions referred to as "short sales against-the-box."
No more than 15% of each funds' respective net assets will be held as
collateral for such short sales at any one time.
Foreign Securities. The Fund and Target Fund may purchase equity (and
debt) securities issued or guaranteed by foreign companies or foreign
governments or their agencies. The funds may buy securities of
companies in any country, developed or underdeveloped. There is no
limit on the amount of each funds' assets that may be invested in
foreign securities, although Target Fund normally does not expect to
have more than 35% of its assets invested in foreign securities.
Foreign currency will be held by each of the funds only in connection
with the purchase or sale of foreign securities. The Fund may write
and purchase both covered and uncovered calls and puts on foreign
currencies. The Fund may also enter into Forward Contracts to protect
against uncertainty in the level of future exchange rates. If the
funds' securities are held abroad, the countries in which they are held
and the sub-custodians holding them must be approved by the Fund's
Board of Trustees.
Foreign securities have special risks. For example, 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 changes in foreign currency rates, 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.
Writing Covered Calls. The Fund and Target Fund may write (that is,
sell) covered call options (calls) to raise cash for liquidity purposes
(for example, to meet redemption requirements) or for defensive
reasons. They may write calls only if certain conditions are met: (1)
after writing any call, not more than 25% of each funds' total assets
may be subject to calls; (2) the calls must be listed on a domestic
securities exchange or quoted on the Automated Quotation System of the
National Association of Securities Dealers, Inc.; and (3) each call
must be "covered" while it is outstanding; that is, the Fund must own
the securities on which the call is written or it must own other
securities that are acceptable for the escrow arrangements required for
calls. If a covered call written by one of the funds is exercised on a
security that has increased in value, that fund will be required to
sell the security at the call price and will not be able to realize any
profit on the security above the call price.
Hedging With Options and Futures Contracts. Each fund may buy and sell
options and futures contracts to try to manage its exposure to
declining prices on its portfolio securities or to establish a position
in the equity securities market as a temporary substitute for
purchasing individual securities. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the
Fund's portfolio against price fluctuations. Other hedging strategies,
such as buying futures and buying call options, tend to increase the
Fund's exposure to the market.
Each of the funds may buy and sell futures contracts only if they
relate to broadly-based stock indices, referred to as "Stock Index
Futures". Each fund may purchase certain kinds of put and call
options, Stock Index Futures (described below), financial futures,
options on Stock Index Futures and on broadly-based stock indices. The
Fund may enter into interest rate swaps, only as to security positions
held by the Fund and not with respect to more than 25% of the Fund's
total assets. These are all referred to as "hedging instruments." The
funds do not use hedging instruments for speculative purposes.
Each fund may purchase put options (puts). Buying a put on an
investment gives the Fund the right to sell the investment to a seller
of a put on that investment at a set price. Each fund can buy only
puts that relate to (1) securities or Stock Index Futures, or (2)
broadly-based stock indices. The Fund can buy a put on a security or
Stock Index Future whether or not the Fund owns the particular security
or Stock Index Future in its portfolio, however, Target Fund may not
purchase puts on securities it does not own. Target Fund may purchase
puts which relate to Stock Index Futures, whether or not it owns the
particular Stock Index Future in its portfolio. The Fund may sell puts
on securities indices or Futures only if such puts are covered by
segregated liquid assets, but may not sell puts if, as a result, more
than 50% of the Fund's net assets would be required to be segregated
liquid assets. The funds may not sell puts other than a put that the
fund previously purchased. Each of the funds may purchase calls only
on securities, broadly-based stock indices or Stock Index Futures, or
to terminate its obligation on a call a fund previously wrote. A call
or put may not be purchased if the value of all of a fund's put and
call options would exceed 5% of a fund's total assets. Each fund may
buy and sell futures contracts only if they relate to broadly-based
stock indices (these are referred to as "Stock Index Futures"). The
funds may purchase and sell puts and calls on foreign currencies that
are traded on a securities or commodities exchange or over-the-counter
market or quoted by major recognized dealers in such options, for the
purpose of protecting against declines in the dollar value of foreign
securities and against increases in the dollar cost of securities to be
acquired. The Fund may write and purchase both covered and uncovered
calls and puts on foreign currencies. The Funds may also enter into
foreign currency exchange contracts ("Forward Contracts") in order to
"lock in" the U.S. dollar price of a security denominated in a foreign
currency which it has purchased or sold but which has not yet settled,
or to protect against a possible loss resulting from an adverse change
in the relationship between the U.S. dollar and a foreign currency.
Illiquid and Restricted Securities. The Fund will not purchase or
otherwise acquire any securities that may be illiquid by virtue of the
absence of a readily-available market or because their disposition
would be subject to legal restrictions ("restricted securities") if, as
a result, more than 10% of the Fund's net assets would be invested in
securities that are illiquid (including repurchase agreements maturing
in more than seven days). This policy does not limit the acquisition
of restricted securities eligible for resale to qualified institutional
buyers pursuant to Rule 144A under the Securities Act that are
determined to be liquid by the Fund's Board of Trustees or by the
Manager under Board-approved guidelines. Such guidelines take into
account, among other factors, trading activity for such securities and
the availability of reliable pricing information. If there is a lack
of trading interest in particular Rule 144A securities, the Fund's
holdings of those securities may be illiquid. There may be undesirable
delays in selling such securities at prices representing their fair
value. Target Fund has an identical policy with respect to investment
in restricted and illiquid securities.
Loans of Portfolio Securities. To attempt to increase income for
liquidity purposes, each fund may lend its portfolio securities (other
than in repurchase transactions) to brokers, dealers and other
financial institutions meeting specified credit conditions if the loan
is collateralized in accordance with applicable regulatory requirements
and if, after any loan, the value of the securities loaned does not
exceed 25% of the value of that fund's net assets. Each fund presently
does not intend that the value of securities loaned in the current
fiscal year will exceed 5% of the value of its total assets.
Repurchase Agreements. Each fund may acquire securities subject to
repurchase agreements to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from
sales of fund shares or settlement of purchases of portfolio
investments. If the vendor fails to pay the agreed-upon resale price
on the delivery date, the fund's risks may include any costs of
disposing of such collateral, and any loss from any delay in
foreclosing on the collateral. Each fund's repurchase agreements will
be fully collateralized. There is no limit on the amount of the fund's
net assets that may be subject to repurchase agreements having a
maturity of seven days or less. Neither fund will enter into a
repurchase agreement which will cause more than 10% of its net assets
to be subject to repurchase agreements having a maturity beyond seven
days.
Warrants and Rights
Each of the funds may invest in warrants, which are the option to
purchase stock at set prices that are valid for a limited period of
time. The fund may invest up to 2% of its total assets in warrants or
rights. Target Fund may invest up to 5% of its total assets. These
restrictions do not include warrants or rights that have been acquired
in units or are attached to other securities. With respect to Target
Fund no more than 2% of its assets may be invested in warrants that are
not listed on the New York or American Stock Exchanges.
Investment Restrictions
Each of the funds and Target Fund has certain investment restrictions
that, together with its investment objectives, are fundamental policies
changeable only by shareholder approval. Set forth below is a summary
of these investment restrictions, which summary is qualified in its
entirety by the investment policies and restrictions of the funds
contained in their respective Prospectuses and Statements of Additional
Information.
The Fund and Target Fund cannot: (1) with respect to the Fund, invest
in securities of a single issuer (except the U.S. Government or its
agencies or instrumentalities) if immediately thereafter either: (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 (with respect to Target Fund, the above-
mentioned restrictions apply on as to 75% of its assets); (2) invest as
to the Fund, more than 25% of its total assets in securities of
companies in any one industry and as to Target Fund, invest more than
25% of its total assets in securities of companies in any one industry;
(3) invest in other open-end investment companies or invest more than
5% of 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; (4) with
respect to the Fund, make short sales of securities except "short sales
against-the-box"; (5) with respect to the Fund, deviate from the
percentage restrictions listed under "Illiquid and Restricted
Securities" and "Writing Covered Calls;" (6) lend money, but the funds
may invest in a portion of a publicly distributed issue of bonds,
debentures, commercial paper, or other similar corporate obligations;
the fund may also make loans of portfolio securities provided the loan
is collateralized in accordance with applicable regulatory requirements
and provided that immediately after any such loan the value of the
securities loaned does not exceed 25% of net assets; (7) 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; (8) invest in or
hold securities of any issuer if those officers, directors and trustees
of the funds or its adviser owning individually more than 0.5% of the
securities of such issuer together own more than 5% of the securities
of such issuer; (9) invest in commodities or commodity contracts;
however, the funds may buy and sell any of the Hedging Instruments it
may use, whether or not such Hedging Instrument is considered to be a
commodity or commodity contract; (10) invest in real estate or
interests in real estate, but may purchase readily marketable
securities of companies holding real estate or interests therein; (11)
purchase securities on margin; however, the Fund may make margin
deposits in connection with any of the Hedging Instruments which it may
use; or (12) mortgage, hypothecate or pledge any of its assets;
however, this does not prohibit the escrow arrangements contemplated by
the writing of covered call options or other collateral or margin
arrangements in connection with any of the Hedging Instruments it may
use; or (13) with respect to Target Fund, invest in interests in oil,
gas or mineral exploration or development programs.
Portfolio Turnover
The Funds may engage frequently in short-term trading to try to achieve
their investment objectives. As a result the portfolio turnover of
each fund might be higher than other mutual funds, although neither
fund expects its portfolio turnover to be more than 100% each year.
High turnover and short-term trading may cause a fund to have
relatively larger commission expenses and transactions costs than funds
that do not engage in short-term trading. If a fund derives 30% or
more of its gross income from the sale of securities held less than
three months, the fund may fail to qualify under the Code as a
regulated investment company and thereupon would lose certain
beneficial tax treatment of its income. The funds each qualified in
their last fiscal year and each intends to qualify in the coming year,
although it reserves the right not to do so.
For the fiscal year ended June 30, 1994, the portfolio turnover rate
for the Fund was 67.7%. For the six months ended December 31, 1994,
the portfolio turnover rate for the Fund was 42.4%. For the fiscal
year ended December 31, 1994, the portfolio turnover rate for Target
Fund with respect to Class A shares was 34.7% and with respect to Class
C shares was 34.7%.
Description of Brokerage Practices
Brokerage practices for the Fund and Target Fund are the same. Subject
to the provisions of the Fund's and Target Fund's respective investment
advisory agreements with the Manager, allocations of brokerage are made
by portfolio managers under the supervision of the Manager's executive
officers. Transactions in securities other than those for which an
exchange is the primary market are generally done with principals or
market makers. Brokerage commissions are paid primarily for effecting
transactions in listed securities and otherwise only if it appears
likely that a better price or execution can be obtained. When the fund
engages in an option transaction, ordinarily the same broker will be
used for the purchase or sale of the option and any transactions in the
securities to which the option relates. When possible, concurrent
orders to purchase or sell the same security by more than one of the
accounts managed by the Manager or it affiliates are combined.
Transactions effected pursuant to such combined orders are averaged as
to price and allocated in accordance with the purchase or sale orders
actually placed for each account. Option commissions may be relatively
higher than those which would apply to direct purchases and sales of
portfolio securities.
The research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager and its
affiliates, and investment research received for the commissions of
those other accounts may be useful both to the fund and one or more of
such other accounts. Such research, which may be supplied by a third
party at the instance of a broker, includes information and analyses on
particular companies and industries as well as market or economic
trends and portfolio strategy, receipt of market quotations for
portfolio evaluations, information systems, computer hardware and
similar products and services. If a research service also assists the
Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making
process may be paid for in commission dollars. The research services
provided by brokers broaden the scope and supplement the research
activities of the Manager, by making available additional views for
consideration and comparisons, and enabling the Manager to obtain
market information for the valuation of securities held in the fund's
portfolio or being considered for purchase. The Board of Trustees,
including the independent Trustees of the Fund and Target Fund (those
Trustees of the Fund and Target 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
agreements described below or the service plans described above),
annually reviews information furnished by the Manager relative to the
commissions paid to brokers furnishing such services in an effort to
ascertain that the amount of such commissions was reasonably related to
the value or the benefit of such services.
During the Fund's fiscal years ended June 30, 1992, 1993 and 1994,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were
$623,069, $923,921 and $1,689,639, respectively. During the fiscal
years ended June 30, 1994, $216,461 was paid to brokers as commissions
in return for research services (including special research,
statistical information and execution); the aggregate dollar amount of
those transactions was $109,841,151. The transactions giving rise to
those commissions were allocated in accordance with the internal
allocation procedures described above.
During Target Fund's fiscal years ended December 31, 1992, 1993 and
1994, total brokerage commissions paid by Target Fund (not including
spreads or concessions on principal transactions on a net trade basis)
were $493,589, $319,608 and $564,504, respectively. During the fiscal
year ended December 31, 1994, $138,285,540 was paid to brokers as
commissions in return for research services (including special
research, statistical information and execution); the aggregate dollar
amount of those transactions was $138,265,540. The transactions giving
rise to those commissions were allocated in accordance with the
Manager's internal allocation procedures.
Expense Ratios and Performance
The ratio of expenses to average net assets for the Fund for the
fiscal year ended June 30, 1994 and the six months ended December 31,
1994 were .94% and 1.29% (annualized), respectively. The ratio of
expenses to average net assets for Class A shares of Target Fund and
for Class C shares of Target Fund for the fiscal year ended December
31, 1994 were 1.16% and 2.18%. Further details are set forth under
"Fund Expenses" and "Financial Highlights" in Target Fund's Prospectus
dated May 1, 1995, which accompanies this Proxy Statement and
Prospectus, and in the Fund's Annual Report as of June 30, 1994 and
Semi-Annual Report as of December 31, 1994, and Target Fund's Annual
Report as of December 31, 1994 which are included in the Additional
Statement. The Fund's average annual total returns for one, five and
ten-year periods ended December 31, 1994 were <12.81>%, 6.92% and
13.18%, respectively. Target Fund's average annual total returns for
the one, five and ten-year periods ended December 31, 1994 for Class A
shares were <5.32>%, 8.46% and 10.49%, respectively. Target Funds
average annual total return for its Class C shares for the one-year
period ended December 31, 1994 was <1.38>% and from inception to
December 31, 1994 was <.60>%.
Shareholder Services
The policies of the Fund and Target Fund with respect to minimum
initial investments and subsequent investments by its shareholders are
the same. Both the Fund and Target Fund offer the following
privileges: (i) Rights of Accumulation, (ii) Letters of Intent, (iii)
reinvestment of dividends and distributions at net asset value, (iv)
net asset value purchases by certain individuals and entities, (v)
Asset Builder (automatic investment) Plans, (vi) Automatic Withdrawal
and Exchange Plans for shareholders who own shares of the fund valued
at $5,000 or more (a shareholder may not combine different classes of
shares in order to qualify for privileges under "Rights of
Accumulation" and "Letter of Intent"), (vii) reinvestment of net
redemption proceeds at net asset value within six months of a
redemption, (viii) AccountLink and PhoneLink arrangements, (ix)
exchanges of shares for shares of certain other funds at net asset
value, and (x) telephone redemption and exchange privileges.
Rights of Shareholders
Shares of the Fund and Class A shares of Target Fund are redeemable at
their net asset value. The shares of each such fund entitle the holder
to one vote per share on the election of trustees and all other matters
submitted to shareholders of the fund. Shares of the Fund and the
Class A shares of Target Fund which Fund shareholders will receive in
the Reorganization participate equally in the fund's dividends and
distributions and in the fund's net assets on liquidation. All shares
of each, when issued, are fully paid and non-assessable (except as to
Target Fund, as described below) and have no preference, preemptive or
conversion rights. It is not contemplated that either the Fund or
Target Fund will hold regular annual meetings of shareholders. Under
the Investment Company Act, shareholders of the Fund do not have rights
of appraisal as a result of the transactions contemplated by the
Reorganization Agreement. However, they have the right at any time
prior to the consummation of such transaction to redeem their shares at
net asset value. Shareholders of the Fund and Target Fund have the
right, under certain circumstances, to remove a Trustee and will be
assisted in communicating with other shareholders for such purpose.
The Fund and Target Fund, organized as Massachusetts Business Trusts,
are governed principally by their Declaration of Trusts and by-laws.
The shareholders of the Fund and Target Fund have certain rights to
call a meeting of shareholders as described in their respective
Statements of Additional Information. Amendments to the Declaration of
Trust require the approval of a "majority" (as defined in the
Investment Company Act) of the fund's shareholders. However, the Board
of Trustees, under the provisions of the Declaration of Trust, have the
power without shareholder approval to divide unissued shares of each of
the funds into two or more classes. With respect to Target Fund, the
Board has done so and Target Fund has two classes of shares, Class A
and Class C. Each class has its own dividends and distributions and
pays certain expenses which may be different. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionately. Only shares
of a particular class vote together on matters that affect that class
alone. Under certain circumstances, shareholders of the fund may be
held personally liable as partners for the fund's obligations, and
under the Declaration of Trust such a shareholder is entitled to
indemnification rights by the fund; the risk of a shareholder incurring
any such loss is limited to the remote circumstances in which the fund
is unable to meet its obligations.
Management and Distribution Arrangements
The Manager, located at Two World Trade Center, New York, New York
10048-0203, acts as the investment adviser for the Fund pursuant to an
investment advisory agreement with the Fund dated October 22, 1990 (the
"Fund Advisory Agreement") and acts as the investment adviser to Target
Fund pursuant to an investment advisory agreement with Target Fund
dated October 22, 1990 ("Target Fund Advisory Agreement"). The funds'
Advisory Agreements were submitted to and approved by the shareholders
of the funds at a meeting held October 1, 1990 because the acquisition
of the Manager by Oppenheimer Acquisition Corporation ("OAC") on
October 22, 1990 terminated the previous investment advisory agreement.
The monthly management fee payable to the Manager by each fund and the
12b-1 service plan fee paid by each fund to the Distributor is set
forth above under "Synopsis - Investment Advisory and Service Plan
Fees." The Fund and Target Fund have each adopted a Service Plan for
their Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with personal service and maintenance of
accounts that hold Class A shares. As of July 1, 1994, Target Fund
shareholders approved an amended Service Plan for Class A shares that
applies to all Class A shares of Target Fund, regardless of the date on
which the shares were purchased. 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 each Fund's Board of Trustees authorizes such
reimbursements, which it has not yet done) for its other expenditures.
Services to be provided include, among others, answering customer
inquiries about each fund, assisting in establishing and maintaining
accounts in each fund, making each fund's investment plans available
and providing other services at the request of a fund or the
Distributor.
Pursuant to the Fund Advisory Agreement and the Target Fund Advisory
Agreement, the Manager supervises the investment operations of the
funds and the composition of their portfolios and furnishes advice and
recommendations with respect to investments, investment policies and
the purchase and sale of securities. The Manager also provides the
Fund and Target Fund with adequate office space, facilities and
equipment and provides, and supervises the activities of, all
administrative and clerical personnel required to provide effective
administration, 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 each fund.
For the fiscal year ended June 30, 1994 and the six months ended
December 31, 1994, the management fees paid by the Fund were $2,848,414
and $1,212,078, respectively. For the fiscal year ended December 31,
1994, the management fees paid by Target Fund was $2,471,942 for its
Class A shares and $3,549 for its Class C shares. The Fund Advisory
Agreement contains no expense limitation. However, independently of
the agreement, the Manager has undertaken that the total expenses of
the Fund in any fiscal year (including the management fee but exclusive
of taxes, interest, brokerage commissions, distribution plan payments
and any extraordinary non-recurring expenses, including litigation)
shall not exceed the most stringent state regulatory limitation on
fund expenses applicable to the Fund. At present, that limitation is
imposed by California and limits expenses (with specified exclusions)
to 2.5% of the first $30 million of average annual net assets, 2% of
the next $70 million and 1.5% of average annual net assets in excess of
$100 million. The Target Fund Advisory Agreement also contains the
foregoing expense limitation. The Manager reserves the right to change
or eliminate the expense limitation at any time and there can be no
assurance as to the duration of the expense limitation.
The Manager is controlled by OAC, a holding company owned in part by
senior management of the Manager and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company that also advises pension plans and investment companies. The
Manager has operated as an investment company adviser since 1959. The
Manager and its affiliates currently advise investment companies with
combined net assets aggregating over $30 billion as of March 31, 1995,
with more than 2.4 million shareholder accounts. OSS, a division of
the Manager, acts as transfer and shareholder servicing agent on an at-
cost basis for the Fund and Target Fund and for certain other open-end
funds managed by the Manager and its affiliates.
The Distributor, a wholly-owned subsidiary of the Manager, acts as
the general distributor of each fund's shares under a General
Distributor's Agreement for each fund dated December 10, 1992. The
General Distributor's Agreement is subject to the same annual renewal
requirements and termination provisions as the investment advisory
agreements. For the fiscal years ended June 30, 1992, 1993 and 1994,
selling charges on the Fund's shares amounted to $990,171, $714,148 and
$629,755, of which the Distributor and an affiliated broker-dealer
retained in the aggregate $246,042, $189,859 and $168,109,
respectively. For the fiscal years ended December 31, 1992, 1993 and
1994, selling charges on Target Fund's Class A shares amounted to
$975,380, $698,109 and $351,806, of which the Distributor and an
affiliated broker-dealer retained, in the aggregate, $421,079, $298,443
and $141,646, respectively. For the period ended December 31, 1994,
contingent deferred sales charges collected by the Distributor on the
redemption of Class C shares amounted to $1,185. Target Fund does not
maintain a fixed dividend rate and there can be no assurance as to the
payment of any dividends or the realization of any capital gains.
The performance graph set forth below depicts the performance of a
hypothetical investment of $10,000 in each class of shares of Target
Fund held until December 31, 1994: in the case of Class A shares, over
a ten year period, and in the case of Class C shares, a one year
period, and from inception of the Class on December 1, 1993, with all
dividends and capital gains distributions reinvested in additional
shares as net asset value on the reinvestment date, without sales
charge. The graph reflects the deduction of the 5.75% maximum initial
sales charge on Class A shares and the 1.0% contingent deferred sales
charge and Class C shares. The graph compares the average annual total
return of Class A shares of Target Fund's shares over that period with
the performance of the Standard & Poor's ("S&P") 500 Index, an
unmanaged index of common stocks widely used as a general measure of
the performance of the U.S. equity securities market. The performance
of the S&P 500 Index includes a factor for the reinvestment of dividend
income but does not reflect reinvestment of capital gains or take into
account sales charges or other initial or ongoing expenses of such
stocks. None of the data below shows the effect of taxes. Fund
shareholders receiving Class
A shares of Target Fund in the Reorganization will not pay a sales
charge on Class A shares of Target Fund.
Comparison of Change
In Value of $10,000
Hypothetical Investment in
Oppenheimer Target Fund
S&P 500 Index
Average Annual Total Return of Target Fund at 12/31/94
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year
<S> <C> <C> <C>
Class A <5.32>% 8.46% 10.49%
1 Year (Life)*
Class C <1.38>% <.60>%
</TABLE>
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer
Fiscal Year Target Fund S&P Target Fund $10,000
(Period Ended) Class A 500 Index Class C Investment
<S> <C> <C> <C> <C>
12/31/84 $ 9,425 $10,627
12/31/85 $12,239 $13,999
12/31/86 $13,252 $16,613
12/31/87 $10,873 $17,485
12/31/88 $14,395 $20,380
12/31/89 $17,030 $26,826
12/31/90 $16,667 $25,992
12/31/91 $23,556 $33,894
12/31/92 $25,974 $36,473
11/30/93 $26,663 $39,661 $10,000 $10,000
12/31/93 $26,994 $40,142 $10,117 $10,121
12/31/94 $27,117 $40,668 $10,066 $10,254
</TABLE>
Past performance is not predictive of future performance.
Purchase of Additional Shares
Shares of the Fund (consisting of Class A shares) and Class A shares
Target Fund are sold at net asset value plus a maximum sales charge of
5.75% of the offering price. The sales charge is reduced for purchases
of either fund's shares of $25,000 or more. On certain purchases of
shares of $1 million or more, a contingent deferred sales charge of 1%
is imposed when such shares are redeemed within 18 months of the end of
the calendar month of their purchase, subject to certain conditions.
Class C shares of Target Fund are sold at net asset value per share
without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred
sales charge of 1.0% will be deducted from the redemption proceeds.
The sales charge on Class A shares of Target Fund will only affect
shareholders of the Fund to the extent that they desire to make
additional purchases of Class A shares of Target Fund in addition to
the shares which they will receive as a result of the Reorganization.
The shares to be issued under the Reorganization Agreement will be
issued by Target Fund at net asset value without a sales charge.
Future dividends and capital gain distributions of Target Fund, if any,
may be reinvested without sales charge into Class A shares. Any Fund
shareholder who is entitled to a reduced sales charge on additional
purchases by reason of a Letter of Intent or Rights of Accumulation
based upon holdings of shares of the Fund will continue to be entitled
to a reduced sales charge on any future purchase of Class A shares of
Target Fund.
METHOD OF CARRYING OUT THE REORGANIZATION
The consummation of the transactions contemplated by the Reorganization
Agreement is contingent upon the approval of the Reorganization by the
shareholders of the Fund and the receipt of the other opinions and
certificates set forth in Sections 10 and 11 of the Reorganization
Agreement and the occurrence of the events described in those Sections.
Under the Reorganization Agreement, all the assets of the Fund,
excluding the Cash Reserve, will be delivered to Target Fund in
exchange for Class A shares of Target Fund. The Cash Reserve to be
retained by the Fund will be sufficient in the discretion of the Board
for the payment of the Fund's liabilities, and the Fund's expenses of
liquidation.
Assuming the shareholders of the Fund approve the Reorganization, the
actual exchange of assets is expected to take place as soon thereafter
as is practicable (the "Closing Date") on the basis of net asset values
as of the close of business on the business day preceding the Closing
Date (the "Valuation Date"). Under the Reorganization Agreement, all
redemptions of shares of the Fund shall be permanently suspended on the
Valuation Date; only redemption requests received in proper form on or
prior to the close of business on that date shall be fulfilled by it;
redemption requests received by the Fund after that date will be
treated as requests for redemptions of the Class A shares of Target
Fund to be distributed to the shareholders requesting redemption. The
exchange of assets for Class A shares will be done on the basis of the
per share net asset value of the Class A shares of Target Fund, and the
value of the assets of the Fund to be transferred as of the close of
business on the Valuation Date, in the manner used by Target Fund in
the valuation of assets. Target Fund is not assuming any of the
liabilities of the Fund, except for portfolio securities purchased
which have not settled and outstanding shareholder redemption and
dividend checks.
The net asset value of the Class A shares transferred by Target Fund to
the Fund will be the same as the value of the net assets received by
Target Fund. For example, if, on the Valuation Date, the Fund were to
have securities with a market value of $95,000 and cash in the amount
of $10,000 (of which $5,000 was to be retained by it as the Cash
Reserve), the value of the assets which would be transferred to Target
Fund would be $100,000. If the net asset value per share of Target
Fund were $10 per share at the close of business on the Valuation Date,
the number of shares to be issued would be 10,000 ($100,000 divided by $10).
These 10,000 shares of Target Fund would be distributed to the former
shareholders of the Fund. This example is given for illustration
purposes only and does not bear any relationship to the dollar amounts
or shares expected to be involved in the Reorganization.
After the Closing Date, the Fund will distribute on a pro rata basis to
its shareholders of record on the Valuation Date the Class A shares of
Target Fund received by the Fund at the closing, in liquidation of the
outstanding shares of the Fund, and the outstanding shares of the Fund
will be cancelled. To assist the Fund in this distribution, Target
Fund will, in accordance with a shareholder list supplied by the Fund,
cause its transfer agent to credit and confirm an appropriate number of
shares of Target Fund to each shareholder of the Fund. Certificates
for shares of Target Fund will be issued upon written request of a
former shareholder of the Fund but only for whole shares with
fractional shares credited to the name of the shareholder on the books
of Target Fund. Former shareholders of the Fund who wish certificates
representing their shares of Target Fund must, after receipt of their
confirmations, make a written request to OSS, P.O. Box 5270, Denver,
Colorado 80217. Shareholders of the Fund holding certificates
representing their shares will not be required to surrender their
certificates to anyone in connection with the Reorganization. After
the Reorganization, however, it will be necessary for such shareholders
to surrender such certificates in order to redeem, transfer or exchange
any shares of Target Fund.
Under the Reorganization Agreement, within one year after the Closing
Date, the Fund shall: (a) either pay or make provision for all of its
debts and taxes; and (b) either (i) transfer any remaining amount of
the Cash Reserve to Target Fund, if such remaining amount is not
material (as defined below) or (ii) distribute such remaining amount to
the shareholders of the Fund who were such on the Valuation Date. Such
remaining amount shall be deemed to be material if the amount to be
distributed, after deducting the estimated expenses of the
distribution, equals or exceeds one cent per share of the number of
Fund shares outstanding on the Valuation Date. Within one year after
the Closing Date, the Fund will complete its liquidation.
Under the Reorganization Agreement, either the Fund or Target Fund may
abandon and terminate the Reorganization Agreement without liability if
the other party breaches any material provision of the Reorganization
Agreement or, if prior to the closing, any legal, administrative or
other proceeding shall be instituted or threatened (i) seeking to
restrain or otherwise prohibit the transactions contemplated by the
Reorganization Agreement and/or (ii) asserting a material liability of
either party, which proceeding or liability has not been terminated or
the threat thereto removed prior to the Closing Date.
In the event that the Reorganization Agreement is not consummated for
any reason, the Board will consider and may submit to the shareholders
other alternatives.
MISCELLANEOUS
Financial Information
The Reorganization will be accounted for by the surviving fund in its
financial statements similar to a pooling without restatement. Further
financial information as to the Fund is contained in its current
Prospectus, which is available without charge from OSS, P.O. Box 5270,
Denver, Colorado 80217, and is incorporated herein, and in its audited
financial statements as of June 30, 1994 and unaudited financial
statements (semi-annual) as of December 31, 1994, which are included in
the Additional Statement. Financial information for Target Fund is
contained in its current Prospectus accompanying this Proxy Statement
and Prospectus and incorporated herein, and in its audited financial
statements as of December 31, 1994, which are included in the
Additional Statement.
Public Information
Additional information about the Fund and Target Fund is available, as
applicable, in the following documents which are incorporated herein
by reference: (i) Target Fund's Prospectus dated May 1, 1995,
accompanying this Proxy Statement and Prospectus and incorporated
herein; (ii) the Fund's Prospectus dated October 21, 1994, supplemented
April 13, 1995, which may be obtained without charge by writing to OSS,
P.O. Box 5270, Denver, Colorado 80217; (iii) Target Fund's Annual
Report as of December 31, 1994, which may be obtained without charge by
writing to OSS at the address indicated above; and (iv) the Fund's
Annual Report as of June 30, 1994 and Semi-Annual Report as of December
31, 1994, which may be obtained without charge by writing to OSS at the
address indicated above. All of the foregoing documents may be
obtained by calling the toll-free number on the cover of this Proxy
Statement and Prospectus.
Additional information about the following matters is contained in
the Statement of Additional Information, which incorporates by
reference the Target Fund Additional Statement, and the Fund's
Prospectus dated October 21, 1994, supplemented January 3, 1995 and
Statement of Additional Information dated October 21, 1994: the
organization and operation of Target Fund and the Fund; more
information on investment policies, practices and risks; information
about the Fund's and Target Fund's respective Boards of Trustees and
their responsibilities; a further description of the services provided
by Target Fund's and the Fund's investment adviser, distributor, and
transfer and shareholder servicing agent; dividend policies; tax
matters; an explanation of the method of determining the offering price
of the shares of Target Fund and the Fund; purchase, redemption and
exchange programs; and distribution arrangements.
The Fund and Target Fund are subject to the informational requirements
of the Securities Exchange Act of 1934, as amended, and in accordance
therewith, file reports and other information with the SEC. Proxy
material, reports and other information about the Fund and Target Fund
which are of public record can be inspected and copied at public
reference facilities maintained by the SEC in Washington, D.C. and
certain of its regional offices, and copies of such materials can be
obtained at prescribed rates from the Public Reference Branch, Office
of Consumer Affairs and Information Services, SEC, Washington, D.C.
20549.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters
not known at the time of the solicitation may come before the Meeting,
the proxy as solicited confers discretionary authority with respect to
such matters as properly come before the Meeting, including any
adjournment or adjournments thereof, and it is the intention of the
persons named as attorneys-in-fact in the proxy to vote this proxy in
accordance with their judgment on such matters.
By Order of the Board of Directors
Andrew J. Donohue, Secretary
______________, 1995 320
<PAGE>
Annex A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
March __, 1995 by and between Oppenheimer Time Fund (the "Fund"), a
Massachusetts business trust, and Oppenheimer Target Fund ("Target
Fund"), a Massachusetts business trust.
W I T N E S S E T H:
WHEREAS, the parties are each open-end investment companies of the
management type; and
WHEREAS, the parties hereto desire to provide for the
reorganization pursuant to Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"), of the Fund through the
acquisition by Target Fund of substantially all of the assets of the
Fund in exchange for the Class A voting shares of beneficial interest
("shares") of Target Fund and the assumption by Target Fund of certain
liabilities of the Fund, which shares of Target Fund are thereafter to
be distributed by the Fund pro rata to its shareholders in complete
liquidation of the Fund and complete cancellation of its shares;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. The parties hereto hereby adopt a Plan of Reorganization
pursuant to Section 368(a)(1) of the Code as follows: The
reorganization will be comprised of the acquisition by Target Fund of
substantially all of the properties and assets of the Fund in exchange
for shares of Target Fund and the assumption by Target Fund of certain
liabilities of the Fund, followed by the distribution of such Target
Fund shares to the shareholders of the Fund in exchange for their
shares of the Fund, all upon and subject to the terms of the Agreement
hereinafter set forth.
The share transfer books of the Fund will be permanently closed at
the close of business on the Valuation Date (as hereinafter defined)
and only redemption requests received in proper form on or prior to the
close of business on the Valuation Date shall be fulfilled by the Fund;
redemption requests received by the Fund after that date shall be
treated as requests for the redemption of the shares of Target Fund to
be distributed to the shareholder in question as provided in Section 5.
2. On the Closing Date (as hereinafter defined), all of the assets
of the Fund on that date, excluding a cash reserve (the "Cash Reserve")
to be retained by the Fund sufficient in its discretion for the payment
of the expenses of the Fund's dissolution and its liabilities, but not
in excess of the amount contemplated by Section 10E, shall be delivered
as provided in Section 8 to Target Fund, in exchange for and against
delivery to the Fund on the Closing Date of a number of shares of
Target Fund having an aggregate net asset value equal to the value of
the assets of the Fund so transferred and delivered.
3. The net asset value of the shares of Target Fund and the value
of the assets of the Fund to be transferred shall in each case be
determined as of the close of business of the New York Stock Exchange
on the Valuation Date. The computation of the net asset value of the
Class A shares of Target Fund and the Fund shall be done in the manner
used by Target Fund and the Fund, respectively, in the computation of
such net asset value per share as set forth in their respective
prospectuses. The methods used by Target Fund in such computation
shall be applied to the valuation of the assets of the Fund to be
transferred to Target Fund.
The Fund shall declare and pay, immediately prior to the Valuation
Date, a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the Fund's
shareholders all of the Fund's investment company taxable income for
taxable years ending on or prior to the Closing Date (computed without
regard to any dividends paid) and all of its net capital gain, if any,
realized in taxable years ending on or prior to the Closing Date (after
reduction for any capital loss carry-forward).
4. The closing (the "Closing") shall be at the office of
Oppenheimer Management Corporation (the "Agent"), Two World Trade
Center, Suite 3400, New York, New York 10048, at 4:00 P.M. New York
time on _______________, 1995, or at such other time or place as the
parties may designate or as provided below (the "Closing Date"). The
business day preceding the Closing Date is herein referred to as the
"Valuation Date."
In the event that on the Valuation Date either party has, pursuant
to the Investment Company Act of 1940, as amended (the "Act"), or any
rule, regulation or order thereunder, suspended the redemption of its
shares or postponed payment therefor, the Closing Date shall be
postponed until the first business day after the date when both parties
have ceased such suspension or postponement; provided, however, that if
such suspension shall continue for a period of 60 days beyond the
Valuation Date, then the other party to the Agreement shall be
permitted to terminate the Agreement without liability to either party
for such termination.
5. As soon as practicable after the Closing, the Fund shall
distribute on a pro rata basis to the shareholders of the Fund on the
Valuation Date the shares of Target Fund received by the Fund on the
Closing Date in exchange for the assets of the Fund in complete
liquidation of the Fund; for the purpose of the distribution by the
Fund of such shares of Target Fund to its shareholders, Target Fund
will promptly cause its transfer agent to: (a) credit an appropriate
number of shares of Target Fund on the books of Target Fund to each
shareholder of the Fund in accordance with a list (the "Shareholder
List") of its shareholders received from the Fund; and (b) confirm an
appropriate number of shares of Target Fund to each shareholder of the
Fund; certificates for shares of Target Fund will be issued upon
written request of a former shareholder of the Fund but only for whole
shares with fractional shares credited to the name of the shareholder
on the books of Target Fund.
The Shareholder List shall indicate, as of the close of business on
the Valuation Date, the name and address of each shareholder of the
Fund, indicating his or her share balance. The Fund agrees to supply
the Shareholder List to Target Fund not later than the Closing Date.
Shareholders of the Fund holding certificates representing their shares
shall not be required to surrender their certificates to anyone in
connection with the reorganization. After the Closing Date, however,
it will be necessary for such shareholders to surrender their
certificates in order to redeem, transfer or pledge the Class A shares
of Target Fund which they received.
6. Within one year after the Closing Date, the Fund shall (a)
either pay or make provision for payment of all of its liabilities and
taxes, and (b) either (i) transfer any remaining amount of the Cash
Reserve to Target Fund, if such remaining amount (as reduced by the
estimated cost of distributing it to shareholders) is not material (as
defined below) or (ii) distribute such remaining amount to the
shareholders of the Fund on the Valuation Date. Such remaining amount
shall be deemed to be material if the amount to be distributed, after
deduction of the estimated expenses of the distribution, equals or
exceeds one cent per share of the Fund outstanding on the Valuation
Date.
7. Prior to the Closing Date, there shall be coordination between
the parties as to their respective portfolios so that, after the
closing, Target Fund will be in compliance with all of its investment
policies and restrictions. At the Closing, the Fund shall deliver to
Target Fund two copies of a list setting forth the securities then
owned by the Fund. Promptly after the Closing, the Fund shall provide
Target Fund a list setting forth the respective federal income tax
bases thereof.
8. Portfolio securities or written evidence acceptable to Target
Fund of record ownership thereof by The Depository Trust Company or
through the Federal Reserve Book Entry System or any other depository
approved by the Fund pursuant to Rule 17f-4 under the Act shall be
endorsed and delivered, or transferred by appropriate transfer or
assignment documents, by the Fund on the Closing Date to Target Fund,
or at its direction, to its custodian bank, in proper form for transfer
in such condition as to constitute good delivery thereof in accordance
with the custom of brokers and shall be accompanied by all necessary
state transfer stamps, if any. The cash delivered shall be in the form
of certified or bank cashiers' checks or by bank wire or intra-bank
transfer payable to the order of Target Fund for the account of Target
Fund. Class A shares of Target Fund representing the number of Class A
shares of Target Fund being delivered against the assets of the Fund,
registered in the name of the Fund, shall be transferred to the Fund on
the Closing Date. Such shares shall thereupon be assigned by the Fund
to its shareholders so that the shares of Target Fund may be
distributed as provided in Section 5.
If, at the Closing Date, the Fund is unable to make delivery under
this Section 8 to Target Fund of any of its portfolio securities or
cash for the reason that any of such securities purchased by the Fund,
or the cash proceeds of a sale of portfolio securities, prior to the
Closing Date have not yet been delivered to it or the Fund's custodian,
then the delivery requirements of this Section 8 with respect to said
undelivered securities or cash will be waived and the Fund will deliver
to Target Fund by or on the Closing Date and with respect to said
undelivered securities or cash executed copies of an agreement or
agreements of assignment in a form reasonably satisfactory to Target
Fund, together with such other documents, including a due bill or due
bills and brokers' confirmation slips as may reasonably be required by
Target Fund.
9. Target Fund shall not assume the liabilities (except for
portfolio securities purchased which have not settled and for
shareholder redemption and dividend checks outstanding) of the Fund,
but the Fund will, nevertheless, use its best efforts to discharge all
known liabilities, so far as may be possible, prior to the Closing
Date. The cost of printing and mailing the proxies and proxy
statements will be borne by the Fund. The Fund and Target Fund will
bear the cost of their respective tax opinion. Any documents such as
existing prospectuses or annual reports that are included in that
mailing will be a cost of the fund issuing the document. Any other
out-of-pocket expenses of Target Fund and the Fund associated with this
reorganization, including legal, accounting and transfer agent
expenses, will be borne by the Fund and Target Fund, respectively, in
the amounts so incurred by each.
10. The obligations of Target Fund hereunder shall be subject to
the following conditions:
A. The Board of Trustees of the Fund shall have authorized the
execution of the Agreement, and the shareholders of the Fund shall have
approved the Agreement and the transactions contemplated hereby, and
the Fund shall have furnished to Target Fund copies of resolutions to
that effect certified by the Secretary or an Assistant Secretary of the
Fund; such shareholder approval shall have been by the affirmative vote
of "a majority of the outstanding voting securities" (as defined in the
Act) of the Fund at a meeting for which proxies have been solicited by
the Proxy Statement and Prospectus (as hereinafter defined).
B. Target Fund shall have received an opinion dated the Closing
Date of counsel to the Fund, to the effect that (i) the Fund is a
business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with full powers to
carry on its business as then being conducted and to enter into and
perform the Agreement; and (ii) that all action necessary to make the
Agreement, according to its terms, valid, binding and enforceable on
the Fund and to authorize effectively the transactions contemplated by
the Agreement have been taken by the Fund.
C. The representations and warranties of the Fund contained
herein shall be true and correct at and as of the Closing Date, and
Target Fund shall have been furnished with a certificate of the
President, or a Vice President, or the Secretary or the Assistant
Secretary or the Treasurer of the Fund, dated the Closing Date, to that
effect.
D. On the Closing Date, the Fund shall have furnished to Target
Fund a certificate of the Treasurer or Assistant Treasurer of the Fund
as to the amount of the capital loss carry-over and net unrealized
appreciation or depreciation, if any, with respect to the Fund as of
the Closing Date.
E. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Fund at the close
of business on the Valuation Date.
F. A Registration Statement on Form N-14 filed by Target
Fund under the Securities Act of 1933, as amended (the "1933 Act"),
containing a preliminary form of the Proxy Statement and Prospectus,
shall have become effective under the 1933 Act not later than May 15,
1995.
G. On the Closing Date, Target Fund shall have received a letter
of Andrew J. Donohue or other senior executive officer of Oppenheimer
Management Corporation acceptable to Target Fund, stating that nothing
has come to his or her attention which in his or her judgment would
indicate that as of the Closing Date there were any material actual or
contingent liabilities of the Fund arising out of litigation brought
against the Fund or claims asserted against it, or pending or to the
best of his or her knowledge threatened claims or litigation not
reflected in or apparent from the most recent audited financial
statements and footnotes thereto of the Fund delivered to Target Fund.
Such letter may also include such additional statements relating to
the scope of the review conducted by such person and his or her
responsibilities and liabilities as are not unreasonable under the
circumstances.
H. Target Fund shall have received an opinion, dated the Closing
Date, of KPMG Peat Marwick LLP, to the same effect as the opinion
contemplated by Section 11.E. of the Agreement.
I. Target Fund shall have received at the closing all of the
assets of the Fund to be conveyed hereunder, which assets shall be free
and clear of all liens, encumbrances, security interests, restrictions
and limitations whatsoever.
11. The obligations of the Fund hereunder shall be subject to the
following conditions:
A. The Board of Trustees of Target Fund shall have authorized the
execution of the Agreement, and the transactions contemplated hereby,
and Target Fund shall have furnished to the Fund copies of resolutions
to that effect certified by the Secretary or an Assistant Secretary of
Target Fund.
B. The Fund's shareholders shall have approved the Agreement and
the transactions contemplated hereby, by an affirmative vote of "a
majority of the outstanding voting securities" (as defined in the Act)
of the Fund, and the Fund shall have furnished Target Fund copies of
resolutions to that effect certified by the Secretary or an Assistant
Secretary of the Fund.
C. The Fund shall have received an opinion dated the Closing Date
of counsel to Target Fund, to the effect that (i) Target Fund is a
business trust duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts with full powers to
carry on its business as then being conducted and to enter into and
perform the Agreement; (ii) all action necessary to make the Agreement,
according to its terms, valid, binding and enforceable upon Target Fund
and to authorize effectively the transactions contemplated by the
Agreement have been taken by Target Fund, and (iii) the Class A shares
of Target Fund to be issued hereunder are duly authorized and when
issued will be validly issued, fully-paid and non-assessable, except as
set forth in Target Fund's then current Prospectus and Statement of
Additional Information.
D. The representations and warranties of Target Fund contained
herein shall be true and correct at and as of the Closing Date, and the
Fund shall have been furnished with a certificate of the President, a
Vice President or the Secretary or an Assistant Secretary or the
Treasurer of Target Fund to that effect dated the Closing Date.
E. The Fund shall have received an opinion of KPMG Peat Marwick
LLP to the effect that the Federal tax consequences of the transaction,
if carried out in the manner outlined in this Plan of Reorganization
and in accordance with (i) the Fund's representation that there is no
plan or intention by any Fund shareholder who owns 5% or more of the
Fund's outstanding shares, and, to the Fund's best knowledge, there is
no plan or intention on the part of the remaining Fund shareholders, to
redeem, sell, exchange or otherwise dispose of a number of Target Fund
shares received in the transaction that would reduce the Fund
shareholders' ownership of Target Fund shares to a number of shares
having a value, as of the Closing Date, of less than 50% of the value
of all of the formerly outstanding Fund shares as of the same date,
(ii) the representation by each of the Fund and Target Fund that, as of
the Closing Date, the Fund and Target Fund will qualify as regulated
investment companies or will meet the diversification test of Section
368(a)(2)(F)(ii) of the Code, and (iii) the other representations by
each of the Fund and Target Fund made to KPMG Peat Marwick LLP and set
forth in the opinion will generally be as follows:
1. The transactions contemplated by the Agreement will qualify as
a tax-free "reorganization" within the meaning of Section 368(a)(1) of
the Code, and under the regulations promulgated thereunder.
2. The Fund and Target Fund will each qualify as a "party to a
reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of the
Fund upon the distribution of Class A shares of beneficial interest in
Target Fund to the shareholders of the Fund pursuant to Section 354 of
the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by the Fund by reason of the transfer of substantially all
its assets in exchange for Class A shares of Target Fund.
5. Under Section 1032 of the Code no gain or loss will be
recognized by Target Fund by reason of the transfer of substantially
all the Fund's assets in exchange for shares of Target Fund and Target
Fund's assumption of certain liabilities of the Fund.
6. The shareholders of the Fund will have the same tax basis and
holding period for the Class A shares of beneficial interest in Target
Fund that they receive as they had for the Fund shares that they
previously held, pursuant to Section 358(a) and 1223(1), respectively,
of the Code.
7. The securities transferred by the Fund to Target Fund will
have the same tax basis and holding period in the hands of Target Fund
as they had for the Fund, pursuant to Section 362(b) and 1223(1),
respectively, of the Code.
F. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Fund at the close
of business on the Valuation Date.
G. A Registration Statement on Form N-14 filed by Target Fund
under the 1933 Act, containing a preliminary form of the Proxy
Statement and Prospectus, shall have become effective under the 1933
Act not later than _______________, 1995.
H. On the Closing Date, the Fund shall have received a letter of
Andrew J. Donohue or other senior executive officer of Oppenheimer
Management Corporation acceptable to the Fund, stating that nothing has
come to his or her attention which in his or her judgment would
indicate that as of the Closing Date there were any material actual or
contingent liabilities of Target Fund arising out of litigation brought
against Target Fund or claims asserted against it, or pending or, to
the best of his or her knowledge, threatened claims or litigation not
reflected in or apparent by the most recent audited financial
statements and footnotes thereto of Target Fund delivered to the Fund.
Such letter may also include such additional statements relating to the
scope of the review conducted by such person and his or her
responsibilities and liabilities as are not unreasonable under the
circumstances.
I. The Fund shall acknowledge receipt of the Class A shares of
Target Fund.
12. The Fund hereby represents and warrants that:
A. The financial statements of the Fund as at June 30, 1994 and
December 31, 1994 heretofore furnished to Target Fund, present fairly
the financial position, results of operations, and changes in net
assets of the Fund as of that date, in conformity with generally
accepted accounting principles applied on a basis consistent with the
preceding year; and that from June 30, 1994 through the date hereof
there has not been, and through the Closing Date there will not be, any
material adverse change in the business or financial condition of the
Fund, it being agreed that a decrease in the size of the Fund due to a
diminution in the value of its portfolio and/or redemption of its
shares shall not be considered a material adverse change;
B. Contingent upon approval of the Agreement and the transactions
contemplated hereby by the Fund's shareholders, the Fund has authority
to transfer all of the assets of the Fund to be conveyed hereunder free
and clear of all liens, encumbrances, security interests, restrictions
and limitations whatsoever;
C. The Prospectus, as amended and supplemented, contained in the
Fund's Registration Statement under the 1933 Act, as amended, is true,
correct and complete, conforms to the requirements of the 1933 Act and
does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Registration
Statement, as amended, was, as of the date of the filing of the last
Post-Effective Amendment, true, correct and complete, conformed to the
requirements of the 1933 Act and did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
D. There is no material contingent liability of the Fund and no
material claim and no material legal, administrative or other
proceedings pending or, to the knowledge of the Fund, threatened
against the Fund, not reflected in such Prospectus;
E. There are no material contracts outstanding to which the Fund
is a party other than those ordinary in the conduct of its business;
F. The Fund is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of
Massachusetts; and has all necessary and material Federal and state
authorizations to own all of its assets and to carry on its business as
now being conducted; and the Fund is duly registered under the Act and
such registration has not been rescinded or revoked and is in full
force and effect;
G. All Federal and other tax returns and reports of the Fund
required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the
knowledge of the Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the
extent such tax returns with respect to the taxable year of the Fund
ended June 30, 1994 have not been filed, such returns will be filed
when required and the amount of tax shown as due thereon shall be paid
when due; and
H. The Fund has elected to be treated as a regulated investment
company and, for each fiscal year of its operations, the Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and the Fund intends to
meet such requirements with respect to its current taxable year.
13. Target Fund hereby represents and warrants that:
A. The financial statements of Target Fund as at December 31,
1994 heretofore furnished to the Fund, present fairly the financial
position, results of operations, and changes in net assets of Target
Fund, as of that date, in conformity with generally accepted accounting
principles applied on a basis consistent with the preceding year; and
that from December 31, 1994 through the date hereof there has not been,
and through the Closing Date there will not be, any material adverse
change in the business or financial condition of Target Fund, it being
understood that a decrease in the size of Target Fund due to a
diminution in the value of its portfolio and/or redemption of its
shares shall not be considered a material or adverse change;
B. The Prospectus, as amended and supplemented, contained in
Target Fund's Registration Statement under the 1933 Act, is true,
correct and complete, conforms to the requirements of the 1933 Act and
does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Registration
Statement, as amended, was, as of the date of the filing of the last
Post-Effective Amendment, true, correct and complete, conformed to the
requirements of the 1933 Act and did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
C. There is no material contingent liability of Target Fund and
no material claim and no material legal, administrative or other
proceedings pending or, to the knowledge of Target Fund, threatened
against Target Fund, not reflected in such Prospectus;
D. There are no material contracts outstanding to which Target
Fund is a party other than those ordinary in the conduct of its
business;
E. Target Fund is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts; has all necessary and material Federal and state
authorizations to own all its properties and assets and to carry on its
business as now being conducted; the shares of Target Fund which it
issues to the Fund pursuant to the Agreement will be duly authorized,
validly issued, fully-paid and non-assessable, except as otherwise set
forth in Target Fund's Registration Statement; and will conform to the
description thereof contained in Target Fund's Registration Statement,
will be duly registered under the 1933 Act and in the states where
registration is required; and Target Fund is duly registered under the
Act and such registration has not been revoked or rescinded and is in
full force and effect;
F. All Federal and other tax returns and reports of Target Fund
required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the
knowledge of Target Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the
extent such tax returns with respect to the taxable year of Target Fund
ended December 31, 1994 have not been filed, such returns will be filed
when required and the amount of tax shown as due thereon shall be paid
when due;
G. Target Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its operations, Target
Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company and
Target Fund intends to meet such requirements with respect to its
current taxable year;
H. Target Fund has no plan or intention (i) to dispose of any of
the assets transferred by the Fund, other than in the ordinary course
of business, or (ii) to redeem or reacquire any of the shares issued by
it in the reorganization other than pursuant to valid requests of
shareholders; and
I. After consummation of the transactions contemplated by the
Agreement, Target Fund intends to operate its business in a
substantially unchanged manner.
14. Each party hereby represents to the other that no broker or
finder has been employed by it with respect to the Agreement or the
transactions contemplated hereby. Each party also represents and
warrants to the other that the information concerning it in the Proxy
Statement and Prospectus will not as of its date contain any untrue
statement of a material fact or omit to state a fact necessary to make
the statements concerning it therein not misleading and that the
financial statements concerning it will present the information shown
fairly in accordance with generally accepted accounting principles
applied on a basis consistent with the preceding year. Each party also
represents and warrants to the other that the Agreement is valid,
binding and enforceable in accordance with its terms and that the
execution, delivery and performance of the Agreement will not result in
any violation of, or be in conflict with, any provision of any charter,
by-laws, contract, agreement, judgment, decree or order to which it is
subject or to which it is a party. Target Fund hereby represents to
and covenants with the Fund that, if the reorganization becomes
effective, Target Fund will treat each shareholder of the Fund who
received any of Target Fund's shares as a result of the reorganization
as having made the minimum initial purchase of shares of Target Fund
received by such shareholder for the purpose of making additional
investments in shares of Target Fund, regardless of the value of the
shares of Target Fund received.
15. Target Fund agrees that it will prepare and file a Registration
Statement on Form N-14 under the 1933 Act which shall contain a
preliminary form of proxy statement and prospectus contemplated by Rule
145 under the 1933 Act. The final form of such proxy statement and
prospectus is referred to in the Agreement as the "Proxy Statement and
Prospectus." Each party agrees that it will use its best efforts to
have such Registration Statement declared effective and to supply such
information concerning itself for inclusion in the Proxy Statement and
Prospectus as may be necessary or desirable in this connection. Target
Fund covenants and agrees to deregister as an investment company under
the Investment Company Act of 1940, as amended, as soon as practicable
and, thereafter, to cause the cancellation of its outstanding shares.
16. The obligations of the parties under the Agreement shall be
subject to the right of either party to abandon and terminate the
Agreement without liability if the other party breaches any material
provision of the Agreement or if any material legal, administrative or
other proceeding shall be instituted or threatened between the date of
the Agreement and the Closing Date (i) seeking to restrain or
otherwise prohibit the transactions contemplated hereby and/or (ii)
asserting a material liability of either party, which proceeding has
not been terminated or the threat thereof removed prior to the Closing
Date.
17. The Agreement may be executed in counterpart, each of which
shall be deemed an original, but taken together shall constitute one
Agreement. The rights and obligations of each party pursuant to the
Agreement shall not be assignable.
18. All prior or contemporaneous agreements and representations are
merged into the Agreement, which constitutes the entire contract
between the parties hereto. No amendment or modification hereof shall
be of any force and effect unless in writing and signed by the parties
and no party shall be deemed to have waived any provision herein for
its benefit unless it executes a written acknowledgement of such
waiver.
19. The Fund understands that the obligations of Target Fund under
the Agreement are not binding upon any Trustee or shareholder of Target
Fund personally, but bind only Target Fund and Target Fund's property.
The Fund represents that it has notice of the provisions of the
Declaration of Trust of Target Fund disclaiming shareholder and Trustee
liability for acts or obligations of Target Fund.
20. Target Fund understands that the obligations of the Fund under
the Agreement are not binding upon any Trustee or shareholder of the
Fund personally, but bind only the Fund and the Fund's property.
Target Fund represents that it has notice of the provisions of the
Declaration of Trust of the Fund disclaiming shareholder and Trustee
liability for acts or obligations of the Fund.
IN WITNESS WHEREOF, each of the parties has caused the Agreement to
be executed and attested by its officers thereunto duly authorized on
the date first set forth above.
Attest: OPPENHEIMER TIME FUND
______________________________ By:_______________________
Robert G. Zack Andrew J. Donohue
Assistant Secretary Secretary
Attest: OPPENHEIMER TARGET FUND
______________________________ By:________________________
Robert G. Zack Andrew J. Donohue
Assistant Secretary Secretary
<PAGE>
OPPENHEIMER TIME FUND
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD JUNE 20, 1995
The undersigned shareholder of Oppenheimer Time Fund (the "Fund"),
does hereby appoint George C. Bowen, Robert Bishop, Scott Farrar and
Andrew J. Donohue, and each of them, as attorneys-in-fact and proxies of the
undersigned, with full power of substitution, to attend the Special
Meeting of Shareholders of the Fund to be held on _______________,
1995, at 3410 South Galena Street, Denver, Colorado 80231 at 10:00
A.M., Denver time, and at all adjournments thereof, and to vote the
shares held in the name of the undersigned on the record date for said
meeting on the Proposal specified on the reverse side. Said attorneys-
in-fact shall vote in accordance with their best judgment as to any
other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHO RECOMMENDS A
VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization between the
Fund and Oppenheimer Target Fund, and the transactions
contemplated thereby, including the transfer of substantially all
the assets of the Fund in exchange for Class A shares of
Oppenheimer Target Fund, the distribution of such shares to the
shareholders of the Fund in complete liquidation of the Fund, the
deregistration of the Fund as an investment company under the
Investment Company Act of 1940, as amended, and the cancellation
of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give his or her title.
250
<PAGE>
OPPENHEIMER TARGET FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PART B
STATEMENT OF ADDITIONAL INFORMATION
May 15, 1995
___________________________________
This Statement of Additional Information of Oppenheimer Target
Fund consists of this cover page and the following documents:
1. Target Fund's Statement of Additional Information dated May 1,
1995, which has been previously filed and is incorporated herein by
reference.
2. Target Fund's Annual Report as of December 31, 1994, which has been
previously filed with the Registration Statement originally filed on
April 13, 1995, and is incorporated herein by reference.
3. Prospectus of Oppenheimer Time Fund dated October 21, 1994,
supplemented January 3, 1995, which has been previously filed with the
Registration Statement originally filed on April 13, 1995, and is
incorporated herein by reference.
4. Statement of Additional Information of Time Fund dated October 21,
1994, supplemented April 13, 1995, which has been previously filed with
the Registration Statement originally filed on April 13, 1995, and is
incorporated herein by reference.
5. Time Fund's Annual Report as of June 30, 1994, which has been
previously filed with the Registration Statement originally filed on
April 13, 1995, and is incorporated herein by reference.
6. Time Fund's Semi-Annual Report as of December 31, 1994, which has
been previously filed with the Registration Statement originally filed
on April 13, 1995, and is incorporated herein by reference.
7. Pro Forma Financial Statements which has been previously filed with
the Registration Statement originally filed on April 13, 1995, and
incorporated herein by reference.
This Statement of Additional Information is not a Prospectus.
This Statement of Additional Information should be read in conjunction
with the Proxy Statement and Prospectus, which may be obtained by
written request to Oppenheimer Shareholder Services ("OSS"), P.O. Box
5270, Denver, Colorado 80217, or by calling OSS at the toll-free number
shown above.
<PAGE>
O P P E N H E I M E R
Target Fund
Prospectus dated May 1, 1995
Oppenheimer Target Fund is a mutual fund that seeks capital
appreciation as its investment objective. The Fund emphasizes
investment in securities of "growth-type" companies, and cyclical
industries that the Fund's investment manager believes have
opportunities for capital growth. The Fund does not invest to earn
current income to distribute to shareholders.
The Fund invests mainly in common stocks, preferred stocks, and
convertible securities. The Fund also uses "hedging" instruments, to
seek to reduce the risks of market fluctuations that affect the value
of the securities the Fund holds.
Some investment techniques the Fund uses may be considered to be
speculative investment methods that may increase the risks of investing
in the Fund and may also increase the Fund's operating costs. You
should carefully review the risks associated with an investment in the
Fund. Please refer to "Investment Policies and Strategies" for more
information about the types of securities the Fund invests in and the
risks of investing in the Fund.
The Fund offers two classes of shares: (1) Class A shares, which
are sold at a public offering price that includes a front-end sales
charge, and (2) Class C shares, which are sold without a front-end
sales charge, although you may pay a sales charge when you redeem your
shares, depending on how long you hold them. A contingent deferred
sales charge is imposed on most Class C shares redeemed within 12
months of purchase. Class C shares are also subject to an annual
"asset-based sales charge." Each class of shares bears different
expenses. In deciding which class of shares to buy, you should consider
how much you plan to purchase, how long you plan to keep your shares,
and other factors discussed in "How to Buy Shares" starting on page 21.
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 May 1, 1995, Statement of Additional Information. For a
free copy, call Oppenheimer Shareholder Services, the Fund's Transfer
Agent, at 1-800-525-7048, or write to the Transfer Agent at the address
on the back cover. The Statement of Additional Information has been
filed with the Securities and Exchange Commission and is incorporated
into this Prospectus by reference (which means that it is legally part
of this Prospectus).
(OppenheimerFunds logo)
Because of the Fund's investment policies and practices, the Fund's
shares may be considered to be speculative.
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of
the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
Page
ABOUT THE FUND
4 Expenses
6 A Brief Overview of the Fund
7 Financial Highlights
10 Investment Objective and Policies
16 How the Fund is Managed
18 Performance of the Fund
ABOUT YOUR ACCOUNT
21 How to Buy Shares
Class A Shares
Class C Shares
29 Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
31 How to Sell Shares
By Mail
By Telephone
32 How to Exchange Shares
34 Shareholder Account Rules and Policies
36 Dividends, Capital Gains and Taxes
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services,
and those expenses are subtracted from the Fund's assets to calculate
the Fund's net asset value per share. All shareholders therefore pay
those expenses indirectly. Shareholders pay other expenses directly,
such as sales charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your share
of the Fund's operating expenses that you will bear indirectly. The
calculations are based on the Fund's expenses during its fiscal year
ended December 31, 1994.
- Shareholder Transaction Expenses are charges you pay when you buy
or sell shares of the Fund. Please refer to pages 21 through 37 for an
explanation of how and when these charges apply.
<TABLE>
<CAPTION>
Class A Shares Class C Shares
<S> <C> <C>
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None
Sales Charge on Reinvested Dividends None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 1.0%(2)
Exchange Fee None None
<FN>
- ------------------
(1) If you invest more than $1 million in Class A shares, you may have to pay a sales charge of up to 1% if you sell
your shares within 18 calendar months from the end of the calendar month during which you purchased those shares.
See "How to Buy Shares - Class A Shares," below.
(2) If you redeem Class C shares within 12 months of buying them, you may have to pay a 1.0% contingent deferred
sales charge. See "How to Buy Shares - Class C Shares," below.
</TABLE>
- Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business. For
example, the Fund pays management fees to its investment adviser,
Oppenheimer Management Corporation (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are set
forth in "How the Fund is Managed," below. The Fund has other regular
expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds its portfolio securities, audit fees and legal
and other expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
The numbers in the chart below are projections of the Fund's
business expenses based on the Fund's expenses in its last fiscal year.
These amounts are shown as a percentage of the average net assets of
each class of the Fund's shares for that year. The "12b-1 Distribution
Plan Fees" for Class A shares are the Service Plan Fees (the maximum
fee is 0.25% of average annual net assets of that class), and for Class
C shares are the Distribution and Service Plan Fee (the maximum service
fee is 0.25% of average annual net assets of that class) and the asset-
based sales charge of 0.75%. The actual expenses for each class of
shares in future years may be more or less, depending on a number of
factors, including the actual amount of the assets represented by each
class of shares. These plans are described in greater detail in "How
to Buy Shares."
<TABLE>
<CAPTION>
Class A Shares Class C Shares
<S> <C> <C>
Management Fees (Restated) 0.74% 0.74%
12b-1 Distribution Plan Fees (Restated) 0.17%(1) 1.00%(2)
Other Expenses 0.30% 0.42%
Total Fund Operating Expenses (Restated) 1.21% 2.16%
<FN>
- ---------------------
(1) Service Plan fees only
(2) Includes Service Plan Fees and asset-based sales charge
</TABLE>
The management fees in the chart are restated to reflect the
decrease in the management fee rate that took effect July 1, 1994,
under the Fund's investment advisory agreement with the Manager. Also,
as of July 1, 1994, a new Service Plan took effect for Class A shares
that applies to all Class A shares of the Fund, regardless of the date
on which the shares were purchased. Therefore, these fees are restated
as though the new rates had been in effect during the entire fiscal
year ended December 31, 1994. Had the fee rates not changed, the
actual management fees would have been 0.76% for Class A and the Class
A Service Plan would have been 0.10%, and total operating expenses
would have been 1.16% for Class A and 2.18% for Class C shares,
respectively.
- 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, and that the Fund's annual return is 5%, and that
its operating expenses for each class are the ones shown in the chart
above as restated. If you were to redeem your shares at the end of
each period shown below, your investment would incur the following
expenses by the end of each period shown:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years*
<S> <C> <C> <C> <C>
Class A Shares $69 $94 $120 $196
Class C Shares $32 $68 $116 $249
If you did not redeem your investment, it would incur the following expenses:
Class A Shares $69 $94 $120 $196
Class C Shares $22 $68 $116 $249
<FN>
- ------------------
* Because of the asset-based sales charge imposed on Class C shares of the Fund, long-term shareholders of Class C shares
could bear expenses that would be the economic equivalent of an amount greater than the maximum front-end sales charges
permitted under applicable regulatory requirements.
</TABLE>
These examples show the effect of expenses on an investment, but
are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which will vary.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire
Prospectus before making a decision about investing in the Fund. Keep
the Prospectus for reference after you invest, particularly for
information about your account, such as how to sell or exchange shares.
- What Is The Fund's Investment Objective? The Fund's investment
objective is to seek capital appreciation.
- What Does the Fund Invest In? To seek capital appreciation,
the Fund primarily invests in common stocks, preferred stocks, and
convertible securities. The Fund may also write covered calls and use
certain types of "hedging instruments" and "derivative investments" to
seek to reduce the risks of market fluctuations that affect the value
of the securities the Fund holds. These investments are more fully
explained in "Investment Objective and Policies" starting on page 10.
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is Oppenheimer Management Corporation, which (including a
subsidiary) manages investment company portfolios currently having over
$30 billion in assets. The Manager is paid an advisory fee by the
Fund, based on its assets. The Fund's portfolio manager, who is
employed by the Manager, is primarily responsible for the selection of
the Fund's securities, is Robert C. Doll, Jr. 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 15 for more information about the Manager and its
fees.
- How Risky is the Fund? All investments carry risks to some
degree. The Fund's investments in stocks 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. These changes affect the value of
the Fund's investments and its share prices for each class of its
shares. In the OppenheimerFunds spectrum, the Fund is generally
considered an aggressive growth fund, considerably more aggressive than
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 Objective and Policies" starting on page 10 for a more
complete discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer
or financial institution, or you can purchase shares directly through
the Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page 21 for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund has two
classes of shares. Both have the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Class C
shares are offered without a front-end sales charge, but may be subject
to a contingent deferred sales charge if redeemed within one year of
buying them. There is also an annual asset-based sales charge on Class
C shares. Please review "How to Buy Shares" starting on page 21 for
more details, including a discussion about factors you and your
financial advisor should consider in determining which class may be
appropriate for you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through
your dealer. Please refer to "How to Sell Shares" on page 31. The
Fund also offers exchange privileges to other OppenheimerFunds,
described in "How to Exchange Shares" on page 32.
- How Has the Fund Performed? The Fund measures its performance
by quoting its average annual total return and cumulative total return,
which measure historical performance. Those returns can be compared to
the returns (over similar periods) of other funds. Of course, other
funds may have different objectives, investments, and levels of risk.
The Fund's performance can also be compared to broad market indices,
which we have done on page 20. 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 December 31, 1994, is included in the Statement of
Additional Information.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------------------------
Class A Class C
------------------------------------------------------------------------------------------- ---------------
Year Ended
Year Ended December 31, December 31,
1994 1993 1992 1991(3) 1990 1989 1988 1987 1986(2) 1985(2) 1994(3) 1993(1)
==========================================================
==========================================================
============
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C>
Per Share Operating Data:
Net asset
value, beginning
of period $ 25.72 $ 25.25 $ 23.76 $ 17.47 $ 18.26 $ 16.04 $ 12.38 $ 20.49 $ 19.30 $ 15.16 $ 25.72
$25.92
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss)
from investment
operations:
Net investment
income (loss) .20 .13 .16 .27 .39 .59 .27 .17 .11 .41 -- (.01)
Net realized
and unrealized
gain (loss)
on investments (.11) .86 2.28 6.87 (.78) 2.34 3.74 (3.68) 1.46 4.05 (.15) .31
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- ------- ------
Total income
(loss) from
investment
operations .09 .99 2.44 7.14 (.39) 2.93 4.01 (3.51) 1.57 4.46 (.15) .30
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.20) (.12) (.17) (.18) (.40) (.62) (.26) (.31) (.38) (.32) (.09) (.10)
Distributions from
net realized gain
on investments (2.98) (.40) (.78) (.67) -- (.09) (.09) (4.29) -- -- (2.98) (.40)
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- ------- ------
Total dividends and
distributions to
shareholders (3.18) (.52) (.95) (.85) (.40) (.71) (.35) (4.60) (.38) (.32) (3.07) (.50)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 22.63 $ 25.72 $ 25.25 $ 23.76 $ 17.47 $ 18.26 $ 16.04 $ 12.38 $ 20.49 $ 19.30 $ 22.50
$25.72
======= ======= ======= ======= ======= =======
======= ======== ======= ======= ======= ======
==========================================================
==========================================================
============
Total Return,
at Net Asset
Value(4) .46% 3.93% 10.27% 41.33% (2.13)% 18.31% 32.39% (17.95)% 8.28% 29.85%
(.50)% 2.11%
==========================================================
==========================================================
============
Ratios/Supplemental
Data:
Net assets,
end of period
(in thousands) $301,698 $368,806 $401,256 $369,351 $52,526 $66,050 $68,031 $60,888 $111,417 $118,244
$1,066 $8
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $325,003 $383,875 $362,295 $209,596 $56,208 $70,874 $68,068 $107,475 $128,757 $130,925 $
467 $6
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding at
end of period
(in thousands) 13,331 14,339 15,892 15,546 3,007 3,616 4,242 4,918 5,437 6,127 47 --
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Net investment
income (loss) .72% .47% .69% 1.25% 2.08% 2.93% 1.64% .60% .36% 1.87%
(.02)% (.07)%(5)
Expenses 1.16% 1.07% 1.09% 1.17% 1.33% 1.27% 1.29% 1.16% 1.16% 1.17%
2.18% 2.18%(5)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate(6) 34.7% 22.9% 42.3% 65.6% 51.2% 68.3% 108.4% 95.1 69.9% 118.8%
34.7% 22.9%
<FN>
1. For the period from December 1, 1993 (inception of offering) to December 31, 1993.
2. During 1986 and 1985, the Fund had average monthly debt outstanding of $688,172 and
$663,262,
respectively; the average monthly number of shares outstanding for the years ended December 31,
1986
and 1985 was 5,799,198 and 7,715,542, respectively, and the average monthly debt per share was
$.12
and $.09 for 1986 and 1985, respectively. The amount of debt outstanding at December 31, 1985
was
$7,000,000.
3. Per share amounts calculated based on the weighted average number of shares outstanding during
the
year.
4. Assumes a hypothetical initial investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly
average of the market value of portfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of one year or less are excluded from the
calculation. Purchase and sales of investment securities (excluding short-term securities) for the
year ended December 31, 1994 were $100,706,246 and $210,599,293, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
<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 to
shareholders.
Investment Policies and Strategies. The Fund seeks its investment
objective by emphasizing investment in common stocks or other equity
securities, including convertible securities, and may hold warrants and
rights. These may include securities of U.S. companies or foreign
companies, as discussed below.
The Manager looks for securities that it believes may appreciate
in value. The Fund may invest in companies of any size and
capitalization, and at times the Manager may emphasize investment in
companies in particular ranges of size. However, in general, capital
appreciation possibilities are more likely to be found in the
securities of "growth-type" companies than in the securities of larger,
more established companies.
The Fund may also seek to take advantage of changes in the
business cycle by investing in companies that are sensitive to those
changes, if the Manager believes they present opportunities for long-
term growth. For example, when the economy is expanding, companies in
the financial services and consumer products industries may be in a
position to benefit from changes in the business cycle and may present
long-term growth opportunities.
When investing the Fund's assets, the Manager considers many
factors, including general economic conditions in the U.S. relative to
foreign economies, and the trends in domestic and foreign stock
markets. The Fund may try to hedge against losses in the value of its
portfolio of securities by using hedging strategies described below.
When market conditions are unstable, the Fund may invest substantial
amounts of its assets in debt securities, such as money market
instruments or government securities, as described below. The Fund's
portfolio manager may employ special investment techniques in selecting
securities for the Fund. These are also described below. Additional
information may be found about them under the same headings in the
Statement of Additional Information.
- What Are "Growth" Companies? These tend to be newer companies
that 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.
- Stock Investment Risks. Because the Fund can invest a
substantial portion (or all) of its assets in stocks, the value of the
Fund's portfolio will be effected by changes in the stock markets.
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 sock prices change uniformly or at the same time, and
other factors can affect a particular stock's price (for example, poor
earnings reports by an issuer, loss of major customers, major
litigation against an issuer, changes in government regulations
affecting an industry). Not all of these factors can be predicted.
Changes in the overall market prices can occur at any time.
As discussed below, 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. Also, the Fund does not
concentrate its investment in any one industry or group of industries
- Other Investment Risks. Because of the types of securities
the Fund invests in and the investment techniques the Fund uses, some
of which may be speculative, the Fund is designed for investors who are
investing for the long-term and who are willing to accept greater risks
of loss of their capital in the hope of achieving capital appreciation.
It is not intended for investors seeking assured income and
preservation of capital. Investing for capital appreciation entails
the risk of loss of all or part of your principal. Because 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.
- Special Risks - Borrowing for Leverage. The Fund may borrow
up to 10% of the value of its assets from banks to buy securities. The
Fund will only borrow if it can do so without putting up assets as
security for a loan. This is a speculative investment method known as
"leverage." Leveraging may subject the Fund to greater risks and costs
than funds that do not borrow. These risks may include the possible
reduction of income and increased fluctuation in the Fund's net asset
value per share, since the Fund pays interest on borrowings. Borrowing
is subject to regulatory limits, described in more detail in the
Statement of Additional Information.
- Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund may engage frequently
in short-term trading to try to achieve its objective. As a result, the
Fund's portfolio turnover may be higher than other mutual funds,
although it is not expected to be more than 100% each year. The
"Financial Highlights," above, show the Fund's portfolio turnover rate
during past fiscal years.
High portfolio turnover and short-term trading may cause the Fund
to have relatively larger commission expenses and transaction costs
than funds that do not engage in short-term trading. Additionally,
high portfolio turnover may affect the ability of the Fund to qualify
as a "regulated investment company" under the Internal Revenue Code for
tax deductions for dividends and capital gains distributions the Fund
pays to shareholders. The Fund qualified in its last fiscal year and
intends to do so in the coming year, although it reserves the right not
to qualify.
- Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, which is 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 the Prospectus or
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.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information
contains more information about these practices, including limitations
on their use that are designed to reduce some of the risks.
- Warrants and Rights. Warrants and rights basically are
options to purchase stock at set prices that are valid for a limited
period of time. The Fund may invest up to 5% of its total assets in
warrants and rights in addition to warrants the Fund has acquired in
units or that are attached to other securities. No more than 2% of the
Fund's assets may be invested in warrants that are not listed on the
New York or American Stock Exchanges. For further details about these
investments, see "Warrants and Rights" in the Statement of Additional
Information.
- Foreign Securities. The Fund may purchase equity (and debt)
securities issued or guaranteed by foreign companies or foreign
governments, including foreign government agencies. The Fund may buy
securities of companies or governments in any country, developed or
underdeveloped. The Fund does not have any limit on the amount of
assets that may be invested in foreign securities. However, the Fund
normally does not expect to have more than 35% of its assets invested
in foreign securities. Foreign currency will be held by the Fund only
in connection with the purchase or sale of foreign securities. If the
Fund's securities are held abroad, the countries in which they are held
and the sub-custodians holding them must be approved by the Fund's
Board of Trustees.
Foreign securities have special risks. For example, 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 changes in foreign currency rates,
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.
- Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that
have been in operation for less than three years, even after including
the operations of any predecessors. Securities of these companies may
have limited liquidity (which means that the Fund may have difficulty
selling them at an acceptable price when it wants to) and the prices of
these securities may be volatile. The Fund currently intends to invest
no more than 5% of its net assets in the next year in securities of
small, unseasoned issuers.
- Special Situations. The Fund may invest in securities of
companies that are in "special situations" that the Manager believes
present opportunities for capital growth. A "special situation" may be
an event such as a proposed merger, reorganization, or other unusual
development that is expected to occur and which may result in an
increase in the value of a company's securities regardless of general
business conditions or the movement of prices in the securities market
as a whole. There is a risk that the price of the security may decline
if the anticipated development fails to occur. There is no limit on
the amount of assets that the Fund may invest in "special situations."
- Hedging. The Fund may purchase and sell certain kinds of
futures contracts, put and call options, forward contracts, and options
on futures and broadly-based securities indices. These are all
referred to as "hedging instruments." The Fund does not use hedging
instruments for speculative purposes, and has limits on the use of
them, described below. The hedging instruments the Fund may use are
described below and in greater detail in "Other Investment Techniques
and Strategies" in the Statement of Additional Information.
The Fund may buy and sell options, futures and forward contracts
for a number of purposes. It may do so to try to manage its exposure
to the possibility that the prices of its portfolio securities may
decline, or to establish a position in the securities market as a
temporary substitute for purchasing individual securities. Some of
these strategies, such as selling futures, buying puts and writing
covered calls, hedge the Fund's portfolio against price fluctuations.
Other hedging strategies, such as buying futures and call options,
tend to increase the Fund's exposure to the securities market. Forward
contracts are used to try to manage foreign currency risks on the
Fund's foreign investments. Foreign currency options are used to try
to protect against declines in the dollar value of foreign securities
the Fund owns, or to protect against an increase in the dollar cost of
buying foreign securities. Writing covered call options may also
provide income to the Fund for liquidity purposes or defensive reasons.
Futures. The Fund may buy and sell futures contracts that relate
to broadly-based securities indices (these are referred to as Stock
Index Futures and Bond Index Futures).
Put and Call Options. The Fund may buy and sell certain kinds of
put options (puts) and call options (calls).
The Fund may purchase calls only on securities, Stock Index
Futures, broadly-based securities indices and foreign currencies, or to
terminate its obligation on a call the Fund previously wrote. The Fund
may write (that is, sell) covered call options. When the Fund writes a
call, it receives cash (called a premium). The call gives the buyer
the ability to buy the investment on which the call was written from
the Fund at the call price during the period in which the call may be
exercised. If the value of the investment does not rise above the call
price, it is likely that the call will lapse without being exercised,
while the Fund keeps the cash premium (and the investment). There is
no limit on the amount of the Fund's total assets that may be subject
to covered calls.
The Fund may purchase put options. Buying a put on an investment
gives the Fund the right to sell the investment at a set price to a
seller of a put on that investment. The Fund can purchase those puts
that relate to (1) securities the Fund owns, (2) Stock Index Futures
(whether or not the Fund owns the particular Stock Index Future in its
portfolio), (3) broadly-based stock indices, or (4) foreign currencies.
The Fund may write puts on securities, broadly-based stock
indices, foreign currencies or Stock Index Futures. Writing puts
requires the segregation of liquid assets to cover the put. The Fund
will not write a put if it would require more than 50% of its net
assets to be segregated to cover the put obligation.
The Fund may buy and sell calls if certain conditions are met.
Calls the Fund buys or sells must be listed on a domestic or foreign
securities or commodities exchange or quoted on the Automated Quotation
System of the National Association of Securities Dealers, Inc. Each
call the Fund writes must be "covered" while it is outstanding; that
means the Fund must own the securities on which the call is written or
it must own other securities that are acceptable for the escrow
arrangements required for calls. After the Fund writes a call, not more
than 25% of the Fund's total assets may be subject to calls. In the
case of puts and calls on foreign currency, they must be traded on a
securites or commodities exchange, or quoted by recognized dealers in
these options. The Fund may also write calls on Futures Contracts it
owns, but those calls must be covered by securities or other liquid
assets the Fund owns and segregates to enable it to satisfy its
obligations if the call is exercised. A call or put option may not be
purchased if the value of all of the Fund's put and call options would
exceed 5% of the Fund's total assets.
Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills
and knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the Fund's return. The Fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option.
Options trading involves the payment of premiums and has special
tax effects on the Fund. There are also special risks in particular
hedging strategies. If a covered call written by the Fund is exercised
on a security that has increased in value, the Fund will be required to
sell the security at the call price and will not be able to realize any
profit if the security has increased in value above the call price.
The use of forward contracts may reduce the gain that would otherwise
result from a change in the relationship between the U.S. dollar and a
foreign currency. To limit its exposure in foreign currency exchange
contracts, the Fund limits its exposure to the amount of its assets
denominated in the foreign currency. Interest rate swaps are subject
to credit risks (if the other party fails to meet its obligations) and
also to interest rate risks. The Fund could be obligated to pay more
under its swap agreements than it receives under them, as a result of
interest rate changes. These risks are described in greater detail in
the Statement of Additional Information.
- Illiquid and Restricted Securities. Under the policies
established by the Fund's Board of Trustees, the Manager determines the
liquidity of certain of the Fund's investments. Investments may be
illiquid because of the absence of an active trading market, making it
difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction
on its resale or which cannot be sold publicly until it is registered
under the Securities Act of 1933. The Fund will not invest more than
10% of its net assets in illiquid or restricted securities (that limit
may increase to 15% if certain state laws are changed or the Fund's
shares are no longer sold in those states). The Fund's percentage
limitation on these investments does not apply to certain restricted
securities that are eligible for resale to qualified institutional
purchasers.
- Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers,
dealers and other financial institutions. The Fund must receive
collateral for a loan. These loans are limited to not more than 25% of
the value of the Fund's net assets and are subject to the conditions
described in the Statement of Additional Information. The Fund
presently does not intend to engage in loans of securities that will
exceed 5% of the value of the Fund's total assets in the coming year.
- 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.
Repurchase agreements must be fully collateralized. However, if the
vendor of the securities under a repurchase agreement 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 which causes more than 10% of its net assets to be
subject to repurchase agreements having a maturity beyond seven days.
There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements of seven days or less.
- Short Sales "Against-the-Box". In a short sale, the seller
does not own the security that is sold, but normally borrows the
security to fulfill the delivery obligation. The seller later buys the
security to repay the loan, in the expectation that the price of the
security will be lower when the purchase is made, resulting in a gain.
The Fund may not sell securities short except in collateralized
transactions referred to as short sales "against-the-box," where the
Fund owns an equivalent amount of the securities sold short. This
technique is primarily used for tax purposes. No more than 15% of the
Fund's net assets will be held as collateral for short sales at any one
time.
- Temporary Defensive Investments. When stock market prices are
falling or in other unusual economic or business circumstances, the
Fund may invest all or a portion of its assets in defensive securities.
Securities selected for defensive purposes may include debt securities,
such as rated or unrated bonds and debentures, preferred stocks, cash
or cash equivalents, such as U.S. Treasury Bills and other short-term
obligations of the U.S. Government, its agencies or instrumentalities,
or commercial paper rated "A-1" or better by Standard & Poor's
Corporation or "P-1" or better by Moody's Investors Service, Inc.
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: (1) as to 75% of its
assets, the Fund may not buy securities issued or guaranteed by a
single issuer if, as a result, the Fund would have invested more than
5% of its total assets in the securities of that issuer or would own
more than 10% of the voting securities of that issuer (purchases of
securities of the U.S. government, its agencies and instrumentalities
are not restricted by this policy); (2) the Fund cannot invest more
than 25% of its total assets in securities of companies in any one
industry; and (3) the Fund cannot invest in other open-end investment
companies or invest more than 5% 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.
All of the percentage restrictions described above and elsewhere
in this Prospectus and in the Statement of Additional Information
(other than the percentage limits that apply to borrowing, described in
the Statement of Additional Information) apply only at the time the
Fund purchases a security, and the Fund need not dispose of a security
merely because the Fund's assets have changed or the security has
increased in value relative to the size of the Fund. There are other
fundamental policies discussed in the Statement of Additional
Information.
How the Fund is Managed
Organization and History. The Fund was originally incorporated in
Maryland in 1980 but was reorganized in 1987 as a Massachusetts
business trust. The Fund is an open-end, diversified management
investment company, with an unlimited number of authorized shares of
beneficial interest.
The Fund is governed by a Board of Trustees, which is responsible
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 provides more information
about them and the officers of the Fund. Although the Fund is not
required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders have
the right to call a meeting to remove a Trustee or to take other action
described in the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The
Board has done so, and the Fund currently has two classes of shares,
Class A and Class C. Both classes invest in the same investment
portfolio. Each class has its own dividends and distributions and pays
certain expenses which may be different for the different classes.
Each class may have a different net asset value. Each share has one
vote at shareholder meetings, with fractional shares voting
proportionally. Only shares of a particular class vote together on
matters that affect that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
Oppenheimer Management Corporation, which is responsible for selecting
the Fund's investments and 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 pays to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment
companies, including other OppenheimerFunds, with assets of more than
$30 billion as of March 31, 1995, and with more than 2.4 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.
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.
- 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 effective May 1,
1994. He previously served as the Fund's portfolio manager from
September 1988 to October 1992. Mr. Doll is an Executive Vice
President and Director of Equity Investments of the Manager. He is also
the portfolio manager of Oppenheimer Growth Fund.
- Fees and Expenses. Under the investment advisory agreement,
the Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 0.75% of the first $200 million of
aggregate net assets, 0.72% of the next $200 million, 0.69% of the next
$200 million, 0.66% of the next $200 million, and 0.60% of aggregate
net assets over $800 million. The Fund's management fee for its last
fiscal year was 0.76% of average annual net assets for Class A shares
and 0.76% for Class C shares, which may be higher than the rate paid by
some other mutual funds. These rates have been restated in the "Annual
Fund Operating Expenses" chart on page 5 to reflect the fact that the
fee rates were reduced effective July 1, 1994.
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.
- The Distributor. The Fund's shares are sold through dealers
and brokers that have a sales agreement with Oppenheimer Funds
Distributor, Inc., a subsidiary of the Manager that acts as the
Distributor. The Distributor also distributes the shares of other
mutual funds managed by the Manager (the "OppenheimerFunds") and is
sub-distributor for funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is Oppenheimer
Shareholder Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund and the other OppenheimerFunds
on an "at-cost" basis. 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 terms
"cumulative total return" and "average annual total return" to
illustrate its performance. These terms are used to show the
performance of each class of shares 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. This performance
information may be useful to help you see how well your investment has
done and to compare it to other funds or market indices, as we have
done below.
It is important to understand that the fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. This performance data is
described below, but more detailed information about how total returns
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary,
depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
- Total Returns. There are different types of total returns
used to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period,
assuming that all dividends and capital gains distributions are
reinvested in additional shares. The cumulative total return measures
the change in value over the entire period (for example, ten years). An
average annual total return shows the average rate of return for each
year in a period that would produce the cumulative total return over
the entire period. However, average annual total returns do not show
the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, normally they
include the payment of the maximum initial sales charge. Total returns
may also be quoted "at net asset value," without including the sales
charge, and those returns would be reduced if sales charges were
deducted. When total returns are shown for a one-year period for Class
C shares, they include the effect of the contingent deferred sales
charge. They may also be shown based on the change in net asset value,
without considering the contingent deferred sales charge.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended December 31, 1994,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During the Fund's
past fiscal year, the Manager positioned the Fund's portfolio more
defensively. In response to the rising interest rates during the first
six months of the year and the negative effect of those rate increases
on stock prices, the Manager caused the Fund to move out of cyclical
stocks and to focus on financial, technology and healthcare issues.
During the last six months of the fiscal year, the Manager placed
greater emphasis on consumer and industrial companies because they
were viewed as having strong earnings power and as selling at
relatively low prices. The Fund also sought to take advantage of the
growth in the international markets by increasing its holdings in
technology and other companies that derive a third to a half of their
earnings from sales outside of the U.S. Additionally, in order to
remain poised to take advantage of new investment opportunities, the
Fund increased its cash position.
- Comparing the Fund's Performance to the Market. The chart
below shows the performance of a hypothetical $10,000 investment in
each class of shares of the Fund at December 31, 1994: in the case of
Class A shares, over a ten-year period, and in the case of Class C
shares from the inception of the Class on December 1, 1993.
The performance of each class of the Fund's shares is compared to
the performance of the S&P 500 Index, a broad-based index of equity
securities widely regarded as a general measurement of the performance
of the U.S. equity securities market. Index performance reflects the
reinvestment of dividends but does not consider the effect of capital
gains or transaction costs, and none of the data below shows the effect
of taxes. Also, the Fund's performance reflects the effect of Fund
business and operating expenses. While index comparisons may be useful
to provide a benchmark for the Fund's performance, it must be noted
that the Fund's investments are not limited to the securities in the
S&P 500 index, which tend to be securities of larger, well-capitalized
companies, as contrasted to the smaller growth-type companies in which
the Fund principally invests. 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 Investment in
Oppenheimer Target Fund Class A Shares
and the S&P 500 Index
(Graph)
Class C Shares
Comparison of Change in Value
of $10,000 Hypothetical Investment in
Oppenheimer Target Fund Class C Shares
and the S&P 500 Index
(Graphs)
Past performance is not predictive of future performance.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors two different classes of
shares. The different classes of shares represent investments in the
same portfolio of securities but are subject to different expenses and
will likely have different share prices.
- Class A Shares. When you buy Class A shares, you pay an
initial sales charge (on investments up to $1 million). If you purchase
Class A shares as part of an investment of at least $1 million in
shares of one or more OppenheimerFunds, you will not pay an initial
sales charge but if you sell any of those shares within 18 months after
your purchase, you may pay a contingent deferred sales charge, which
will vary depending on the amount you invested. Sales charges are
described below in "Class A Shares".
- 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%. Please refer to "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 advisors:
- How Much Do You Plan to Invest? If you plan to invest a
substantial amount over the long term, the reduced sales charges
available for larger purchases of Class A shares will normally be more
beneficial to you than purchasing Class C shares, because of the higher
annual expenses Class C shares will likely bear. For purchases over $1
million, the contingent deferred sales charge on Class A shares will
normally be more beneficial. The Distributor will not accept any order
for $1 million or more for Class C shares on behalf of a single
investor for that reason.
- How Long Do You Expect to Hold Your Investment? The Fund is
designed for long-term investment. While future financial needs cannot
be predicted with certainty, investors who prefer not to pay an initial
sales charge and who plan to hold their shares for shorter periods
might consider Class C shares. Investors who plan to redeem shares
within a year might consider whether the front-end sales charge on
Class A shares would result in higher net expenses after redemption.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for 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, not all other OppenheimerFunds offer Class C shares
limiting exchangeability from the Fund. Share certificates are not
available for Class C shares and if you are considering using you
shares as collateral for a loan, that may be a factor to consider.
Additionally, the dividends payable to Class C shareholders will be
reduced by the additional expenses borne solely by that class, such as
the asset-based sales charge, as described below and in the Statement
of Additional Information.
- How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different compensation
for selling one class than for selling another class. It is important
that investors understand that the purpose of the contingent deferred
sales charge and asset-based sales charge for Class C shares 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.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any
time with as little as $25. There are reduced minimum investments under
special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as
little as $250 (if your IRA is established under an Asset Builder Plan,
the $25 minimum applies), and subsequent investments may be as little
as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other OppenheimerFunds
(a list of them appears in the Statement of Additional Information, or
you can ask your dealer or call the Transfer Agent), or by reinvesting
distributions from unit investment trusts that have made arrangements
with the Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, or directly through the Distributor, or
automatically from your bank account through an Asset Builder Plan
under the OppenheimerFunds AccountLink service. When you buy shares, be
sure to specify Class A or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "Oppenheimer Funds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment first
with a financial advisor, to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing House
(ACH) member, to transmit funds electronically to purchase shares, or
to have the Transfer Agent send redemption proceeds or to transmit
dividends and distributions.
Shares are purchased for your account on the regular business day
the Distributor is instructed by you to initiate the ACH transfer to
buy shares. You can provide those instructions automatically, under an
Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to
"AccountLink" below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and
up to four other OppenheimerFunds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver. In most cases, to enable you to
receive that day's offering price, the Distributor must receive your
order at the time of day the New York Stock Exchange closes, which is
normally 4:00 P.M., New York time, but may be earlier on some days (all
references to time in this Prospectus mean "New York time"). The net
asset value of each class of shares is determined as of that time on
each day The New York Stock Exchange is open (which is a "regular
business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of the New York Stock Exchange on a regular business
day and transmit it to the Distributor so that it is received before
the Distributor's close of business that day, which is normally 5:00
P.M. The Distributor may reject any purchase order for the Fund's
shares, in its sole discretion.
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, where purchases are not subject to an
initial sales charge, the offering price may be net asset value. In
some cases, reduced sales charges may be available, as described below.
Out of the amount you invest, the Fund receives the net asset value to
invest for your account. The sales charge varies depending on the
amount of your purchase. A portion of the sales charge may be retained
by the Distributor and allocated to your dealer. The current sales
charge rates and commissions paid to dealers and brokers are as
follows:
<TABLE>
<CAPTION>
________________________________________________________________________________
Front-End Sales Charge Commission as
As a Percentage of: Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
_________________________________________________________________________________
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
________________________________________________________________________________
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more
OppenheimerFunds aggregating $1 million or more (shares of any other
OppenheimerFunds that offer only one class of shares that has no class
designation are considered "Class A" shares for this purpose). The
Distributor pays dealers of record commissions on such purchases in an
amount equal to the sum of 1.0% of the first $2.5 million, plus 0.50%
of the next $2.5 million, plus 0.25% of share purchases over $5
million. That commission will be paid only on the amount of those
purchases in excess of $1 million that were not previously subject to a
front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of
the calendar month of their purchase, a contingent deferred sales
charge (called the "Class A contingent deferred sales charge") will be
deducted from the redemption proceeds. That sales charge will be equal
to 1.0% of the aggregate net asset value of either (1) the redeemed
shares (not including shares purchased by reinvestment of dividends or
capital gain distributions) or (2) the original cost of the shares,
whichever is less. However, the Class A contingent deferred sales
charge will not exceed the aggregate commissions the Distributor paid
to your dealer on all Class A shares of all OppenheimerFunds you
purchased subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to the
sales charge, including shares purchased by reinvestment of dividends
and capital gains, and then will redeem other shares in the order that
you purchased them. The Class A contingent deferred sales charge is
waived in certain cases described in "Waivers of Class A Sales Charges"
below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's Exchange Privilege (described
below). However, if the shares acquired by exchange are redeemed
within 18 months of the end of the calendar month of the purchase of
the exchanged shares, the contingent deferred sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance
up to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds
(other than money market funds) under OppenheimerFunds-sponsored
403(b)(7) custodial plans exceed $5 million per year (calculated per
quarter), will receive monthly one-half of the Distributor's retained
commissions on those sales, and if those sales exceed $10 million per
year, those dealers will receive the Distributor's entire retained
commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of
the following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A shares you purchase for your own
accounts, or jointly, or on behalf of your children who are minors,
under trust or custodial accounts. A fiduciary can cumulate 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
shares of the Fund and other OppenheimerFunds to reduce the sales
charge rate that applies to purchases of Class A shares. You can also
include Class A shares of OppenheimerFunds 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 OppenheimerFunds. The
value of those shares will be based on the greater of the amount you
paid for the shares or their current value (at offering price). The
OppenheimerFunds are listed in "Reduced Sales Charges" in the Statement
of Additional Information, or a list can be obtained from the Transfer
Agent. The reduced sales charge will apply only to current purchases
and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, you may purchase
Class A shares of the Fund and other OppenheimerFunds during a 13-month
period and the reduced Class A sales charge rate that applies to the
total amount of the intended purchases will be the sales charge rate
for the Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. No sales charge is imposed
on sales of Class A shares to the following investors: (1) the Manager
or its affiliates; (2) 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; (3) registered management investment
companies, or separate accounts of insurance companies having an
agreement with the Manager or the Distributor for that purpose; (4)
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; (5) 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); (6)
dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the
use of shares of the Fund in particular investment products made
available to their clients; (7) dealers, brokers or registered
investment advisors that have entered into an agreement with the
Distributor to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment advisor provides
administration services.
Additionally, no sales charge is imposed on shares that are (a)
issued in plans of reorganization, such as mergers, asset acquisitions
and exchange offers, to which the Fund is a party, or (b) purchased by
the reinvestment of loan repayments by a participant in a retirement
plan for which the Manager or its affiliates acts as sponsor, (c)
purchased by the reinvestment of dividends or other distributions
reinvested from the Fund or other OppenheimerFunds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor, or (d)
purchased and paid for with the proceeds of shares redeemed in the
prior 12 months from a mutual fund on which an initial sales charge or
contingent deferred sales charge was paid (other than a fund managed by
the Manager or any of its affiliates); 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 the waiver.
There is a further discussion of this policy in "Reduced Sales Charges"
in the Statement of Additional Information.
The contingent deferred sales charge does not apply to purchases
of Class A shares at net asset value described above and is also waived
if shares are redeemed in the following cases: (1) retirement
distributions or loans to participants or beneficiaries from qualified
retirement plans, deferred compensation plans or other employee benefit
plans ("Retirement Plans"), (2) returns of excess contributions made to
Retirement Plans, (3) Automatic Withdrawal Plan payments that are
limited to no more than 12% of the original account value annually, (4)
involuntary redemptions of shares by operation of law or under the
procedures set forth in the Fund's Declaration of Trust or adopted by
the Board of Trustees; and (5) Class A shares that would otherwise be
subject to the Class A contingent deferred sales charge are redeemed,
but at the time the purchase order for your shares was placed, the
dealer agreed to accept the dealer's portion of the commission payable
on the sale in installments of 1/18th of the commission per month (and
that no further commissions would be payable if the shares were
redeemed within 18 months of purchase).
- 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 accounts that hold Class A shares. Reimbursement is
made quarterly at an annual rate that may not exceed 0.25% of the
average annual net assets of Class A shares of the Fund. The
Distributor uses all of those fees to compensate dealers, brokers,
banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class
A shares and to reimburse itself (if the Fund's Board of Trustees
authorizes such reimbursements, which it has not yet done) for its
other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details,
please refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Class C Shares. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred
sales charge of 1.0% will be deducted from the redemption proceeds.
That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions. The charge
will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent
deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of
dividends and capital gains distributions). The Class C contingent
deferred sales charge is paid to the Distributor to reimburse its
expenses of providing distribution-related services to the Fund in
connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies
to a redemption, the Fund redeems shares in the following order: (1)
shares acquired by reinvestment of dividends and capital gains
distributions, (2) shares held for over 12 months, and (3) shares held
the longest during the 12-month period.
- Waivers of Class C Sales Charge. The Class C contingent
deferred sales charge will be waived if the shareholder requests it for
any of the following redemptions: (1) 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; (2)
redemptions from accounts other than Retirement Plans following the
death or disability of the shareholder (the disability must have
occurred after the account was established and you must provide
evidence of a determination of disability by the Social Security
Administration), (3) returns of excess contributions to Retirement
Plans and (4) distributions from IRAs (including SEP-IRAs and SAR/SEP
accounts) before the participant is age 59 1/2, and distributions from
403(b)(7) custodial plans or pension or profit sharing plans before the
participant is age 59 1/2 but only after the participant has separated
from service, if the distributions are made in substantially equal
periodic payments over the life (or life expectancy) of the participant
or the joint lives (or joint life and last survivor expectancy) of the
participant and the participant's designated beneficiary (and the
distributions must comply with other requirements for such
distributions under the Internal Revenue Code and may not exceed 10% of
the account value annually, measured from the date the Transfer Agent
receives the request).
The contingent deferred sales charge is also waived on Class C
shares in the following cases: (i) shares sold to the Manager or its
affiliates; (ii) 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; (iii)
shares issued in plans of reorganization to which the Fund is a party;
and (iv) shares redeemed in involuntary redemptions as described above.
Further details about this policy are contained in "Reduced Sales
Charges" in the Statement of Additional Information.
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to
compensate the Distributor for its services and costs in distributing
Class C shares and servicing accounts. Under the Plan, the Fund pays
the Distributor an annual "asset-based sales charge" of 0.75% per year
on Class C shares. The Distributor also receives a service fee of
0.25% per year. Both fees are computed on the average annual net
assets of Class C shares, determined as of the close of each regular
business day. The asset-based sales charge allows investors to buy
Class C shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares.
Those services are similar to those provided under the Class A Service
Plan, described above. The asset-based sales charge and service fees
increase Class C expenses by up to 1.00% of average net assets per
year.
The Distributor pays the 0.25% service fee to dealers in advance
for the first year after Class C shares have been sold by the dealer.
After the shares have been held for a year, the Distributor pays the
fee on a quarterly basis. The Distributor pays sales commissions of
0.75% of the purchase price to dealers from its own resources at the
time of sale. The Distributor retains the asset-based sales charge
during the first year shares are outstanding to recoup the sales
commissions it pays, the advances of service fee payments it makes, and
its financing costs. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares that
have been outstanding for a year or more.
Because the Distributor's actual expenses in selling Class C
shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the Fund
under the Distribution and Service Plan for Class C shares, those
expenses may be carried over and paid in future years. If the Plan is
terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor
for certain expenses it incurred before the plan was terminated.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to
your account at your bank or other financial institution to enable you
to send money electronically between those accounts to perform a number
of types of account transactions. These include purchases of shares by
telephone (either through a service representative or by PhoneLink,
described below), automatic investments under Asset Builder Plans, and
sending dividends and distributions or Automatic Withdrawal Plan
payments directly to your bank account. Please refer to the Application
for details or call the Transfer Agent for more information.
AccountLink privileges should be requested on the Application you
use to buy shares, or on your dealer's settlement instructions if you
buy your shares through your dealer. After your account is established,
you can request AccountLink privileges on signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply
to each shareholder listed in the registration on your account as well
as to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or changing
those privileges. After you establish AccountLink for your account,
any change of bank account information must be made by signature-
guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone representative,
call the Distributor at 1-800-852-8457. The purchase payment will be
debited from your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone. PhoneLink
may be used on already-established Fund accounts after you obtain a
Personal Identification Number (PIN), by calling the special PhoneLink
number: 1-800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with the
Fund, to pay for these purchases.
- Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically by
phone from your Fund account to another OppenheimerFunds account you
have already established by calling the special PhoneLink number.
Please refer to "How to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will send
the proceeds directly to your AccountLink bank account. Please refer
to "How to Sell Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans
that enable you to sell shares automatically or exchange them to
another OppenheimerFunds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or
more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of
withdrawals of up to $1,500 per month by telephone. You should consult
the Application and Statement of Additional Information for more
details.
- Automatic Exchange Plans. You can authorize the Transfer Agent
to exchange an amount you establish in advance automatically for shares
of up to five other OppenheimerFunds on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The minimum
purchase for each other OppenheimerFunds 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
Fund shares, you have up to 6 months to reinvest all or part of the
redemption proceeds in Class A shares of the Fund or other
OppenheimerFunds without paying sales charge. You must be sure to ask
the Distributor for this privilege when you send your payment. Please
consult the Statement of Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your
employer, the plan trustee or administrator must make the purchase of
shares for your retirement plan account. The Distributor offers a
number of different retirement plans that can be used by individuals
and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment; including
SAR/SEP-IRAs
- Pension and Profit-Sharing Plans for self-employed persons
and small business owners
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account on any regular
business day by selling (redeeming) some or all of your shares. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers
you a number of ways to sell your shares: in writing or by telephone.
You can also set up Automatic Withdrawal Plans to redeem shares on a
regular basis, as described above. If you have questions about any of
these procedures, and especially if you are redeeming shares in a
special situation, such as due to the death of the owner, or from a
retirement plan, please call the Transfer Agent first, at 1-800-525-
7048, for assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement
of Additional Information.
- Certain Requests Require a Signature Guarantee. To protect you
and the Fund from fraud, certain redemption requests must be in writing
and must include a signature guarantee in the following situations
(there may be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and
receive a check
- The check is not payable to all shareholders listed on the
account statement
- The check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a
different owner or name
- Shares are redeemed by someone other than the owners (such as
an Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent
will accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing 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:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the
account is registered, and
- Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking to
sell shares.
Use the following address for requests by mail:
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
Oppenheimer Shareholder Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be received
by the Transfer Agent by the close of the New York Stock Exchange that
day, which is normally 4:00 P.M., but may be earlier on some days.
Shares held in an OppenheimerFunds retirement plan or under a share
certificate may not be redeemed by telephone.
- To redeem shares through a service representative, call 1-
800-852-8457
- To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to
your bank account on AccountLink, you may have the proceeds wired to
that bank account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone, once in each 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. This service is not available within 30 days
of changing the address on an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH wire to
your bank is initiated on the business day after the redemption. You
do not receive dividends on the proceeds of the shares you redeemed
while they are waiting to be wired.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Brokers or dealers may charge for that
service. Please 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
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. To exchange shares, you must meet several
conditions:
- Shares of the fund selected for exchange must be available
for sale in your state of residence
- The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
- You must meet the minimum purchase requirements for the fund
you purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of
the same class in the other OppenheimerFunds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another
fund. At present, not all of the OppenheimerFunds offer the same
classes of shares. If a fund has only one class of shares that does
not have a class designation, they are "Class A" shares for exchange
purposes. Certain OppenheimerFunds offer Class A shares and either
Class B or Class C shares, and a list can be obtained by calling the
Distributor at 1-800-525-7048. In some cases, sales charges may be
imposed on exchange transactions. Please refer to "How to Exchange
Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are
registered with the same name(s) and address. Shares held under
certificates may not be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares
of the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from
the other fund in the exchange transaction on the same regular business
day on which the Transfer Agent receives an exchange request 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 if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple exchange
requests from a dealer in a "market-timing" strategy might require the
disposition of securities at a time or price disadvantageous to the
Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide you
notice whenever it is reasonably able to do so, it may impose these
changes at any time.
- 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
- 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 regular
business day by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that are
outstanding. The Fund's Board of Trustees has established procedures
to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are
special procedures for valuing illiquid and restricted securities,
obligations for which market values cannot be readily obtained, and
call options and hedging instruments. These procedures are described
more completely in the Statement of Additional Information.
- The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless and until the Transfer
Agent receives cancellation instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring callers
to provide tax identification numbers and other account data or by
using PINs, and by confirming such transactions in writing. If the
Transfer Agent does not use reasonable procedures it may be liable for
losses due to unauthorized transactions, but otherwise neither it nor
the Fund will be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine. If you are unable to
reach the Transfer Agent during periods of unusual market activity, you
may not be able to complete a telephone transaction and should consider
placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From
time to time, the Transfer Agent in its discretion may waive certain of
the requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities
Clearing Corporation are responsible for obtaining their clients'
permission to perform those transactions and are responsible to their
clients who are shareholders of the Fund if the dealer performs any
transaction erroneously.
- The redemption price for shares will vary from day to day
because the value of the securities in the Fund's portfolio fluctuates,
and the redemption price, which is the net asset value per share, will
normally be different for Class A and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within 7
days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. Effective June 7, 1995, for accounts registered in the name
of a broker-dealer, payment will be forwarded within 3 business days.
The Transfer Agent may delay forwarding a check or processing a payment
via AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided if
you purchase shares by certified check or arrange with your bank to
provide telephone or written assurance to the Transfer Agent that your
purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other than
the fact that the market value of shares has dropped, and in some cases
involuntary redemptions may be made to repay the Distributor for losses
from the cancellation of share purchase orders.
- Under unusual circumstances, shares of the fund may be redeemed
"in kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at
the rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified
Social Security or taxpayer identification number when you sign your
application, or if you violate Internal Revenue Service regulations on
tax reporting of dividends.
- 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 and Class C shares.
- To avoid sending duplicate copies of materials to households,
the Fund will mail only one copy of each annual and semi-annual report
and updated prospectus 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 and Class
C shares from net investment income on an annual basis and normally
pays those dividends to shareholders in December, but the Board of
Trustees can change that date. The Board may also cause the Fund to
declare dividends after the close of the Fund's fiscal year (which ends
December 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 shares generally are expected
to be higher than for Class C shares because expenses allocable to
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 gains are treated as dividends for tax
purposes. There can be no assurances that the Fund will pay any capital
gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving dividends
by check or sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a
check for all dividends and long-term capital gains distributions or
have them sent to your bank on AccountLink.
- Reinvest Your Distributions in Another OppenheimerFunds
Account. You can reinvest all distributions in another OppenheimerFunds
account you have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you held
your shares. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Distributions are
subject to federal income tax and may be subject to state or local
taxes. Your distributions are taxable when paid, whether you reinvest
them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each
taxable distribution you received in the previous year.
- "Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy shares
on or just before the ex-dividend date, or just before the Fund
declares a capital gains distribution, you will pay the full price for
the shares and then receive a portion of the price back as a taxable
dividend or capital gain.
- Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax. A capital
gain or loss is the difference between the price you paid for the
shares and the price you received when you sold them.
- Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain federal tax
information about your investment. More information is contained in
the Statement of Additional Information, and in addition you should
consult with your tax adviser about the effect of an investment in the
Fund on your particular tax situation.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER TARGET FUND
Graphic material included in Prospectus of Oppenheimer Target
Fund: "Comparison of Total Return of Oppenheimer Target Fund with the
S&P 500 Index - Change in Value of a $10,000 Hypothetical Investment"
Linear graphs will be included in the Prospectus of Oppenheimer
Target Fund (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in each
class of shares of the Fund. In the case of the Fund's Class A shares,
that graph will cover each of the Fund's last ten fiscal years from
12/31/84 through 12/31/94 and in the case of the Fund's Class C shares
the graph will cover the period from the inception of the class
(December 1, 1993) through 12/31/94. The graphs 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 graphs. 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."
<TABLE>
<CAPTION>
Fiscal Year Oppenheimer S&P 500
(Period) Ended Target Fund A Index
<S> <C> <C>
12/31/84 $9,425 $10,627
12/31/85 $12,239 $13,999
12/31/86 $13,252 $16,613
12/31/87 $10,873 $17,485
12/31/88 $14,395 $20,380
12/31/89 $17,030 $26,826
12/31/90 $16,667 $25,992
12/31/91 $23,556 $33,894
12/31/92 $25,974 $36,473
12/31/93 $26,994 $40,142
12/31/94 $27,117 $40,668
Fiscal Oppenheimer S&P
Period Ended Target Fund C 500 Index
11/30/93(1) $10,000 $10,000
12/31/93 $10,017 $10,121
12/31/94 $10,066 $10,254
<FN>
- ----------------------
(1) Class C shares of the Fund were first publicly offered on December 1, 1993.
</TABLE>
<PAGE>
Oppenheimer Target Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
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, Oppenheimer
Management Corporation, Oppenheimer Funds Distributor, Inc. or any
affiliate thereof. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered
hereby in any state to any person to whom it is unlawful to make such
an offer in such state.
PR0320.001.0595 *Printed on Recycled Paper
<PAGE>
Oppenheimer Target Fund
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated May 1, 1995
This Statement of Additional Information of Oppenheimer Target Fund
is not a Prospectus. This document contains additional information about
the Fund and supplements information in the Prospectus dated May 1, 1995.
It should be read together with the Prospectus, which may be obtained by
writing to the Fund's Transfer Agent, Oppenheimer Shareholder Services,
at P.O. Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent
at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies 2
Investment Policies and Strategies 2
Other Investment Techniques and Strategies 3
Other Investment Restrictions 13
How the Fund is Managed 15
Organization and History 15
Trustees and Officers of the Fund 15
The Manager and Its Affiliates 20
Brokerage Policies of the Fund 21
Performance of the Fund 23
Distribution and Service Plans 26
About Your Account
How To Buy Shares 28
How To Sell Shares 34
How To Exchange Shares 38
Dividends, Capital Gains and Taxes 39
Additional Information About the Fund 40
Financial Information About the Fund
Independent Auditors' Report 41
Financial Statements 42
Appendix A: Industry Classifications A-1
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund invests, as well as 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 meaning as those terms
have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's investment
advisor, Oppenheimer Management Corporation (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
Fund's Manager as to the future movement of the equity securities markets.
If the Manager believes that economic conditions favor a rising market,
the Fund will emphasize securities and investment methods selected for
high capital growth. If the Manager believes that a market decline is
likely, defensive securities and investment methods will be emphasized
(See "Temporary Defensive Investments," below).
- Growth-Type Companies. The "growth-type" companies whose
securities may be emphasized in the Fund's portfolio include, among
others, companies in the natural resources fields or those developing
industrial applications for new scientific knowledge having potential for
technological innovation, such as nuclear energy, oceanography, business
services, business technology and new consumer products.
The Fund may invest in securities of smaller, less well-known companies
(see "Investing in Small, Unseasoned Companies" below), but the Fund may
also buy securities of large, well-known companies (which are not
generally considered to be "growth-type" companies) when the Manager
believes that the amounts of securities of smaller companies available at
prices that may be expected to appreciate are insufficient to help the
Fund achieve its objective of capital appreciation.
- Warrants and Rights. Warrants basically are options to purchase
equity securities at set prices valid for a specified period of time. The
prices of warrants do not necessarily move in a manner parallel to the
prices of the underlying securities. The price the Fund pays for a
warrant will be lost unless the warrant is exercised prior to its
expiration. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and have
no rights with respect to the assets of the issuer.
Other Investment Techniques and Strategies
- Hedging with Options and Futures Contracts. As described in the
Prospectus, the Fund may employ one or more types of Hedging Instruments.
Hedging Instruments may be used to attempt to: (i) protect against
possible declines in the market value of the Fund's portfolio resulting
from downward trends in the securities markets, (ii) protect unrealized
gains in the value of the Fund's securities which have appreciated, (iii)
facilitate selling securities for investment reasons, (iv) establish a
position in the securities markets as a temporary substitute for
purchasing particular debt securities, or (v) reduce the risk of adverse
currency fluctuations.
The Fund may use hedging to attempt to protect against declines in the
market value of the Fund's portfolio, to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons.
To do, the Fund may: (i) purchase Futures or (ii) purchase calls on such
Futures or securities. Normally, the Fund would then purchase the equity
securities and terminate the hedging position. When hedging to protect
against declines in the dollar value of a foreign currency-denominated
security, the Fund may: (a) purchase puts on that foreign currency or on
foreign currency Futures, (b) write calls on that currency or on such
Futures, or (c) enter into Forward Contracts at a lower rate than the spot
("cash") rate.
The Fund's strategy of hedging with Futures and options on Futures will
be incidental to the Fund's activities in the underlying cash market. At
present, the Fund does not intend to enter into Futures, Forward Contracts
and options on Futures if, after any such purchase, the sum of margin
deposits on Futures and premiums paid on Futures options exceeds 5% of the
value of the Fund's total assets. 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, legally permissible and
adequately disclosed. Additional Information about the Hedging
Instruments the Fund may use is provided below
- Writing Call Options. The Fund may write (that is, sell) call
options ("calls"). All calls written by the Fund must be "covered" while
the call is outstanding (that means, the Fund must own the securities
subject to the call or other securities acceptable for applicable escrow
requirements). Calls on Futures (discussed below) must be covered by
deliverable securities or by liquid assets segregated to satisfy the
Futures contract.
When the Fund writes a call on an investment it receives a premium and
agrees to sell the callable investment to a purchaser of a corresponding
call during the call period (usually not more than 9 months) at a fixed
exercise price (which may differ from the market price of the underlying
investment), regardless of market price changes during the call period.
The Fund has retained the risk of loss should the price of the underlying
security decline during the call period, which may be offset to some
extent by the premium.
To terminate its obligation on a call it has written, the Fund may
purchase a corresponding call in a "closing purchase transaction." A
profit or loss will be realized, depending upon whether the net of the
amount of the option transaction costs and the premium received on the
call the Fund has written is more or less than the price of the call the
Fund has subsequently purchased. A profit may also be realized if the
call lapses unexercised, because the Fund retains the underlying
investment and the premium received. Those profits are considered short-
term capital gains for Federal income tax purposes, and when distributed
by the Fund are taxable as ordinary income. If the Fund could not effect
a closing purchase transaction due to lack of a market, it would have to
hold the callable investments until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar amount of deliverable securities or liquid assets. The Fund will
segregate additional liquid assets if the value of the escrowed assets
drops below 100% of the current value of the Future. In no circumstances
would an exercise notice require the Fund to deliver a futures contract;
it would simply put the Fund in a short futures position, which is
permitted by the Fund's hedging policies.
- Purchasing Calls and Puts. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not fully
participate in an anticipated rise in the securities market. When the
Fund purchases a call (other than in a closing purchase transaction), it
pays a premium and, except as to calls on stock indices, has the right to
buy the underlying investment from a seller of a corresponding call on the
same investment during the call period at a fixed exercise price. When
the Fund purchases a call on an index, it pays a premium, but settlement
is in cash rather than by delivery of the underlying investment to the
Fund. In purchasing a call, the Fund benefits only if the call is sold
at a profit or if, during the call period, the market price of the
underlying investment is above the sum of the call price plus the
transaction costs and the premium paid and the call is exercised. If the
call is not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date and the Fund will lose its premium
payment and the right to purchase the underlying investment.
The Fund may purchase put options ("puts") which relate to securities,
foreign currencies or Futures. When the Fund purchases a put, it pays a
premium and, except as to puts on stock indices, has the right to sell the
underlying investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying a put
on an investment the Fund owns enables the Fund to protect itself during
the put period against a decline in the value of the underlying investment
below the exercise price by selling the underlying investment at the
exercise price to a seller of a corresponding put. If the market price
of the underlying investment is equal to or above the exercise price and
as a result the put is not exercised or resold, the put will become
worthless at its expiration date, and the Fund will lose its premium
payment and the right to sell the underlying investment. The put may,
however, be sold prior to expiration (whether or not at a profit.)
Buying a put on an investment it does not own, either a put on an index
or a put on a Stock Index Future not held by the Fund, permits the Fund
either to resell the put or buy the underlying investment and sell it at
the exercise price. The resale price of the put will vary inversely with
the price of the underlying investment. If the market price of the
underlying investment is above the exercise price and as a result the put
is not exercised, the put will become worthless on its expiration date.
In the event of a decline in the stock market, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its loss on
its portfolio securities. When the Fund purchases a put on an index, or
on a Future not held by it, the put protects the Fund to the extent that
the index moves in a similar pattern to the securities held. In the case
of a put on an index or Future, settlement is in cash rather than by
delivery by the Fund of the underlying investment.
Puts and calls on broadly-based stock indices or Stock Index Futures
are similar to puts and calls on securities or futures contracts except
that all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock market
generally) rather than on price movements in individual securities or
futures contracts. When the Fund buys a call on an index or Future, it
pays a premium. During the call period, upon exercise of a call by the
Fund, a seller of a corresponding call on the same investment will pay the
Fund an amount of cash to settle the call if the closing level of the
index or Future upon which the call is based is greater than the exercise
price of the call. That cash payment is equal to the difference between
the closing price of the index and the exercise price of the call times
a specified multiple (the "multiplier") which determines the total dollar
value for each point of difference. When the Fund buys a put on an index
or Future, it pays a premium and has the right during the put period to
require a seller of a corresponding put, upon the Fund's exercise of its
put, to deliver to the Fund an amount of cash to settle the put if the
closing level of the index or Future upon which the put is based is less
than the exercise price of the put. That cash payment is determined by the
multiplier, in the same manner as described above as to calls.
- Stock Index Futures. The Fund may buy and sell Stock Index Futures.
No monetary amount is paid or received upon the purchase or sale of a
Stock Index Future or a foreign currency exchange contract ("Forward
Contract"), discussed below. This is a type of financial future for which
the index used as the basis for trading is a broadly-based stock index
(including stocks that are not limited to issuers in a particular industry
or group of industries). A stock index assigns relative values to the
stocks included in the index and fluctuates with the changes in the market
value of these stocks. Stock indices cannot be purchased or sold
directly. Financial Futures are contracts based on the future value of
the basket of securities that comprise the underlying index. The contracts
obligate the seller to deliver, and the purchaser to take, cash to settle
the futures transaction, or to enter into an offsetting contract. No
physical delivery of the securities underlying the index is made on
settling futures obligations.
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
will be deposited with the Funds'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 (that is, as the value on the Fund's books is changed) to reflect
changes in its market value, subsequent margin payments, called variation
margin, will be made to or by the futures broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any loss or gain is then
realized for tax purposes. Although Stock Index Futures by their terms
call for cash settlement or delivery of cash, 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 to contracts are traded.
Forward Contracts. The Fund may enter into foreign currency exchange
contracts ("Forward Contracts"), which obligate the seller to deliver and
the purchaser to take a specific amount of foreign currency at a specific
future date for a fixed price. A Forward Contract involves bilateral
obligations of one party to purchase, and another party to sell, a
specific currency at a future date (which may be any fixed number of days
from the date of the contract agreed upon by the parties), at a price set
at the time the contract is entered into. These contracts are traded in
the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. The Fund may enter into a
Forward Contract in order to "lock in" the U.S. dollar price of a security
denominated in a foreign currency which it has purchased or sold but which
has not yet settled, or to protect against a possible loss resulting from
an adverse change in the relationship between the U.S. dollar and a
foreign currency.
There is a risk that use of Forward Contracts may reduce the gain that
would otherwise result from a change in the relationship between the U.S.
dollar and a foreign currency. To attempt to limit its exposure to loss
under Forward Contracts in a particular foreign currency, the Fund limits
its use of these contracts to the amount of its net assets denominated in
that currency or denominated in a closely-correlated foreign currency.
Forward contracts include standardized foreign currency futures contracts
which are traded on exchanges and are subject to procedures and
regulations applicable to other Futures. The Fund may also enter into a
forward contract to sell a foreign currency denominated in a currency
other than that in which the underlying security is denominated. This is
done in the expectation that there is a greater correlation between the
foreign currency of the forward contract and the foreign currency of the
underlying investment than between the U.S. dollar and the foreign
currency of the underlying investment. This technique is referred to as
"cross hedging." The success of cross hedging is dependent on many
factors, including the ability of the Manager to correctly identify and
monitor the correlation between foreign currencies and the U.S. dollar.
To the extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the cross
currency hedge.
The Fund may use Forward Contracts to protect against uncertainty in
the level of future exchange rates. The use of Forward Contracts does not
eliminate fluctuations in the prices of the underlying securities the Fund
owns or intends to acquire, but it does fix a rate of exchange in advance.
In addition, although Forward Contracts limit the risk of loss due to a
decline in the value of the hedged currencies, at the same time they limit
any potential gain that might result should the value of the currencies
increase.
There is no limitation as to the percentage of the Fund's assets that
may be committed to foreign currency exchange contracts. The Fund does
not enter into such forward contracts or maintain a net exposure in such
contracts to the extent that the Fund would be obligated to deliver an
amount of foreign currency in excess of the value of the Fund's assets
denominated in that currency, or enter into a "cross hedge," unless it is
denominated in a currency or currencies that the Manager believes will
have price movements that tend to correlate closely with the currency in
which the investment being hedged is denominated. See "Tax Aspects of
Covered Calls and Hedging Instruments" below for a discussion of the tax
treatment of foreign currency exchange contracts.
The Fund may enter into Forward Contracts with respect to specific
transactions. For example, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, or when
the Fund anticipates receipt of dividend payments in a foreign currency,
the Fund may desire to "lock-in" the U.S. dollar price of the security or
the U.S. dollar equivalent of such payment by entering into a Forward
Contract, for a fixed amount of U.S. dollars per unit of foreign currency,
for the purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will thereby be
able to protect itself against a possible loss resulting from an adverse
change in the relationship between the currency exchange rates during the
period between the date on which the security is purchased or sold, or on
which the payment is declared, and the date on which such payments are
made or received.
The Fund may also use Forward Contracts to lock in the U.S. dollar
value of portfolio positions ("position hedge"). In a position hedge, for
example, when the Fund believes that foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a forward
sale contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund's portfolio securities denominated in
such foreign currency, or when the Fund believes that the U.S. dollar may
suffer a substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a fixed
dollar amount. In this situation the Fund may, in the alternative, enter
into a forward contract to sell a different foreign currency for a fixed
U.S. dollar amount where the Fund believes that the U.S. dollar value of
the currency to be sold pursuant to the forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in
which portfolio securities of the Fund are denominated ("cross hedge").
The Fund's Custodian will place cash or U.S. Government securities or
other liquid high-quality debt securities in a separate account of the
Fund having a value equal to the aggregate amount of the Fund's
commitments under forward contracts to cover its short positions. If the
value of the securities placed in the separate account declines,
additional cash or securities will be placed in the account on a daily
basis so that the value of the account will equal the amount of the Fund's
commitments with respect to such contracts. Unanticipated changes in
currency prices may result in poorer overall performance for the Fund than
if it had not entered into such contracts.
The precise matching of the Forward Contract amounts and the value of
the securities involved will not generally be possible because the future
value of such securities in foreign currencies will change as a
consequence of market movements in the value of these securities between
the date the Forward Contract is entered into and the date it is sold.
Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot (i.e., cash) market (and bear the expense of
such purchase), if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some
of the foreign currency received upon the sale of the portfolio security
if its market value exceeds the amount of foreign currency the Fund is
obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-
term hedging strategy is highly uncertain. Forward Contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions
costs.
At or before the maturity of a Forward Contract requiring the Fund to
sell a currency, the Fund may either sell a portfolio security and use the
sale proceeds to make delivery of the currency or retain the security and
offset its contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund may close out a Forward Contract requiring
it to purchase a specified currency by entering into a second contract
entitling it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss as a
result of entering into such an offsetting Forward Contract under either
circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first
contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies with
factors such as the currencies involved, the length of the contract period
and the market conditions then prevailing. Because Forward Contracts are
usually entered into on a principal basis, no fees or commissions are
involved. Because such contracts are not traded on an exchange, the Fund
must evaluate the credit and performance risk of each particular
counterparty under a Forward Contract.
Although the Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Fund may convert foreign currency from time
to time, and investors should be aware of the costs of currency
conversion. Foreign exchange dealers do not charge a fee for conversion,
but they do seek to realize a profit based on the difference between the
prices at which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while offering
a lesser rate of exchange should the Fund desire to resell that currency
to the dealer.
Additional Information About Hedging Instruments and Their Use. The
Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent, through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required from the Fund for such
transactions. OCC will release the securities on the expiration of the
option or upon the Fund's entering into a closing transaction. An option
position may be closed out only on a market which provides secondary
trading for options of the same series, and there is no assurance that a
liquid secondary market will exist for any particular option.
The Fund's option activities may affect its turnover rate and brokerage
commissions. The exercise by the Fund of puts on securities will cause
the sale of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might cause the
Fund to sell the related investments for reasons which would not exist in
the absence of the put. The Fund will pay a brokerage commission each
time it buys a put or call, sells a call, or buys or sells an underlying
investment in connection with the exercise of a put or call. Such
commissions may be higher than those which would apply to direct purchases
or sales of such underlying investments. Premiums paid for options are
small in relation to the market value of the related investments, and
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading in options could result in the Fund's net
asset value being more sensitive to changes in the value of the underlying
investments.
When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer,
which would establish a formula price at which the Fund would have the
absolute right to repurchase that OTC option. That formula price would
generally be based on a multiple of the premium received for the option,
plus the amount by which the option is exercisable below the market price
of the underlying security (that is, the extent to which the option is
"in-the-money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be invested in
illiquid securities, stated in the Prospectus) the mark-to-market value
of any OTC option held by it. The Securities and Exchange Commission
("SEC") is evaluating whether OTC options should be considered liquid
securities, and the procedure described above could be affected by the
outcome of that evaluation.
- 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 net 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 option exchanges governing the maximum number
of options that may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options were
written or purchased on the same or different exchanges or are held in one
or more accounts or through one or more exchanges or brokers. Thus, the
number of options which the Fund may write or hold may be affected by
options written or held by other entities, including other investment
companies having the same advisor as the Fund, or an advisor that is an
affiliate of the Fund's advisor. Position limits also apply to Futures.
An exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions. Due to
requirements under the Investment Company Act, when the Fund purchases a
Future, the Fund will maintain, in a segregated account or accounts with
its custodian bank, cash or readily-marketable, short-term (maturing in
one year or less) debt instruments in an amount equal to the market value
of the securities underlying such Future, less the margin deposit
applicable to it.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That
qualification enables the Fund to "pass through" its income and realized
capital gains to shareholders without having to pay tax on them. This
avoids a "double tax" on that income and capital gains, since shareholders
normally will be taxed on the dividends and capital gains they receive
from the Fund (unless the Fund's shares are held in a retirement account
or the shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that less
than 30% of its gross income must be derived from gains realized on the
sale of securities held for less than three months. To comply with this
30% cap, the Fund will limit the extent to which it engages in the
following activities, but will not be precluded from them: (i) selling
investments, including Stock Index Futures, held for less than three
months, whether or not they were purchased on the exercise of a call held
by the Fund; (ii) purchasing options which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv) exercising
puts or calls held by the Fund for less than three months; or (v) writing
calls on investments held less than three months.
Certain foreign currency exchange contracts ("Forward Contracts") in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this mark-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position
making up a straddle is allowed only to the extent such loss exceeds any
unrecognized gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
of foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of disposition also
are treated as ordinary gain or loss. Currency gains and losses are
offset against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may increase or
decrease the amount of the Fund's investment company income available for
distribution to its shareholders.
- Possible Risk Factors in Hedging. In addition to the risks with
respect to options discussed in the Prospectus and above, there is a risk
in using short hedging by selling Futures to attempt to protect against
decline in value of the Fund's portfolio securities (due to an increase
in interest rates) that the prices of such 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 offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second, the
liquidity of the futures markets depend on participants entering into
offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
If the Fund uses Hedging Instruments to establish a position in the
securities markets as a temporary substitute for the purchase of
individual securities (long hedging) by buying Futures and/or calls on
such Futures or on securities, it is possible that the market may
decline; if the Fund then concludes not to invest in such securities at
that time because of concerns as to possible further market decline or for
other reasons, the Fund will realize a loss on the Hedging Instruments
that is not offset by a reduction in the price of the securities
purchased.
- Borrowing for Leverage. From time to time, the Fund may increase
its ownership of securities by borrowing from banks on an unsecured basis
and investing the borrowed funds, subject to the restrictions stated in
the Prospectus. Any such borrowing will be made only from banks, and,
pursuant to the requirements of the Investment Company Act of 1940 (the
"Investment Company Act"), will only be made to the extent that the value
of the Fund's assets, less its liabilities other than borrowings, is equal
to at least 300% of all borrowings including the proposed borrowing. If
the value of the Fund's assets, when computed in that manner, should fail
to meet the 300% asset coverage requirement, the Fund is required within
three days to reduce its bank debt to the extent necessary to meet 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.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offer potential benefits not available
from investing solely in securities of domestic issuers, including the
opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business
cycles different from those of the U.S., or to reduce fluctuations in
portfolio value by taking advantage of foreign stock markets that do not
move in a manner parallel to U.S. markets. If the Fund's portfolio
securities are held abroad, the countries in which they may be held and
the sub-custodians holding them must be approved by the Fund's Board of
Trustees under applicable rules of the Securities and Exchange Commission.
Investing in foreign securities involves considerations and possible
risks not typically associated with investing in securities in the U.S.
The values of foreign securities will be affected by changes in currency
rates or exchange control regulations or currency blockage, application
of foreign tax laws, including withholding taxes, changes in governmental
administration or economic or monetary policy (in the U.S. or abroad) or
changed circumstances in dealings between nations. There may be a lack
of public information about foreign issuers. Foreign countries may not
have financial reporting, accounting and auditing standards comparable to
those that apply to U.S. issuers. Costs will be incurred in connection
with conversions between various currencies. Foreign brokerage
commissions are generally higher than commissions in the U.S., and foreign
securities markets may be less liquid, more volatile and less subject to
governmental regulation than in the U.S. They may have increased delays
in setting portfolio transactions. Investments in foreign countries could
be affected by other factors not generally thought to be present in the
U.S., including expropriation or nationalization, confiscatory taxation
and potential difficulties in enforcing contractual obligations, and could
be subject to extended settlement periods.
- Illiquid and Restricted Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund,
if such registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund wishes to
sell the security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would be
permitted to sell them. The Fund would bear the risks of any downward
price fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Trustees of the Fund or by
the Manager under Board-approved guidelines. Those guidelines take into
account the trading activity for such securities and the availability of
reliable pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral on each business day must at least equal the value of the
loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities).
To be acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the dividends
or interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees.
The terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor. An "approved vendor"
is a U.S. commercial bank or the U.S. branch of a foreign bank or a
broker-dealer 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 resale price exceeds the purchase
price by an amount that reflects an agreed-upon interest rate effective
for the period during which the repurchase agreement is in effect. The
majority of these transactions run from day to day, and delivery pursuant
to the resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the
Investment Company Act, collateralized by the underlying security. The
Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must equal
or exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- Short Sales "Against-the-Box". In this type of short sale, while
the short position is open, the Fund must own an equal amount of the
securities sold short, or by virtue of ownership of other securities have
the right, without payment of further consideration, to obtain an equal
amount of the securities sold short. Short sales against-the-box may be
made to defer, for Federal income tax purposes, recognition of gain or
loss on the sale of securities "in-the-box" until the short position is
closed out.
- Temporary Defensive Investments. When the equity markets in
general are declining, the Fund may commit an increasing portion of its
assets to defensive securities. These may include the types of securities
described in the Prospectus. When investing for defensive purposes, the
Fund will normally emphasize investment in short-term debt securities
(that is, securities maturing in one year or less from the date of
purchase), since those types of securities are generally more liquid and
usually may be disposed of quickly without significant gains or losses so
that the Manager may have liquid assets when it wishes to make investments
in securities for appreciation possibilities.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the Fund
must follow that are also fundamental policies. Fundamental policies and
the Fund's investment objective cannot be changed without the vote of a
"majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a "majority" vote is defined as the vote of
the holders of the lesser of: 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 more than 50% of the
outstanding shares.
Under these additional restrictions, the Fund cannot:
(1) Invest in companies for the purpose of acquiring control or
management thereof;
(2) Invest in commodities or commodities contracts other than the
hedging instruments permitted by any of its other fundamental
policies, whether or not any such hedging instrument is
considered to be a commodity or a commodity contract;
(3) Invest in real estate or in interests in real estate, but the
Fund may purchase readily marketable securities of companies
holding real estate or interests therein;
(4) 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;
(5) 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 of the types that are usually purchased
by institutions, whether or not publicly distributed; the Fund
may also make loans of portfolio securities, subject to the
percentage restrictions set forth in the Prospectus under the
caption "Loans of Portfolio Securities";
(6) Mortgage or pledge any of its assets; however, this does not
prohibit the escrow arrangements contemplated by the writing of
covered call options or other collateral or margin arrangements
in connection with any hedging instruments permitted by any of
its other fundamental policies;
(7) Underwrite securities of other companies, except insofar as the
Fund 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;
(8) Invest in or hold securities of any issuer if those officers and
Trustees of the Fund or its adviser owning individually more
than .5% of the securities of such issuer together own more than
5% of the securities of such issuer; or
(9) Invest in interests in oil, gas or mineral exploration or
development programs.
For purposes of tho Fund's policy not to concentrate its investments
in any one industry as described in restriction (2) and 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.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the Fund is
not required to hold, and does not plan to hold, regular annual meetings
of shareholders. The Fund will hold meetings when required to do so by the
Investment Company Act or other applicable law, or when a shareholder
meeting is called by the Trustees or upon proper request of the
shareholders. Shareholders have the right, upon the declaration in
writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record
holders of 10% of its outstanding shares. In addition, if the Trustees
receive a request from at least 10 shareholders (who have been
shareholders for at least six months) holding shares of the Fund valued
at $25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate with
other shareholders to request a meeting to remove a Trustee, the Trustees
will then either make the Fund's shareholder list available to the
applicants or mail their communication to all other shareholders at the
applicants' expense, or the Trustees may take such other action as set
forth under Section 16(c) of the Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides
for indemnification and reimbursement of expenses out of its property for
any shareholder held personally liable for its obligations. The
Declaration of Trust also provides that the Fund shall, upon request,
assume the defense of any claim made against any shareholder for any act
or obligation of the Fund and satisfy any judgment thereon. Thus, while
Massachusetts law permits a shareholder of a business trust (such as the
Fund) to be held personally liable as a "partner" under certain
circumstances, the risk of a Fund shareholder incurring financial loss on
account of shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its obligations
described above. Any person doing business with the Trust, and any
shareholder of the Trust, agrees under the Trust's Declaration of Trust
to look solely to the assets of the Trust for satisfaction of any claim
or demand which may arise out of any dealings with the Trust, and the
Trustees shall have no personal liability to any such person, to the
extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and officers and
their principal occupations and business affiliations during the past five
years are listed below. The address of each Trustee and officer is Two
World Trade Center, New York, New York 10048-0203, unless another address
is listed below. All of the Trustees are also trustees of Oppenheimer
Fund, Oppenheimer Global Fund, Oppenheimer Time Fund, Oppenheimer Growth
Fund, Oppenheimer Discovery Fund, Oppenheimer Global Emerging Growth Fund,
Oppenheimer Gold & Special Minerals Fund, Oppenheimer Tax-Free Bond Fund,
Oppenheimer New York Tax-Exempt Fund, Oppenheimer California Tax-Exempt
Fund, Oppenheimer Multi-State Tax-Exempt Trust, Oppenheimer Asset
Allocation Fund, Oppenheimer Mortgage Income Fund, Oppenheimer U.S.
Government Trust, Oppenheimer Multi-Sector Income Trust and Oppenheimer
Multi-Government Trust (the "New York-based OppenheimerFunds"). Messrs.
Spiro, Bishop, Bowen, Donohue, Farrar and Zack respectively hold the same
offices with the other New York-based OppenheimerFunds as with the Fund.
As of April 3, 1995, 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. The foregoing does not include shares held of
record by an employee benefit plan for employees of the Manager (for which
one of the officers listed below, Mr. Donohue, is a Trustee), other than
the shares beneficially owned under that plan by the officers of the Fund
listed below.
Leon Levy, Chairman of the Board of Trustees; Age: 69
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings, Inc. (real estate development).
Leo Cherne, Trustee; Age: 82
122 East 42nd Street, New York, New York 10168
Chairman Emeritus of the International Rescue Committee (philanthropic
organization); formerly Executive Director of The Research Institute
of America.
Robert G. Galli, Trustee*; Age: 61
Vice Chairman of the Manager and Vice President and Counsel of
Oppenheimer Acquisition Corp. ("OAC"), the Manager's parent holding
company; formerly he held the following positions: a director of the
Manager and Oppenheimer Funds Distributor, Inc. (the "Distributor"),
Vice President and a director of HarbourView Asset Management
Corporation ("HarbourView") and Centennial Asset Management
Corporation ("Centennial"), investment advisory subsidiaries of the
Manager, a director of Shareholder Financial Services, Inc. ("SFSI")
and Shareholder Services, Inc. ("SSI"), transfer agent subsidiaries of
the Manager, an officer of other OppenheimerFunds and Executive Vice
President and General Counsel of the Manager and Oppenheimer Funds
Distributor, Inc. (the 'Distributor").
Benjamin Lipstein, Trustee; Age: 72
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of Business
Administration, New York University; a director of Sussex Publishers,
Inc. (Publishers of Psychology Today on Mother Earth News) and a
director of Spy Magazine, L.P.
Elizabeth B. Moynihan, Trustee; Age: 65
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery of
Art (Smithsonian Institution), the Institute of Fine Arts (New York
University), National Building Museum; a member of the Trustees
Council, Preservation League of New York State; a member of the Indo-
U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: 67
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company), Kemper
Corporation (insurance and financial services company), Fidelity Life
Association (mutual life insurance company); formerly Chairman of the
Board of ICL, Inc. (information systems), and President and Chief
Executive Officer of The Conference Board, Inc. (international
economic and business research).
______________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Edward V. Regan, Trustee; Age: 64
40 Park Avenue, New York, New York 10016
President of Jerome Levy Economics Institute; a member of the U.S.
Competitiveness Policy Council; a director or GranCare, Inc.
(healthcare provider); formerly New York State Comptroller and a
trustee of the New York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 63
200 Park Avenue, New York, New York 10166
Founder and Chairman of Russell Reynolds Associates, Inc. (executive
recruiting); Chairman of Directors Publication, Inc. (consulting and
publishing); a trustee of Mystic Seaport Museum, International House,
Greenwich Historical Society and Greenwich Hospital.
Sidney M. Robbins, Trustee; Age: 83
50 Overlook Road, Ossining, New York 10562
Chase Manhattan Professor Emeritus of Financial Institutions, Graduate
School of Business, Columbia University; Visiting Professor of
Finance, University of Hawaii; a director of The Korea Fund, Inc. and
The Malaysia Fund, Inc. (closed-end investment companies); a member of
the Board of Advisors, Olympus Private Placement Fund, L.P.; Professor
Emeritus of Finance, Adelphi University.
Donald W. Spiro, President and Trustee*; Age: 69
Chairman Emeritus and a director of the Manager; formerly Chairman of
the Manager and Oppenheimer Funds Distributor, Inc. (the
"Distributor").
Pauline Trigere, Trustee; Age: 82
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design and sale
of women's fashions).
Clayton K. Yeutter, Trustee; Age: 64
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of B.A.T.
Industries, Ltd. (tobacco and financial services), Caterpillar, Inc.
(machinery), ConAgra, Inc. (food and agricultural products), Farmers
Insurance Company (Insurance); FMC Corp. (chemicals and machinery),
Lindsay Manufacturing Co. (irrigation equipment), Texas Instruments,
Inc. (electronics), and The Virgo Corporation (fertilizer
manufacturer); formerly (in descending chronological order) Counsellor
to the President (Bush) for Domestic Policy, Chairman of the
Republican National Committee, Secretary of the U.S. Department of
Agriculture, and U.S. Trade Representative.
_____________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
Andrew J. Donohue, Secretary; Age: 44
Executive Vice President and General Counsel of the Manager and the
Distributor; an officer of other OppenheimerFunds; formerly Senior
Vice President and Associate General Counsel of the Manager and the
Distributor; Partner in Kraft & McManimon (a law firm), an officer of
First Investors Corporation (a broker-dealer) and First Investors
Management Company, Inc. (broker-dealer and investment adviser), and
a director and an officer of First Investors Family of Funds and First
Investors Life Insurance Company.
Robert Doll, Jr., Vice President and Portfolio Manager; Age: 40
Executive Vice President of the Manager; an officer of other
OppenheimerFunds.
George C. Bowen, Treasurer; Age: 58
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of
other OppenheimerFunds.
Robert G. Zack, Assistant Secretary; Age: 46
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other
OppenheimerFunds.
Robert Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an Accountant for Yale &
Seffinger, P.C., an accounting firm, and previously an Accountant
and Commissions Supervisor for Stuart James Company Inc., a broker-
dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other OppenheimerFunds; previously a Fund Controller for
the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman Co., a bank, and previously a
Senior Fund Accountant for State Street Bank & Trust Company.
- Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager. They and the Trustees of the Fund who are affiliated
with the Manager (Messrs. Galli and Spiro, who is also an officer of the
Fund,) receive no salary or fee from the Fund. The Trustees of the Fund
(including Mr. Edmund Delaney, a former Trustee who retired in 1994, but
excluding Messrs. Galli and Spiro) received the total amounts shown below
from the Fund, during its fiscal year ended December 31, 1994, and from
all 19 of the New York-based OppenheimerFunds (including the Fund) listed
in the first paragraph of this section (and from Oppenheimer Global
Environment Fund, a former New York-based OppenheimerFund), for services
in the positions shown below.
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation From All
Name and from New York-based
Position Fund OppenheimerFunds1
<S> <C> <C>
Leon Levy $17,234 $141,000.00
Chairman and Trustee
Leo Cherne $ 8,412 $ 68,800.00
Audit Committee
Member and Trustee
Edmund T. Delaney $10,536 $ 86,200.00
Former Study Committee
Member and Trustee2
Benjamin Lipstein $10,536 $ 86,200.00
Study Committee
Member and Trustee
Elizabeth B. Moynihan $ 7,408 $ 60,625.00
Study Committee
Member3 and Trustee
Kenneth A. Randall $ 9,584 $ 78,400.00
Audit Committee
Member and Trustee
Edward V. Regan $ 6,874 $ 56,275.00
Audit Committee
Member and Trustee
Russell S. Reynolds, Jr. $ 6,372 $ 52,100.00
Trustee
Sidney M. Robbins $14,931 $122,100.00
Study Committee Chairman
Audit Committee Vice-
Chairman and Trustee
Pauline Trigere $ 6,372 $ 52,100.00
Trustee
Clayton K. Yeutter $ 6,372 $ 52,100.00
Trustee
<FN>
______________________
1 For the 1994 calendar year.
2 Board and committee positions held during a portion of the period shown.
3 Committee position held during a portion of the period shown.
</TABLE>
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was
received. A Trustee must serve in that capacity for any of the New York-
based OppenheimerFunds 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. No payments have been made by the Fund
under the plan and no benefits were accrued as a part of Fund expenses as
of December 31, 1994.
- Major Shareholders. As of April 3, 1995, no person owned of record
or was known by the Fund to own beneficially 5% or more of any class of
the Fund's outstanding shares.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund, and two of whom (Messrs. Galli and Spiro)
serve as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed to
detect and prevent improper personal trading by certain employees,
including portfolio managers, that would compete with or take advantage
of the Fund's portfolio transactions. Compliance with the Code of Ethics
is carefully monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at its
expense, to provide the Fund with adequate office space, facilities and
equipment, and to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
corporate administration for the Fund, including the compilation and
maintenance of records with respect to its operations, the preparation and
filing of specified reports, and composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the advisory
agreement or by the Distributor under the General Distributors Agreement
are paid by the Fund. The advisory agreement lists examples of expenses
paid by the Fund. The major categories 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 December 31, 1992,
1993 and 1994, the management fees paid by the Fund to the Manager were
$3,006,439, $3,028,433, and $2,475,491 respectively.
During the fiscal year ended December 31, 1994, the rates under the
investment advisory fee changed on assets up to $400 million. Until June
30, 1994, the rates were 0.80% of the first $200 million of aggregate net
assets and 0.75% of the next $200 million. Effective July 1, 1994, those
rates were reduced to 0.75% of the first $200 million and 0.72% of the
next $200 million.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest, brokerage
commissions, distribution assistance payments and extraordinary expenses
such as litigation costs) shall not exceed the most stringent expense
limitation imposed under state law applicable to the Fund. Pursuant to the
undertaking, the Manager's fee will be reduced at the end of a month so
that there will not be any accrued but unpaid liability under this
undertaking. Currently, the most stringent state expense limitation is
imposed by California, and limits the Fund's expenses (with specified
exclusions) to 2.5% of the first $30 million of average annual net assets,
2% of the next $70 million of average annual net assets, and 1.5% of
average annual net assets in excess of $100 million. The Manager reserves
the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this limitation would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The advisory agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard 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.
- 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 and Class C 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
December 31, 1992, 1993, and 1994, the aggregate sales charges on sales
of the Fund's Class A shares were $975,580, $698,109, and $351,806
respectively, of which the Distributor and an affiliated broker-dealer
retained in the aggregate $421,079, $298,443 and $141,646 in those
respective years. During the Fund's fiscal year ended December 31, 1994,
contingent deferred sales charges collected on the Fund's Class C shares
totalled $1,185 all of which the Distributor retained. For additional
information about distribution of the Fund's shares and the expenses
connected with such activities, please refer to "Distribution and Service
Plans," below.
- The Transfer Agent. Oppenheimer Shareholder Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's shareholder
registry and shareholder accounting records, and for shareholder servicing
and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the advisory agreement is to arrange the
portfolio transactions for the Fund. The advisory agreement contains
provisions relating to the employment of broker-dealers ("brokers") to
effect the Fund's portfolio transactions. In doing so, the Manager is
authorized by the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment Company
Act, as may, in its best judgment based on all relevant factors,
implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable
price obtainable) of such transactions. The Manager need not seek
competitive commission bidding but is expected to minimize the commissions
paid to the extent consistent with the interest and policies of the Fund
as established by its Board of Trustees.
Under the advisory agreement, the Manager is authorized to select
brokers that provide brokerage and/or research services for the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. The commissions paid to such brokers may be higher
than another qualified broker would have charged if a good faith
determination is made by the Manager and the commission is fair and
reasonable in relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of the Fund
and other investment companies managed by the Manager or its affiliates
as a factor in the selection of brokers for the Fund's portfolio
transactions.
Description of Brokerage Practices Followed by the Manager. Subject to
the provisions of the advisory agreement, the procedures and rules
described above, allocations of brokerage are generally made by the
Manager's portfolio traders based upon 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 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 prices. 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 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 research services provided by brokers broadens the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
During the Fund's fiscal years ended December 31, 1992, 1993, and 1994,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $493,589,
$319,608 and $564,504, respectively. During the fiscal year ended
December 31, 1994, $295,074 was paid to brokers as commissions in return
for research services (including special research, statistical information
and execution); the aggregate dollar amount of those transactions was
$138,285,540. 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 "cumulative 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 class of shares of the Fund for the
1, 5, and 10-year periods (or the life of the class, if less) ending as
of the most recently-ended calendar quarter prior to the publication of
the advertisement. This enables an investor to compare the Fund's
performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of Class A and
Class C shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to the
particular class.
- Average Annual Total Returns. The "average annual total return" of
each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
( ERV ) 1/n
(-----) -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over
an entire period of years. Its calculation uses some of the same factors
as average annual total return, but it does not average the rate of return
on an annual basis. Cumulative total return is determined as follows:
ERV - P
- ------- = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). For Class 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 to buy additional
shares at net asset value per share, and that the investment is redeemed
at the end of the period. The "average annual total returns" on an
investment in Class A shares of the Fund for the one, five and ten year
periods ended December 31, 1994, were -5.32%, 8.46% and 10.49%,
respectively. The "cumulative total return" on Class A shares for the ten
year period ended December 31, 1994, was 171.17%. During a portion of the
periods for which total returns are shown for Class A shares, the Fund's
maximum initial sales charge rate was higher; as a result, performance
returns on actual investments during those periods may be lower than the
results shown.
The average annual total returns on Class C shares for the period from
December 1, 1993, (the commencement of the offering of the shares) and for
the one-year period ending through December 31, 1994 were 0.60% and 1.38%,
respectively.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an average annual total return at net asset value or a
cumulative total return at net asset value for Class A or Class C shares.
Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that
class of shares (without considering front-end or contingent deferred
sales charges) and takes into consideration the reinvestment of dividends
and capital gains distributions. The cumulative total return at net asset
value of the Fund's Class A shares for the ten-year period ended December
31, 1994 was 187.71%. The average annual total returns at net asset value
for the one, five and ten-year periods ended December 31, 1994, for Class
A shares were 0.46%, 9.75% and 11.15%, respectively. The average annual
total return at net asset value for Class C shares for the 1-year period
ended December 31, 1994, was 0.50% respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A or Class C shares. However, when
comparing total return of an investment in Class A or Class C shares of
the Fund with that of other alternatives, investors should understand that
as the Fund is an aggressive equity fund seeking capital appreciation, its
shares are subject to greater market risks and volatility than shares of
funds having other investment objectives and that the Fund is designed for
investors who are willing to accept greater risk of loss in the hopes of
realizing greater gains.
Other Performance Comparisons. From time to time the Fund may publish the
ranking of its Class A or Class C shares by Lipper Analytical Services,
Inc. ("Lipper"), a widely-recognized independent service. Lipper monitors
the performance of regulated investment companies, including the Fund, and
ranks their performance for various periods based on categories relating
to investment objectives. The performance of the Fund is ranked against
(i) all other funds (excluding money market funds), (ii) all other capital
appreciation funds and (iii) all other capital appreciation funds in a
specific size category. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain distributions
and income dividends but do not take sales charges or taxes into
consideration.
From time to time, the Fund may include in its advertisements and sales
literature performance information about the Fund cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources, including Lipper.
From time to time the Fund may publish the ranking of its performance
by Morningstar, Inc., an independent mutual fund monitoring service that
ranks mutual funds, including the Fund, monthly in broad investment
categories (equity, taxable bond, municipal bond and hybrid) based on
risk-adjusted investment return. Investment return measures a fund's (or
class's) three, five and ten-year average annual total returns (when
available) in excess of 90-day U.S. Treasury bill returns after
considering sales charges and expenses. Risk reflects fund performance
below 90-day U.S. Treasury bill monthly returns. Risk and return are
combined to produce star rankings reflecting performance relative to the
average fund in a fund's category. Five stars is the "highest" ranking
(top 10%), four stars is "above average" (next 22.5%), three stars is
"average" (next 35%), two stars is "below average" (next 22.5%) and one
star is "lowest" (bottom 10%). Morningstar ranks the Fund in relation to
other equity funds. The current ranking is a weighted average of the 3,
5 and 10-year rankings (if available). Rankings are subject to change.
The total return on an investment in the Fund's Class A or Class C
shares may be compared with performance for the same period of either the
Dow-Jones Industrial Average ("Dow") or the Standard & Poor's 500 Index
("S&P 500"), both of which are widely recognized indices of U.S. stock
market performance. Both indices consist of unmanaged groups of common
stocks; the Dow consists of thirty such issues. The performance of both
indices includes a factor for the reinvestment of income dividends.
Neither index reflects reinvestment of capital gains or takes transaction
charges or taxes into consideration as these items are not applicable to
indices.
Investors may also wish to compare the Fund's Class A or Class C return
to the returns on fixed income investments available from banks and thrift
institutions, such as certificates of deposit, ordinary interest-paying
checking and savings accounts, and other forms of fixed or variable time
deposits, and various other instruments such as Treasury bills. However,
the Fund's returns and share price are not guaranteed by the FDIC or any
other agency and will fluctuate daily, while bank depository obligations
may be insured by the FDIC and may provide fixed rates of return, and
Treasury bills are guaranteed as to principal and interest by the U.S.
government.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by
them to shareholders of the OppenheimerFunds, other than performance
rankings of the OppenheimerFunds themselves. Those ratings or rankings
of shareholder/investor services by third parties may compare the
OppenheimerFunds' services to those of other mutual fund families selected
by the rating or ranking services and may be based upon the opinions of
the rating or ranking service itself, based on its research or judgment,
or based upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plan for Class C shares under Rule 12b-1 of the
Investment Company Act pursuant to which the Fund will reimburse the
Distributor quarterly for all or a portion of its costs incurred in
connection with the distribution and/or servicing of the shares of that
class, as described in the Prospectus. Each Plan has been approved by a
vote of (i) the Board of Trustees of the Fund, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose
of voting on that Plan, and (ii) the holders of a "majority" (as defined
in the Investment Company Act) of the shares of each class. For the
Distribution and Service Plan for Class C shares, that vote was cast by
the Manager as the sole initial holder of Class C shares of the Fund.
In addition, under the Plans the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in
the case of the Manager, may include profits from the advisory fee it
receives from the Fund) to make payments to brokers, dealers or other
financial institutions (each is referred to as a "Recipient" under the
Plans) for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or
decrease the amount of payments they make from their own resources to
Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Either Plan may be terminated at
any time by the vote of a majority of the Independent Trustees or by the
vote of the holders of a "majority" (as defined in the Investment Company
Act) of the outstanding shares of that class. Neither Plan may be amended
to increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. All material amendments must be approved by the Independent
Trustees.
While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. The report for the Class C Plan 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, did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Trustees. Initially, the Board of Trustees has set the
fee at the maximum rate and set no minimum amount.
The Fund's shareholders approved a new Service Plan for Class A shares,
effective July 1, 1994. Under the old plan, payments were made to a
Recipient only as to Class A shares acquired on or after April 1, 1991.
Under the current Plan, payments are based on the value of all Class A
shares, whenever acquired.
For the fiscal year ended December 31, 1994, payments under the Class
A Plan totalled $325,662, all of which was paid by the Distributor to
Recipients, including $33,166 paid to MML Investor Services, Inc., an
affiliate of the Distributor. Payments made under the Class C Plan during
that fiscal period totalled $4,642.
Any unreimbursed expenses incurred by the Distributor with respect to
Class A shares for any fiscal year may not be recovered in subsequent
years. Payments received by the Distributor under the Plan for Class A
shares will not be used to pay any interest expense, carrying charge, or
other financial costs, or allocation of overhead by the Distributor. The
Class C Plan allows the service fee payment to be paid by the Distributor
to Recipients in advance for the first year Class C shares are
outstanding, and thereafter on a quarterly basis, as described in the
Prospectus. The advance payment is based on the net asset value of the
Class C shares sold. An exchange of shares does not entitle the Recipient
to an advance service fee payment. In the event Class C shares are
redeemed during the first year that the shares are outstanding, the
Recipient will be obligated to repay a pro rata portion of the advance
payment for those shares to the Distributor.
Although the Class C Plan permits the Distributor to retain both the
asset-based sales charges and the service fee on Class C 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 C Plan by the Board. Initially, the
Board has set no minimum holding period. All payments under the Class C
Plan are subject to the limitations imposed by the Rules of Fair Practice
of the National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees.
The Class C Plan allows for the carry-forward of distribution expenses,
to be recovered from asset-based sales charges in subsequent fiscal
periods, as described in the Prospectus. The asset-based sales charge
paid to the Distributor by the Fund under the Class C Plan is intended to
allow the Distributor to recoup the cost of sales commissions paid to
authorized brokers and dealers at the time of sale, plus financing costs,
as described in the Prospectus. Such payments may also be used to pay for
the following expenses in connection with the distribution of Class C
shares: (i) financing the advance of the service fee payment to Recipients
under the Class C Plan, (ii) compensation and expenses of personnel
employed by the Distributor to support distribution of Class C shares, and
(iii) costs of sales literature, advertising and prospectuses (other than
those furnished to current shareholders) and state "blue sky" registration
fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A and Class C Shares. The
availability of two 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 C shares are the same as
those of the initial sales charge with respect to Class A shares. Any
salesperson or other person entitled to receive compensation for selling
Fund shares may receive different compensation with respect to one class
of shares than the other. The Distributor will not accept any order for
$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.
The two 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
C shares and the dividends payable on Class C shares will be reduced by
incremental expenses borne solely by that class, including the asset-based
sales charge to which Class C shares are subject.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A and Class C shares recognizes two
types of expenses. General expenses that do not pertain specifically to
either 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 and Class C shares of the Fund are determined as of the
close of business of The New York Stock Exchange on each day that the
Exchange is open, by dividing the value of the Fund's net assets
attributable to that class by the number of shares of that class
outstanding. The Exchange normally closes at 4:00 P.M. New York time, but
may close earlier on some days (for example, in case of weather
emergencies or days falling before a holiday). The Exchange's most recent
annual announcement (which is subject to change) states that it will close
on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It may
also close on other days. The Fund may invest a portion of its assets in
foreign securities primarily listed on foreign exchanges which may trade
on Saturdays or customary U.S. business holidays on which the Exchange is
closed. Because the Fund's 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 securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of the
preceding trading day, or closing bid and asked prices); (ii) securities
traded on NASDAQ and other unlisted equity securities for which last sale
prices are not regularly reported but for which over-the-counter market
quotations are readily available are valued at the highest closing bid
price at the time of valuation, or, if no closing bid price is reported,
on the basis of a closing bid price obtained from a dealer who maintains
an active market in that security; (iii) debt securities having a maturity
in excess of 60 days are valued at the mean between the bid and asked
prices determined by a portfolio pricing service approved by the Board or
obtained from active market makers on the basis of reasonable inquiry;
(iv) short-term debt securities having a remaining maturity of 60 days or
less are valued at cost, adjusted for amortization of premiums and
accretion of discounts; (v) securities (including restricted securities)
not having readily-available market quotations are valued at fair value
under the Board's procedures; and (vi) securities traded on foreign
exchanges are valued at the closing or last sales prices reported on a
principal exchange, or, if none, at the mean between closing bid and asked
prices and reflect prevailing rates of exchange taken from the closing
price on the London foreign exchange market that day.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the NYSE.
Events affecting the values of foreign securities traded in stock markets
that occur between the time their prices are determined and the close of
the NYSE will not be reflected in the Fund's calculation of net asset
value unless the Board of Trustees or the Manager, under procedures
established by the Board of Trustees, determines that the particular event
would materially affect the Fund's net asset value, in which case an
adjustment would be made. Foreign currency will be valued as close to the
time fixed for the valuation date as is reasonably practicable. The
values of securities denominated in foreign currency will be converted to
U.S. dollars at the prevailing rates of exchange at the time of valuation.
Puts, calls and Futures held by the Fund are valued at the last sales
price on the principal exchange on which they are traded, or on NASDAQ,
as applicable, or, if there are no sales that day, in accordance with (i),
above. Forward currency contracts are valued at the closing price on the
London foreign exchange market. When the Fund writes an option, an amount
equal to the premium received by the Fund is included in the Fund's
Statement of Assets and Liabilities as an asset, and an equivalent
deferred credit is included in the liability section. The deferred credit
is "marked-to-market" to reflect the current market value of the option.
In determining the Fund's gain on investments, if a call written by the
Fund is exercised, the proceeds are increased by the premium received.
If a call or put written by the Fund expires, the Fund has a gain in the
amount of the premium; if the Fund enters into a closing purchase
transaction, it will have a gain or loss depending on whether the premium
was more or less than the cost of the closing transaction. If the Fund
exercises a put it holds, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of premium paid by the
Fund.
AccountLink. When shares are purchased through AccountLink, each purchase
must be at least $25.00. Shares will be purchased on the regular business
day the Distributor is instructed to initiate the Automated Clearing House
transfer to buy the shares. Dividends will begin to accrue on shares
purchased by the proceeds of ACH transfers on the business day the Fund
receives Federal Funds for such purchase through the ACH system before the
close of The New York Stock Exchange. The Exchange normally closes at
4:00 P.M.; but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the shares
will be purchased and dividends will begin to accrue on the next regular
business day. The proceeds of ACH transfers are normally received by the
Fund 3 days after the ACH transfer is initiated. The Distributor and the
Fund are not responsible for any delays in purchasing shares resulting
from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Right of Accumulation
and Letters of Intent because of the economies of sales efforts and
reduction in expenses realized by the Distributor, dealers and brokers
making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-
law, brothers and sisters, sons- and daughters-in-law, a sibling's spouse
and a spouse's siblings.
- The OppenheimerFunds. The OppenheimerFunds are those mutual funds
for which the Distributor acts as the distributor or the sub-distributor
and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Insured Tax-Exempt Bond Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Time Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion High Yield Fund
Oppenheimer Investment Grade Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Mortgage Income Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Diversified Income 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 OppenheimerFunds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent ("Letter") is the investor's
statement of intention to purchase Class A shares of the Fund (and other
eligible OppenheimerFunds) sold with a front-end sales charge during the
13-month period from the investor's first purchase pursuant to the Letter
(the "Letter of Intent period"), which may, at the investor's request,
include purchases made up to 90 days prior to the date of the Letter. The
Letter states the investor's intention to make the aggregate amount of
purchases (excluding any purchases made by reinvestment of dividends or
distributions or purchases made at net asset value without sales charge),
which together with the investor's holdings of such funds (calculated at
their respective public offering prices calculated on the date of the
Letter) will equal or exceed the amount specified in the Letter. This
enables the investor to count the shares to be purchased under the Letter
of Intent to obtain the reduced sales charge rate (as set forth in the
Prospectus) applicable to purchases of shares in that amount (the
"intended purchase amount"). Each purchase of Class A shares under the
Letter will be made at the public offering price (including the sales
charge) that applies to a single lump-sum purchase of shares in the amount
intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual purchases. If total eligible purchases during the
Letter of Intent period exceed the intended purchase amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended purchase amount specified in the Letter shall be held in escrow
by the Transfer Agent. For example, if the intended purchase amount is
$50,000, the escrow shall be shares valued in the amount of $2,500
(computed at the public offering price adjusted for a $50,000 purchase).
Any dividends and capital gains distributions on the escrowed shares will
be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of the Letter) include Class A
shares sold with a front-end sales charge or subject to a Class A
contingent deferred sales charge, and Class A shares acquired in exchange
for Class A shares of one of the other OppenheimerFunds that were acquired
subject to a Class A initial or contingent sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in
the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
OppenheimerFunds.
There is a front-end sales charge on the purchase of certain
OppenheimerFunds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- 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 it 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.
- Involuntary Redemptions. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if
the aggregate net asset value of those shares is less than $200 or such
lesser amount as the Board may fix. The Board of Trustees will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the Shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.
Reinvestment Privilege. Within six months of a redemption, a shareholder
may reinvest all or part of the redemption proceeds of Class A shares of
the Fund. The reinvestment may be made without sales charge only in Class
A shares of the Fund or any of the other OppenheimerFunds into which
shares of the Fund are exchangeable as described in "How to Exchange
Shares," below. 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 OppenheimerFunds within 90 days of payment of the sales charge, the
shareholder's basis in the shares of the Fund that were redeemed may not
include the amount of the sales charge paid. That would reduce the loss
or increase the gain recognized from the redemption. However, in that
case the sales charge would be added to the basis of the shares acquired
by the reinvestment of the redemption proceeds. The Fund may amend,
suspend or cease offering this reinvestment privilege at any time as to
shares redeemed after the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of either class at the time of transfer
to the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class C contingent deferred
sales charge will be followed in determining the order in which shares are
transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, or pension or
profit-sharing plans should be addressed to "Trustee, OppenheimerFunds
Retirement Plans," c/o the Transfer Agent at its address listed in "How
To Sell Shares" in the Prospectus or on the back cover of this Statement
of Additional Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if the
distribution is premature; and (iii) conform to the requirements of the
plan and the Fund's other redemption requirements. Participants (other
than self-employed persons) in OppenheimerFunds-sponsored pension or
profit-sharing plans may not directly request redemption of their
accounts. The employer or plan administrator must sign the request.
Distributions from pension 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. The repurchase price per share will be the
net asset value next computed after the Distribution receives the order
placed by the dealer or broker, except if the Distributor receives a
repurchase 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 closes (normally 4:00 P.M., but
it may be earlier on some days), and the order was transmitted to and
received by the Distributor prior to its close of business that day
(normally 5:00 P.M.). Payment ordinarily will be made within seven days
after the Distributor's receipt of the required redemption documents, with
signature(s) guaranteed as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class C shareholders should not establish withdrawal
plans that would require the redemption of shares held less than 12
months, because of the imposition of the Class C contingent deferred sales
charge on such withdrawals (except where the Class C contingent deferred
sales charge is waived as described in the Prospectus under "Class C
Contingent Deferred Sales Charge").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated
below and in the provisions of the OppenheimerFunds Application relating
to such Plans, as well as the Prospectus. These provisions may be amended
from time to time by the Fund and/or the Distributor. When adopted, such
amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other OppenheimerFunds automatically on
a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment.
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 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
OppenheimerFunds having more than one class of shares may be exchanged
only for shares of the same class of other OppenheimerFunds. Shares of
OppenheimerFunds that have a single class without a class designation are
deemed "Class A" shares for this purpose, and all OppenheimerFunds offer
"Class A" shares (except for Oppenheimer Strategic Diversified Income
Fund), but only the following other OppenheimerFunds offer Class C shares:
Oppenheimer Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Champion High Yield Fund
Oppenheimer U.S. Government Trust
Oppenheimer Intermediate Tax-Exempt Bond Fund
Oppenheimer Main Street Income & Growth Fund
Oppenheimer Cash Reserves (Class C and B shares are available
only by exchange)
Oppenheimer Strategic Diversified Income Fund
Oppenheimer Limited-Term Government Fund
Class A shares of OppenheimerFunds 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
OppenheimerFunds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of
OppenheimerFunds subject to a contingent deferred sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the OppenheimerFunds 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 OppenheimerFunds. No contingent deferred sales charge is imposed on
exchanges of shares of either class purchased subject to a contingent
deferred sales charge. However, when Class A shares acquired by exchange
of Class A shares of other OppenheimerFunds purchased subject to a Class
A contingent deferred sales charge are redeemed within 18 months of the
end of the calendar month of the initial purchase of the exchanged Class
A shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares (see "Class A Contingent Deferred Sales Charge" in the
Prospectus). The Class 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 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 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 both classes must specify whether they intend to exchange Class A or
Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of,
the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different OppenheimerFunds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
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, in order to enable the investor to earn a return
on otherwise idle funds.
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 OppenheimerFunds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. As of the
date of this Statement of Additional Information, not all of the
OppenheimerFunds offer Class C shares. To elect this option, a
shareholder must notify the Transfer Agent in writing and either have an
existing account in the fund selected for reinvestment or must obtain a
prospectus for that fund and an application from the Distributor to
establish an account. The investment will be made at the net asset value
per share in effect at the close of business on the payable date of the
dividend or distribution. Dividends and/or distributions from certain of
the OppenheimerFunds may be invested in shares of this Fund on the same
basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates. The Fund's cash
balances with the Custodian in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may be
substantial.
Independent Auditors. The independent auditors of the Fund audit the
Fund's financial statements and perform other related audit services.
They also act as auditors for certain other funds advised by the Manager
and its affiliates.
<PAGE>
Appendix A: Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Transmission
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
<TABLE>
<S> <C>
Independent Auditors' Report
==========================================================
==========================================================
============
The Board of Trustees and Shareholders of Oppenheimer Target Fund:
We have audited the accompanying statements of investments and assets and liabilities of Oppenheimer
Target Fund as of December 31, 1994, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the years in the two-year period then ended and
the financial highlights for each of the years in the ten-year period then ended. These financial
statements and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of December 31, 1994, by
correspondence with the custodian and brokers; and where confirmations were not received from
brokers, we performed other auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to above present
fairly, in all material respects, the financial position of Oppenheimer Target Fund as of December
31, 1994, the results of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial highlights for each of the
years in the ten-year period then ended, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Denver, Colorado
January 23, 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Statement of Investments December 31, 1994
------------------------------------------------------------------------------------------------------
Face Market Value
Amount See Note 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Repurchase Agreements--21.9% Repurchase agreement with First Chicago Capital Markets, 6%,
dated 12/30/94, to be repurchased at $66,444,267 on 1/3/95,
collateralized by U.S. Treasury Nts., 3.875%--8.875%, 5/31/95--8/31/05,
with a value of $63,145,634 and U.S. Treasury Bonds, 10.75%--14.25%,
2/15/02--8/15/05, with a value of $4,638,710 (Cost $66,400,000) $66,400,000 $66,400,000
Shares
==========================================================
==========================================================
===============
Common Stocks--78.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--2.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--1.0% Georgia Gulf Corp.(1) 75,000 2,915,625
- -----------------------------------------------------------------------------------------------------------------------------------
Steel--1.1% LTV Corp.(1) 215,000 3,493,750
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--10.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Auto Parts: After Market-0.4% Goodyear Tire & Rubber Co. 40,000 1,345,000
- -----------------------------------------------------------------------------------------------------------------------------------
Broadcast Media--0.6% Multimedia, Inc.(1) 62,500 1,781,250
- -----------------------------------------------------------------------------------------------------------------------------------
Entertainment--0.4% WMS Industries, Inc.(1) 65,000 1,218,750
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure Time--3.1% Acclaim Entertainment, Inc.(1) 25,000 359,375
-----------------------------------------------------------------------------------------------------
Brunswick Corp. 275,000 5,190,625
-----------------------------------------------------------------------------------------------------
Harley-Davidson, Inc. 80,000 2,240,000
-----------------------------------------------------------------------------------------------------
Outboard Marine Corp. 75,000 1,471,875
------------
9,261,875
- -----------------------------------------------------------------------------------------------------------------------------------
Restaurants--0.4% Shoney's, Inc.(1) 95,000 1,211,250
- -----------------------------------------------------------------------------------------------------------------------------------
Retail Stores: Bradlees, Inc. 10,000 116,250
-----------------------------------------------------------------------------------------------------
Department Stores--0.5% Dollar General Corp. 50,000 1,500,000
------------
1,616,250
- -----------------------------------------------------------------------------------------------------------------------------------
Retail Stores: General Waban, Inc.(1) 90,000 1,597,500
-----------------------------------------------------------------------------------------------------
Merchandise Chains--1.8% Wal-Mart Stores, Inc. 185,000 3,931,250
------------
5,528,750
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty--2.0% Home Depot, Inc. (The) 30,000 1,380,000
-----------------------------------------------------------------------------------------------------
Intelligent Electronics, Inc. 73,200 585,600
-----------------------------------------------------------------------------------------------------
Michaels Stores, Inc.(1) 82,900 2,880,775
-----------------------------------------------------------------------------------------------------
Toys 'R' Us, Inc.(1) 40,000 1,220,000
------------
6,066,375
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty Apparel--0.7%
Gap, Inc. (The) 65,000 1,982,500
- -----------------------------------------------------------------------------------------------------------------------------------
Toys--0.3% Mattel, Inc. 30,000 753,750
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--19.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages: Soft Drinks--2.3% Coca-Cola Co. (The) 100,000 5,150,000
-----------------------------------------------------------------------------------------------------
PepsiCo, Inc. 50,000 1,812,500
------------
6,962,500
</TABLE>
6 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Drugs--3.2% Merck & Co., Inc. 40,000 $ 1,525,000
-----------------------------------------------------------------------------------------------------
Pfizer, Inc. 35,000 2,703,750
-----------------------------------------------------------------------------------------------------
Schering-Plough Corp. 75,000 5,550,000
------------
9,778,750
- -----------------------------------------------------------------------------------------------------------------------------------
Food Processing--0.7% ConAgra, Inc. 45,000 1,406,250
-----------------------------------------------------------------------------------------------------
IBP, Inc. 25,000 756,250
------------
2,162,500
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare: Diversified--4.4% Abbott Laboratories 125,000 4,078,125
-----------------------------------------------------------------------------------------------------
American Home Products Corp. 37,400 2,346,850
-----------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 50,000 2,893,750
-----------------------------------------------------------------------------------------------------
Warner-Lambert Co. 50,000 3,850,000
------------
13,168,725
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare: Miscellaneous--3.7%
Amgen, Inc.(1) 60,000 3,540,000
-----------------------------------------------------------------------------------------------------
U.S. Healthcare, Inc. 100,000 4,125,000
-----------------------------------------------------------------------------------------------------
United Healthcare Corp. 80,000 3,610,000
------------
11,275,000
- -----------------------------------------------------------------------------------------------------------------------------------
Hospital Management--0.8% HealthCare COMPARE Corp.(1) 70,000 2,388,750
- -----------------------------------------------------------------------------------------------------------------------------------
Household Products--0.8% Colgate-Palmolive Co. 40,000 2,535,000
- -----------------------------------------------------------------------------------------------------------------------------------
Medical Products--2.4% Cordis Corp.(1) 75,000 4,537,500
-----------------------------------------------------------------------------------------------------
Medtronic, Inc. 50,000 2,781,250
------------
7,318,750
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--1.2% Philip Morris Cos., Inc. 15,000 862,500
-----------------------------------------------------------------------------------------------------
UST, Inc. 95,000 2,636,250
------------
3,498,750
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--2.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Conglomerates--0.8% Canadian Pacific Ltd. 150,000 2,250,000
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--1.7% General Electric Co. 100,000 5,100,000
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing: Mark IV Industries, Inc. 20,000 395,000
Diversified Industrials--0.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Railroads--0.3% Illinois Central Corp. 30,000 922,500
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--23.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Finance--0.3% MBNA Corp. 40,000 935,000
</TABLE>
7 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Investments (Continued)
-----------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Financial Services:
Miscellaneous--9.9% Advanta Corp., Cl. A 175,000 $ 4,593,750
-----------------------------------------------------------------------------------------------------
Bear Stearns Cos., Inc. (The) 90,000 1,383,750
-----------------------------------------------------------------------------------------------------
Countrywide Credit Industries, Inc. 20,000 260,000
-----------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 15,000 757,500
-----------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. 45,000 3,279,375
-----------------------------------------------------------------------------------------------------
First USA, Inc. 65,000 2,136,875
-----------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 190,000 5,771,250
-----------------------------------------------------------------------------------------------------
PaineWebber Group, Inc. 156,800 2,352,000
-----------------------------------------------------------------------------------------------------
Student Loan Marketing Assn. 75,000 2,437,500
-----------------------------------------------------------------------------------------------------
Sunamerica, Inc. 125,100 4,534,875
-----------------------------------------------------------------------------------------------------
Travelers, Inc. 75,000 2,437,500
------------
29,944,375
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance: Life--2.2% AFLAC, Inc. 159,750 5,112,000
-----------------------------------------------------------------------------------------------------
NWNL Companies, Inc. 60,000 1,740,000
------------
6,852,000
- -----------------------------------------------------------------------------------------------------------------------------------
Major Banks: Other--1.5% Bank of Boston Corp. 175,000 4,528,125
- -----------------------------------------------------------------------------------------------------------------------------------
Major Banks: Regional--8.1% First Interstate Bancorp 40,000 2,705,000
-----------------------------------------------------------------------------------------------------
KeyCorp 100,000 2,500,000
-----------------------------------------------------------------------------------------------------
Midlantic Corp. 100,000 2,650,000
-----------------------------------------------------------------------------------------------------
NationsBank Corp. 100,000 4,512,500
-----------------------------------------------------------------------------------------------------
Northern Trust Corp. 10,000 350,000
-----------------------------------------------------------------------------------------------------
Shawmut National Corp. 245,000 4,011,875
-----------------------------------------------------------------------------------------------------
Signet Banking Corp. 155,000 4,436,875
-----------------------------------------------------------------------------------------------------
SouthTrust Corp. 157,500 2,835,000
-----------------------------------------------------------------------------------------------------
SunTrust Banks, Inc. 10,000 477,500
------------
24,478,750
- -----------------------------------------------------------------------------------------------------------------------------------
Money Center Banks--0.4% Chase Manhattan Corp. 33,500 1,151,563
- -----------------------------------------------------------------------------------------------------------------------------------
Savings and Loans/ California Federal Bank(1) 190,000 2,066,250
Holding Cos.--0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--19.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Software Automatic Data Processing, Inc. 35,000 2,047,500
-----------------------------------------------------------------------------------------------------
And Services--6.9% BMC Software, Inc.(1) 100,000 5,687,500
-----------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 65,000 3,152,500
-----------------------------------------------------------------------------------------------------
Computer Sciences Corp.(1) 23,100 1,178,100
-----------------------------------------------------------------------------------------------------
General Motors Corp., Cl. E 25,000 962,500
-----------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 100,000 6,112,500
-----------------------------------------------------------------------------------------------------
Novell, Inc.(1) 35,000 599,375
-----------------------------------------------------------------------------------------------------
Sybase, Inc.(1) 20,000 1,040,000
------------
20,779,975
</TABLE>
8 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computer Systems--7.0% 3Com Corp.(1) 100,000 $ 5,156,250
-----------------------------------------------------------------------------------------------------
American Power Conversion Corp.(1) 115,000 1,883,125
-----------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 50,000 2,325,000
-----------------------------------------------------------------------------------------------------
Compaq Computer Corp.(1) 90,000 3,555,000
-----------------------------------------------------------------------------------------------------
Quantum Corp.(1) 94,000 1,421,750
-----------------------------------------------------------------------------------------------------
Seagate Technology(1) 20,000 480,000
-----------------------------------------------------------------------------------------------------
Western Digital Corp.(1) 375,000 6,281,250
------------
21,102,375
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics: Linear Technology Corp. 60,000 2,970,000
Instrumentation--1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics: Intel Corp. 125,000 7,984,375
-----------------------------------------------------------------------------------------------------
Semiconductors--2.9% Novellus Systems, Inc.(1) 7,500 375,000
------------------------------------------------------------------------------------------------------
VLSI Technology, Inc.(1) 35,000 420,000
------------
8,779,375
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications--1.3% AT&T Corp. 80,000 4,020,000
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--1.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Companies--0.7% Empresa Nacional de Electricidad SA, Sponsored ADR 50,000
2,025,000
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone--0.6% Telefonos de Mexico SA, Sponsored ADR 50,000 2,050,000
------------
Total Common Stocks (Cost $185,188,215) 236,614,138
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $251,588,215) 100.1% 303,014,138
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.1) (249,914)
---------- ------------
Net Assets 100.0% $302,764,224
==========
============
<FN>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
9 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1994
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C> <C>
Assets Investments, at value (including repurchase agreements of $66,400,000)
(cost $251,588,215)--see accompanying statement $303,014,138
-----------------------------------------------------------------------------------------------------
Cash 253,694
-----------------------------------------------------------------------------------------------------
Receivables:
Investments sold 2,200,708
Interest and dividends 440,133
Shares of beneficial interest sold 133,504
-----------------------------------------------------------------------------------------------------
Other 243,911
------------
Total assets 306,286,088
==========================================================
==========================================================
===============
Liabilities Payables and other liabilities:
Investments purchased 1,852,737
Shares of beneficial interest redeemed 982,557
Dividends and distributions 146,484
Distribution and service plan fees--Note 4 130,930
Other 409,156
------------
Total liabilities 3,521,864
==========================================================
==========================================================
===============
Net Assets $302,764,224
============
==========================================================
==========================================================
===============
Composition of Paid-in capital $248,122,703
-----------------------------------------------------------------------------------------------------
Net Assets Undistributed (overdistributed) net investment income (69,749)
-----------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) from investment transactions 3,285,347
-----------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments--Note 3 51,425,923
------------
Net assets $302,764,224
============
==========================================================
==========================================================
===============
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$301,698,437 and 13,330,877 shares of beneficial interest outstanding) $22.63
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $24.01
-----------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $1,065,787 and 47,375 shares of beneficial interest outstanding) $22.50
</TABLE>
See accompanying Notes to Financial Statements.
10 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1994
-----------------------------------------------------------------------------------------------------
==========================================================
==========================================================
===============
<S> <C> <C>
Investment Income Interest $ 1,583,627
-----------------------------------------------------------------------------------------------------
Dividends 4,540,238
-------------
Total income 6,123,865
==========================================================
==========================================================
===============
Expenses Management fees--Note 4 2,475,491
-----------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A--Note 4 325,662
Class C--Note 4 4,640
-----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 334,992
-----------------------------------------------------------------------------------------------------
Shareholder reports 324,811
-----------------------------------------------------------------------------------------------------
Trustees' fees and expenses 104,631
-----------------------------------------------------------------------------------------------------
Custodian fees and expenses 51,086
-----------------------------------------------------------------------------------------------------
Legal and auditing fees 41,829
-----------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 826
Class C 375
-----------------------------------------------------------------------------------------------------
Other 119,641
-------------
Total expenses 3,783,984
==========================================================
==========================================================
===============
Net Investment Income (Loss) 2,339,881
==========================================================
==========================================================
===============
Realized and Unrealized Net realized gain (loss) on investments 38,815,275
Gain (Loss) on Investments -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (40,560,449)
-------------
Net realized and unrealized gain (loss) on investments (1,745,174)
==========================================================
==========================================================
===============
Net Increase (Decrease) in Net Assets Resulting From Operations $ 594,707
=============
</TABLE>
See accompanying Notes to Financial Statements.
11 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets
-----------------------------------------------------------------------------------------------------
Year Ended December 31,
1994 1993
==========================================================
==========================================================
===============
<S> <C> <C> <C>
Operations Net investment income (loss) $ 2,339,881 $ 1,811,132
-----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 38,815,275 7,582,007
-----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (40,560,449) 3,927,425
------------ ------------
Net increase (decrease) in net assets resulting from operations 594,707 13,320,564
==========================================================
==========================================================
===============
Dividends and Dividends from net investment income:
Distributions to Class A ($.201 and $.12 per share, respectively) (2,361,728) (1,693,272)
Shareholders Class C ($.085 and $.101 per share, respectively) (2,907) (180)
-----------------------------------------------------------------------------------------------------
Distributions from net realized gain on investments:
Class A ($2.982 and $.398 per share, respectively) (35,048,552) (5,616,693)
Class C ($2.982 and $.398 per share, respectively) (102,047) (123)
==========================================================
==========================================================
===============
Beneficial Interest Net increase (decrease) in net assets resulting from
Transactions Class A beneficial interest transactions--Note 2 (30,283,681) (38,460,852)
-----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
Class C beneficial interest transactions--Note 2 1,154,378 8,135
==========================================================
==========================================================
===============
Net Assets Total increase (decrease) (66,049,830) (32,442,421)
-----------------------------------------------------------------------------------------------------
Beginning of period 368,814,054 401,256,475
------------ ------------
End of period [including undistributed (overdistributed) net
investment income of $(69,749) and $10,407, respectively] $302,764,224 $368,814,054
============
============
</TABLE>
See accompanying Notes to Financial Statements.
12 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------------------------
Class A Class C
------------------------------------------------------------------------------------------- ---------------
Year Ended
Year Ended December 31, December 31,
1994 1993 1992 1991(3) 1990 1989 1988 1987 1986(2) 1985(2) 1994(3) 1993(1)
==========================================================
==========================================================
============
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
Per Share Operating Data:
Net asset
value, beginning
of period $ 25.72 $ 25.25 $ 23.76 $ 17.47 $ 18.26 $ 16.04 $ 12.38 $ 20.49 $ 19.30 $ 15.16 $ 25.72 $25.92
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss)
from investment
operations:
Net investment
income (loss) .20 .13 .16 .27 .39 .59 .27 .17 .11 .41 -- (.01)
Net realized
and unrealized
gain (loss)
on investments (.11) .86 2.28 6.87 (.78) 2.34 3.74 (3.68) 1.46 4.05 (.15) .31
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- ------- ------
Total income
(loss) from
investment
operations .09 .99 2.44 7.14 (.39) 2.93 4.01 (3.51) 1.57 4.46 (.15) .30
- --------------------------------------------------------------------------------------------------------------------------------
Dividends and
distributions to
shareholders:
Dividends from net
investment income (.20) (.12) (.17) (.18) (.40) (.62) (.26) (.31) (.38) (.32) (.09) (.10)
Distributions from
net realized gain
on investments (2.98) (.40) (.78) (.67) -- (.09) (.09) (4.29) -- -- (2.98) (.40)
------- ------- ------- ------- ------- ------- ------- -------- ------- ------- ------- ------
Total dividends and
distributions to
shareholders (3.18) (.52) (.95) (.85) (.40) (.71) (.35) (4.60) (.38) (.32) (3.07) (.50)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 22.63 $ 25.72 $ 25.25 $ 23.76 $ 17.47 $ 18.26 $ 16.04 $ 12.38 $ 20.49 $ 19.30 $ 22.50 $25.72
======= ======= ======= ======= ======= =======
======= ======== ======= ======= ======= ======
==========================================================
==========================================================
============
Total Return,
at Net Asset
Value(4) .46% 3.93% 10.27% 41.33% (2.13)% 18.31% 32.39% (17.95)% 8.28% 29.85% (.50)%
2.11%
==========================================================
==========================================================
============
Ratios/Supplemental
Data:
Net assets,
end of period
(in thousands) $301,698 $368,806 $401,256 $369,351 $52,526 $66,050 $68,031 $60,888 $111,417 $118,244 $1,066
$8
- --------------------------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $325,003 $383,875 $362,295 $209,596 $56,208 $70,874 $68,068 $107,475 $128,757 $130,925 $ 467
$6
- --------------------------------------------------------------------------------------------------------------------------------
Number of shares
outstanding at
end of period
(in thousands) 13,331 14,339 15,892 15,546 3,007 3,616 4,242 4,918 5,437 6,127 47 --
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Net investment
income (loss) .72% .47% .69% 1.25% 2.08% 2.93% 1.64% .60% .36% 1.87% (.02)%
(.07)%(5)
Expenses 1.16% 1.07% 1.09% 1.17% 1.33% 1.27% 1.29% 1.16% 1.16% 1.17% 2.18%
2.18%(5)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate(6) 34.7% 22.9% 42.3% 65.6% 51.2% 68.3% 108.4% 95.1 69.9% 118.8% 34.7%
22.9%
<FN>
1. For the period from December 1, 1993 (inception of offering) to December 31, 1993.
2. During 1986 and 1985, the Fund had average monthly debt outstanding of $688,172 and $663,262,
respectively; the average monthly number of shares outstanding for the years ended December 31, 1986
and 1985 was 5,799,198 and 7,715,542, respectively, and the average monthly debt per share was $.12
and $.09 for 1986 and 1985, respectively. The amount of debt outstanding at December 31, 1985 was
$7,000,000.
3. Per share amounts calculated based on the weighted average number of shares outstanding during the
year.
4. Assumes a hypothetical initial investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day of the fiscal period.
Sales charges are not reflected in the total returns.
5. Annualized.
6. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly
average of the market value of portfolio securities owned during the period. Securities with a
maturity or expiration date at the time of acquisition of one year or less are excluded from the
calculation. Purchase and sales of investment securities (excluding short-term securities) for the
year ended December 31, 1994 were $100,706,246 and $210,599,293, respectively.
See accompanying Notes to Financial Statements.
</FN>
</TABLE>
13 Oppenheimer Target Fund
<PAGE>
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------
Notes to Financial Statements
------------------------------------------------------------------------------------------------------
==========================================================
==========================================================
============
1. Significant Oppenheimer Target Fund (the Fund) is registered under the Investment Company Act of 1940, as
Accounting Policies amended, as a diversified, open-end management investment company. The Fund's investment
advisor is
Oppenheimer Management Corporation (the Manager). The Fund offers both Class A and Class C shares.
Class A shares are sold with a front-end sales charge. Class C shares may be subject to a contingent
deferred sales charge. Both classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own distribution and/or service plan, expenses directly
attributable to a particular class and exclusive voting rights with respect to matters affecting a
single class. The following is a summary of significant accounting policies consistently followed by
the Fund.
------------------------------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at 4:00 p.m. (New York time) on each trading
day. Listed and unlisted securities for which such information is regularly reported are valued at
the last sale price of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Short-term debt securities having a
remaining maturity of 60 days or less are valued at cost (or last determined market value) adjusted
for amortization to maturity of any premium or discount. Securities for which market quotes are not
readily available are valued under procedures established by the Board of Trustees to determine fair
value in good faith.
------------------------------------------------------------------------------------------------------
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 Income Taxes. The Fund intends to continue to comply with provisions of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its taxable income,
including any net realized gain on investments not offset by loss carryovers, to shareholders.
Therefore, no federal income tax provision is required.
------------------------------------------------------------------------------------------------------
Trustees' Fees and Expenses. The Fund has adopted a nonfunded retirement plan for the Fund's
independent trustees. Benefits are based on years of service and fees paid to each trustee during the
years of service. The accumulated liability for the Fund's projected benefit obligations was $99,350
at December 31, 1994. No payments have been made under the plan.
------------------------------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are recorded on the
ex-dividend date.
------------------------------------------------------------------------------------------------------
Change in Accounting Classification of Distributions to Shareholders. The character of the
distributions made during the year from net investment income or net realized gains may differ from
their ultimate characterization for federal income tax purposes. Also, due to timing of dividend
distributions, the fiscal year in which amounts are distributed may differ from the year that the
income or realized gain (loss) was recorded by the Fund. Effective January 1, 1994, the Fund adopted
Statement of Position 93-2: Determination, Disclosure, and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distributions by Investment Companies. As a result, the
Fund changed the classification of distributions to shareholders to better disclose the differences
between financial statement amounts and distributions determined in accordance with income tax
regulations. Accordingly, subsequent to December 31, 1993, amounts have been reclassified to reflect
a decrease in paid-in capital of $115,983, a decrease in undistributed net investment income of
$55,402, and an increase in accumulated net realized gain on investments of $171,385.
</TABLE>
14 Oppenheimer Target Fund
<PAGE>
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
==========================================================
==========================================================
============
1. Significant Other. Investment transactions are accounted for on the date the investments are purchased or sold
Accounting Policies (trade date) and dividend income is recorded on the ex-dividend date. Realized gains and losses on
(continued) investments and unrealized appreciation and depreciation are determined on an identified cost basis,
which is the same basis used for federal income tax purposes.
==========================================================
==========================================================
============
2. Shares of The Fund has authorized an unlimited number of no par value shares of beneficial interest.
Beneficial Interest Transactions in shares of beneficial interest were as follows:
<CAPTION>
Year Ended December 31, 1994 Year Ended December 31, 1993(1)
---------------------------- -------------------------------
Shares Amount Shares Amount
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 1,091,689 $ 27,823,899 2,339,461 $ 58,420,529
Dividends and distributions reinvested 1,592,900 35,776,790 264,070 6,749,613
Redeemed (3,693,115) (93,884,370) (4,156,612) (103,630,994)
---------- ------------- ---------- -------------
Net decrease (1,008,526) $ (30,283,681) (1,553,081) $ (38,460,852)
========== =============
========== =============
------------------------------------------------------------------------------------------------------
Class C:
Sold 65,435 $ 1,619,304 310 $ 8,000
Dividends and distributions reinvested 4,518 100,882 5 135
Redeemed (22,893) (565,808) -- --
---------- ------------- ---------- -------------
Net increase 47,060 $ 1,154,378 315 $8,135
========== =============
========== =============
1. For the year ended December 31, 1993 for Class A shares and for the period from December 1, 1993
(inception of offering) to December 31, 1993 for Class C shares.
==========================================================
==========================================================
============
3. Unrealized Gains and At December 31, 1994, net unrealized appreciation on investments of $51,425,923 was composed
of gross
Losses on Investments appreciation of $60,340,978, and gross depreciation of $8,915,055.
==========================================================
==========================================================
============
4. Management Fees Prior to July 1, 1994, management fees paid to the Manager were in accordance with the
investment
And Other Transactions advisory agreement with the Fund which provided for an annual fee of .80% on the first $200
million
With Affiliates of net assets, .75% on the next $200 million, .69% on the next $200 million, .66% on the next $200
million and .60% on net assets in excess of $800 million. Under the terms of the agreement, the
annual fees on the first and second $200 million of net assets decreased to .75% and .72%,
respectively, on July 1, 1994. The Manager has agreed to reimburse the Fund if aggregate expenses
(with specified exceptions) exceed the most stringent applicable regulatory limit on Fund expenses.
For the year ended December 31, 1994, commissions (sales charges paid by investors) on sales of
Class A shares totaled $351,806, of which $141,646 was retained by Oppenheimer Funds Distributor,
Inc. (OFDI), a subsidiary of the Manager, as general distributor, and by an affiliated broker/dealer.
During the year ended December 31, 1994, OFDI received contingent deferred sales charges of $1,185
upon redemption of Class C shares, as reimbursement for sales commissions advanced by OFDI at the
time of sale of such shares.
Oppenheimer Shareholder Services (OSS), a division of the Manager, is the transfer and
shareholder servicing agent for the Fund, and for other registered investment companies. OSS's total
costs of providing such services are allocated ratably to these companies.
Under separate approved plans, each class may expend up to .25% of its net assets annually to
reimburse OFDI for costs incurred in connection with the personal service and maintenance of accounts
that hold shares of the Fund (prior to July 1, 1994, reimbursements were made with respect to shares
sold subsequent to March 31, 1991 for Class A), including amounts paid to brokers, dealers, banks and
other institutions. In addition, Class C shares are subject to an asset-based sales charge of .75% of
net assets annually, to reimburse OFDI for sales commissions paid from its own resources at the time
of sale and associated financing costs. In the event of termination or discontinuance of the Class C
plan, the Board of Trustees may allow the Fund to continue payment of the asset-based charge to OFDI
for distribution expenses incurred on Class C shares sold prior to termination or discontinuance of
the plan. During the year ended December 31, 1994, OFDI paid $33,166 to an affiliated broker/dealer
as reimbursement for Class A personal service and maintenance expenses and retained $4,642 as
reimbursement for Class C sales commissions and service fee advances, as well as financing costs
</TABLE>
Investment Adviser
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Distributor
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
Oppenheimer Shareholder Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, 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
<PAGE>
OPPENHEIMER TARGET FUND
FORM N-14
PART C
OTHER INFORMATION
Item 15. Indemnification
Reference is made to Article VIII of Registrant's Agreement and
Declaration of Trust filed as Exhibit 24(b)(1) to Registrant's
Registration Statement and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or
paid by a trustee, officer or controlling person of Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person,
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 16. Exhibits
(1) (i) Amended and Restated Declaration of Trust dated 4/28/93; Filed
with Post-Effective Amendment No. 27 to Registrant's Registration
Statement, 3/2/94, and incorporated herein by reference.
(ii) Amendment No. 1 dated 8/24/93 to the Amended and Restated
Declaration of Trust - Filed with Post-Effective Amendment No. 27 to
the Registrant's Statement No. 27, 2/25/94, and incorporated herein
by reference.
(2) By-Laws adopted 8/6/87: Previously filed with Registrant's Form SE
for its Form N-SAR for the fiscal year ending 12/31/87, and
incorporated herein by reference.
(3) Not applicable.
(4) Agreement and Plan of Reorganization: See Exhibit A to Part A of
this Registration Statement.
(5) Specimen Share Certificate: Previously filed with Registrant's Post-
Effective Amendment No. 27, 3/2/94, and incorporated herein by
reference.
(6) Investment Advisory Agreement dated 6/20/91: Previously filed with
Registrant's Post-Effective Amendment No. 23, 2/8/92, and
incorporated herein by reference.
(7) (i) General Distributor's Agreement dated 12/10/92: Previously filed
with Registrant's Post-Effective Amendment No. 27, 3/2/94, and
incorporated herein by reference.
(ii) Prototype Oppenheimer Fund Management, Inc. Dealer Agreement:
Previously filed with Post-Effective Amendment No. 14 to the
Registration Statement of Oppenheimer Main Street Funds, Inc.
(Reg. No. 33-17850), 9/30/94, and incorporated herein by
reference.
(iii) Prototype Oppenheimer Fund Management, Inc. Broker Agreement:
Previously filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(iv) Prototype Oppenheimer Fund Management, Inc. Agency Agreement:
Previously filed with Post-Effective Amendment No. 14 of
Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(v) Broker Agreement between Oppenheimer Fund Management, Inc. and
Newbridge Securities, dated 10/1/86: Previously filed with Post-
Effective Amendment No. 25 of Oppenheimer Growth Fund (Reg. No.
2-45272), 11/1/86, refiled with Post-Effective Amendment No. 45
of Oppenheimer Growth Fund (Reg. No. 2-45272), 8/22/94, pursuant
to Item 102 of Regulation S-T, and incorporated herein by
reference.
(8) Retirement Plan for Non-Interested Trustees or Directors (adopted by
Registrant - 6/7/90): Previously filed with Post-Effective Amendment
No. 97 of Oppenheimer Fund (Reg. No. 2-14586), 8/30/90, and
incorporated herein by reference.
(9) Custody Agreement dated November 12, 1992 between Registrant and The
Bank of New York: Previously filed with Registrant's Post-Effective
Amendment No. 25, 4/23/93, and incorporated herein by reference.
(10) Service Plan and Agreement dated 6/10/93 under Rule 12b-1 of the
Investment Company Act of 1940 for Class A shares distribution:
Filed with Registrant's Post-Effective Amendment No. 28, 4/29/94,
and incorporated herein by reference, Distribution Plan and
Agreement dated 12/1/93 under Rule 12b-1 of the Investment Company
Act of 1940 for Class C shares distribution: Filed with
Registrant's Post-Effective Amendment No. 27, 3/2/94, and
incorporated herein by reference.
(11) Opinion and Consent of Counsel dated 5/1/87: Previously filed with
Registrant's Pre-Effective Amendment No. 1, 5/1/87, and incorporated
herein by reference.
(12) Tax Opinion Relating to the Reorganization: Draft Opinion -
Filed herewith.
(13) Not applicable.
(14) Consent of KPMG Peat Marwick LLP: Filed herewith.
(15) Not applicable.
(16) Not applicable
(17) Declaration of Registrant under Rule 24f-2: Previously filed
with Registrant's Form N-14 on April 13, 1995.
(18) Power of Attorney - Previously filed with Registrant's Post-
Effective Amendment No. 28 dated 4/2/94 and incorporated herein
by reference.
Item 17. Undertakings
(1) Not applicable.
(2) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York
on the 15th day of May, 1995.
OPPENHEIMER TARGET FUND
By: /s/ Donald W. Spiro
____________________________*
Donald W. Spiro, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ George C. Bowen* Chief Financial
- ------------------- and Accounting
George Bowen Officer May 15, 1995
/s/ Leo Cherne* Trustee May 15, 1995
- --------------
Leo Cherne
/s/ Robert G. Galli* Trustee May 15, 1995
___________________
Robert G. Galli
/s/ Leon Levy* Chairman of the May 15, 1995
______________________ Board of Trustees
Leon Levy
/s/ Benjamin Lipstein* Trustee May 15, 1995
______________________
Benjamin Lipstein
/s/ Elizabeth B. Moynihan* Trustee May 15, 1995
_______________________
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee May 15, 1995
_______________________
Kenneth A. Randall
/s/ Edward V. Regan* Trustee May 15, 1995
_______________________
Edward V. Regan
/s/ Sidney M. Robbins* Trustee May 15, 1995
_______________________
Sidney M. Robbins
/s/ Russell S. Reynolds, Jr.* Trustee May 15, 1995
____________________________
Russell S. Reynolds, Jr.
/s/ Donald W. Spiro* Chief Executive
________________________ Officer
Donald W. Spiro and Trustee May 15, 1995
/s/ Pauline Trigere* Trustee May 15, 1995
_________________________
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee May 15, 1995
_________________________
Clayton K. Yeutter
*By: /s/ Robert G. Zack
------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER TARGET FUND
EXHIBIT INDEX
Form N-14
Item No.
- ---------
12 Draft Tax Opinion Relating to the Reorganization
14 Independent Auditors' Consent
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Oppenheimer Target Fund and
Oppenheimer Time Fund:
We consent to the use in the registration statement on Form N-14 of
Oppenheimer Target Fund of our report dated January 23, 1995, appearing in
the 1994 Annual Report of Oppenheimer Target Fund, to the incorporation by
reference of our report dated July 22, 1994, appearing in the 1994 Annual
Report of Oppenheimer Time Fund and to the references to our Firm under the
headings "Tax Consequences of the Reorganization" and "Tax Aspects of the
Reorganization" in the registration statement.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Denver, Colorado
May 12, 1995
merge\320CON2
______________, 1995
Oppenheimer Time Fund
Two World Trade Center 34th floor
New York, New York 10048-0203
Oppenheimer Target Fund
Two World Trade Center 34th floor
New York, New York 10048-0203
Dear Sirs:
We have reviewed the Agreement and Plan of Reorganization between
Oppenheimer Time Fund (the "Fund") and Oppenheimer Target Fund ("Target
Fund") which is attached as Exhibit A to the Proxy Statement and
Prospectus of the Fund included as part of Target Fund's Registration
Statement on Form N-14 filed under the Securities Act of 1933, as amended,
with the Securities and Exchange Commission on April 13, 1995 (the
"Agreement"), concerning the acquisition by Target Fund of substantially
all of the assets of the Fund solely for voting shares of beneficial
interest in Target Fund, followed by the distribution of Target Fund
shares to the shareholders of the Fund in complete liquidation of the
Fund.
In connection with the rendering of this opinion, we have reviewed the
Agreement, the most recent audited financial statements and related
documents and other materials as we deemed relevant to the rendering of
this opinion. Based upon all of the foregoing and the representations
made by the Fund and Target Fund, attached hereto, in our opinion, the
federal tax consequences of the transaction will be as follows:
1. The transactions contemplated by the Agreement will qualify as a tax-
free "reorganization" within the meaning of Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code").
2. The Fund and Target Fund will each qualify as a "party to a
reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of the Fund
upon the distribution of shares of beneficial interest in Target Fund
to the shareholders of the Fund, pursuant to Section 354 of the Code.
4. Under Section 361(a) of the Code no gain or loss will be recognized
by the Fund by reason of the transfer of its assets solely in
exchange for Class A shares of Target Fund.
5. Under Section 1032 of the Code no gain or loss will be recognized by
Target Fund by reason of the transfer of the Fund's assets solely in
exchange for Class A shares of Target Fund.
6. The stockholders of the Fund will have the same tax basis and holding
period for the shares of beneficial interest in Target Fund that they
receive as they had for the stock of the Fund that they previously
held, pursuant to Sections 358(a) and 1223(1), respectively, of the
Code.
7. The securities transferred by the Fund to Target Fund will have the
same tax basis and holding period in the hands of Target Fund as they
had for the Fund, pursuant to Sections 362(b) and 1223(1),
respectively, of the Code.
Very truly yours
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
MERGE\320OPIN
