Registration No. 2-69719
File No. 811-3105
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. __
/ /
POST-EFFECTIVE AMENDMENT NO. 34 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 28 / 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.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On April 20, 1996, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ________________, pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On _____________, pursuant to paragraph (a)(2) of Rule 485
The Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the Investment
Company Act of 1940. A Rule 24f-2 Notice for the
Registrant's fiscal year ended December 31, 1995 was filed on
February 28, 1996.
<PAGE>
FORM N-1A
OPPENHEIMER TARGET FUND
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
- --------- ------------------
1 Front Cover Page
2 Expenses; Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed -- Organization and
History; Investment
Objective and Policies
5 How the Fund is Managed; Back Cover; Expenses
5A Performance of the Fund
6 How the Fund is Managed -- Organization and History; The
Transfer Agent; Dividends,
Capital Gains and Taxes
7 Shareholder Account Rules and Policies; How to Buy Shares; How
to Exchange
Shares; Service Plan for Class A Shares; Distribution and Service
Plans for Class B and Class
C Shares; Special Investor Services; How to Sell Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
- --------- ----------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment Restrictions
14 How the Fund is Managed - Trustees and Officers of the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to Sell
Shares; How to Exchange
Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the Fund;
Additional Information
About the Fund
22 Performance of the Fund
23 Financial Statements
_______________
* Not applicable or negative answer.
<PAGE>
O P P E N H E I M E R
Target Fund
Prospectus dated April 20, 1996
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 may use "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 Objective and Policies" for more information
about the types of securities the Fund invests in and the risks of
investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the April 20, 1996, Statement of Additional Information. For a
free copy, call OppenheimerFunds Services, the Fund's Transfer Agent, at
1-800-525-7048, or write to the Transfer Agent at the address on the back
cover. The Statement of Additional Information has been filed with the
Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of its
assets, administration, distribution of its shares and other services, and
those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. All shareholders therefore pay those
expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
will bear indirectly. The numbers below are based on the Fund's expenses
during its last fiscal year ended December 31, 1995.
- Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Fund. Please refer to "About Your Account" from
pages through __ for an explanation of how and when these charges apply.
Class A Class B Class C
Shares Shares Shares
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None None
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 5% in the first 1% if shares
year, declining are redeemed
to 1% in the within 12
sixth year and months of
eliminated purchase(2)
thereafter(2)
Exchange Fee None None None
______________________
[FN]
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may have
to pay a sales charge of up to 1% if you sell your shares within 18
calendar months from the end of the calendar month during which you
purchased those shares. See "How to Buy Shares -- Buying Class A Shares,"
below.
(2) See "How to Buy Shares - Buying Class B Shares" and "How to Buy Shares
- - Buying Class C Shares," below, for more information on the contingent
deferred sales charges.
- Annual Fund Operating Expenses are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the
Fund pays management fees to its investment adviser, OppenheimerFunds,
Inc. (which is referred to in this Prospectus as the "Manager"). The
rates of the Manager's fees are set forth in "How the Fund is Managed,"
below. The Fund has other regular expenses for services, such as transfer
agent fees, custodial fees paid to the bank that holds its portfolio
securities, audit fees and legal expenses. Those expenses are detailed
in the Fund's Financial Statements in the Statement of Additional
Information.
Annual Fund Operating Expenses (as a Percentage of Average Net
Assets)
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class C Shares
<S> <C> <C> <C>
Management Fees 0.72% 0.72% 0.72%
12b-1 Distribution Plan Fees0.16% 1.00% 1.00%
Other Expenses 0.15% 0.18% 0.18%
Total Fund Operating Expenses 1.03% 1.90% 1.90%
</TABLE>
The numbers in the chart above are based upon the Fund's expenses in
its last fiscal year ended December 31, 1995. 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 fees (the maximum fee is 0.25% of average annual net assets
of that class), and for Class B and Class C shares are the service fees
(the maximum service fee is 0.25% of average annual net assets of that
class) and the asset-based sales charge of 0.75%.
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. Class B shares
were not publicly sold before November 1, 1995. Therefore, the Annual
Fund Operating Expenses for Class B shares are based on amounts that would
have been payable in that period assuming that Class B shares were
outstanding during the entire fiscal year. These plans are described in
greater detail in "How to Buy Shares."
- 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 Annual Fund
Operating Expenses table above. If you were to redeem your shares at the
end of each period shown below, your investment would incur the following
expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $67 $88 $111 $176
Class B Shares $69 $90 $123 $179
Class C Shares $29 $60 $103 $222
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Class A Shares $67 $88 $111 $176
Class B Shares $19 $60 $103 $179
Class C Shares $19 $60 $103 $222
_____________________
* The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the effect of the
asset-based sales charge and the contingent deferred sales charge imposed
on Class B and Class C shares long-term holders of Class B and Class C
shares could pay the economic equivalent of more than the maximum front-
end sales charge allowed under applicable regulations. For Class B
shareholders, the automatic conversion of Class B shares to Class A shares
is designed to minimize the likelihood that this will occur. Please refer
to "How to Buy Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which may be more or less than those
shown.
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 OppenheimerFunds, Inc. Prior to January 6, 1996, the Manager
was known as Oppenheimer Management Corporation. The Manager (including
a subsidiary) manages investment company portfolios having over $50
billion in assets at March 1, 1996. The Manager is paid an advisory fee
by the Fund, based on its net assets. The Fund's portfolio manager Jane
Putnam, is employed by the Manager and is primarily responsible for the
selection of the Fund's securities. The Fund's Board of Trustees, elected
by shareholders, oversees the investment adviser and the portfolio
manager. Please refer to "How the Fund is Managed," starting on page
for more information about the Manager and its fees.
- How Risky is the Fund? All investments carry risks to some
degree. It is important to remember that the Fund is designed for long-
term investors. The Fund's investments in stocks are subject to changes
in their value from a number of factors such as changes in general stock
market movements. A change in value of particular stocks may result from
an event affecting the issuer. These changes affect the value of the
Fund's investments and its share prices for each class of its shares. In
the Oppenheimer funds spectrum, the Fund is generally considered an
aggressive growth fund, considerably more aggressive than growth and
income funds and the more conservative 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 for a more complete discussion of the
Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How to Buy Shares"
on page for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund offers three
classes of shares. Each class has the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales
charge, starting at 5.75%, and reduced for larger purchases. Class B
shares and Class C shares are offered without a front-end sales charge,
but may be subject to a contingent deferred sales charge if redeemed
within 6 years or 12 months, respectively, of purchase. There is also an
annual asset-based sales charge on Class B shares and Class C shares.
Please review "How to Buy Shares" starting on page _ 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 __. The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How
to Exchange Shares" on page __.
- How Has the Fund Performed? The Fund measures its performance by
quoting its average annual total returns and cumulative total returns,
which measure historical performance. Those returns can be compared to
the returns (over similar periods) of other funds. Of course, other funds
may have different objectives, investments, and levels of risk. The
Fund's performance can also be compared to broad market indices, which we
have done on pages __ and . 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,
1995, is included in the Statement of Additional Information. Class B
shares were only offered during a portion of the fiscal year ended
December 31, 1995, commencing on November 1, 1995.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------
Year Ended December 31,
1995 1994 1993 1992 1991(2)
=====================================================
=====================================================
=====
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $22.63 $25.72 $25.25 $23.76 $17.47
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 .20 .13 .16 .27
Net realized and unrealized
gain (loss) 7.61 (.11) .86 2.28 6.87
-------- -------- -------- -------- --------
Total income (loss) from
investment operations 7.85 .09 .99 2.44 7.14
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.24) (.20) (.12) (.17) (.18)
Distributions from net
realized gain (2.80) (2.98) (.40) (.78) (.67)
-------- -------- -------- -------- --------
Total dividends and
distributions to shareholders (3.04) (3.18) (.52) (.95) (.85)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.44 $22.63 $25.72 $25.25 $23.76
======== ======== ======== ========
========
=====================================================
=====================================================
=====
Total Return, at Net Asset Value(5) 34.85% .46% 3.93% 10.27% 41.33%
=====================================================
=====================================================
=====
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $758,439 $301,698 $368,806 $401,256 $369,351
- ---------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $538,210 $325,003 $383,875 $362,295 $209,596
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.08% .72% .47% .69% 1.25%
Expenses 1.03% 1.16% 1.07% 1.09% 1.17%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 71.9% 34.7% 22.9% 42.3% 65.6%
- ---------------------------------------------------------------------------------------------------------------
Average brokerage
commission rate(8) $0.07 -- -- -- --
</TABLE>
[FN]
1. For the period from December 1, 1993 (inception of offering) to
December 31,
1993.
2. Per share amounts calculated based on the weighted average number of
shares outstanding during the period.
3. For the period from November 1, 1995 (inception of offering) to
December 31,1995.
4. During 1986, the Fund had average monthly debt outstanding of $688,172;
the average monthly number of shares outstanding for the year ended
December 31,1986 was 5,799,198, and the average monthly debt per share was
$0.12.
5. Assumes a hypothetical initial investment on the business day before
the first day of the fiscal period, with all dividends and distributions
reinvested in additional shares on the reinvestment date, and redemption
at the net asset value calculated on the last business day of the fiscal
period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
<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 securities considered by the
Manager to have appreciation possibilities, primarily common stocks or
other equity securities, including convertible securities, of "growth-
type" issuers, 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-Type " Companies? These tend to be either newer
companies that may be developing new products or services, or expanding
into new markets for their products or dominant companies in growing
industries that are growing even faster than the industry through market
share gains. Growth-type companies 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.
- 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 investment policies. The Fund's investment policies
and techniques are not "fundamental" unless this Prospectus or the
Statement of Additional Information says that a particular policy is
"fundamental." The Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's Board
of Trustees may change non-fundamental policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus.
- Stock Investment Risks. Because the Fund 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. At times, the
stock markets can be volatile and stock prices can change substantially.
This market risk will affect the Fund's net asset values per share, which
will fluctuate as the values of the Fund's portfolio securities change.
Not all stock prices change uniformly or at the same time, not all stock
markets move in the same direction at the same time, and other factors can
affect a particular stock's 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
investments in any one industry or group of industries
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 investment 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 investment.
Because changes in securities market prices can occur any time, 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. That
percentage limit is a fundamental policy. 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 and interest expense affects the Fund's share
price. 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.
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 basically are options to purchase
stock at set prices that are valid for a limited period of time. Rights
are similar to warrants but normally have a short duration and are
distributed directly by the issuer to its shareholders. The Fund may
invest up to 5% of its total net assets in warrants or rights. That 5%
does not apply to warrants the Fund has acquired in units with other
securities or that are attached to other securities. No more than 2% of
the Fund's net assets may be invested in warrants that are not listed on
the New York or American Stock Exchanges. For further details about these
investments, please refer to "Warrants and Rights" in the Statement of
Additional Information.
- 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.
- 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.
- Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have
been in operation for less than three years, 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).
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 ("NASDAQ") of The Nasdaq Stock Market, 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. 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 securities 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.
- Derivative Investments. In general, a "derivative investment" is
a specially designed investment. Its performance is linked to the
performance of another investment or security, such as an option, future,
index, currency or commodity. The Fund can invest in a number of
different kinds of "derivative investments." They are used in some cases
for hedging purposes and in other cases to enhance total return. In the
broadest sense, exchange-traded options and futures contracts (discussed
in "Hedging," above) may be considered "derivative investments."
There are special risks in investing in derivative investments. The
company issuing the instrument may fail to pay the amount due on the
maturity of the instrument. Also, the underlying investment or security
on which the derivative is based might not perform the way the Manager
expected it to perform. The performance of derivative investments may
also be influenced by interest rate and stock market changes in the U.S.
and abroad. All of this can mean that the Fund may realize less principal
or income from the investment than expected. Certain derivative
investments held by the Fund may trade in the over-the-counter market and
may be illiquid. Please refer to "Illiquid and Restricted Securities" for
an explanation.
- 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 currently intends to invest no more than 10% of its net assets
in illiquid or restricted securities. The Fund's percentage limitation
on these investments does not apply to certain restricted securities that
are eligible for resale to qualified institutional purchasers. See
"Illiquid and Restricted Securities" in the Statement of Additional
Information.
- 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:
- 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);
- the Fund cannot invest more than 25% of its total assets in
securities of companies in any one industry; and
- 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 will not normally hold
annual meetings of its shareholders, it may hold shareholder meetings from
time to time on important matters, and shareholders have the right to call
a meeting to remove a Trustee or to take other action described in the
Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class A,
Class B and Class C. All 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 as a class on matters that affect that class
alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the Manager,
OppenheimerFunds, Inc., which is responsible for selecting the Fund's
investments and handling its day-to-day business. The Manager carries out
its duties, subject to the policies established by the Board of Trustees,
under an investment advisory agreement which states the Manager's
responsibilities. The agreement sets forth the fees paid by the Fund to
the Manager and describes the expenses that the Fund is responsible for
paying to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $50 billion
as of March 1, 1996, and with more than 2.8 million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company
that is owned in part by senior officers of the Manager and controlled by
Massachusetts Mutual Life Insurance Company.
- Portfolio Manager. The Portfolio Manager of the Fund is Jane
Putnam. She has been the person principally responsible for the day-to-
day management of the Fund's portfolio since July, 1995. Ms. Putnam is
a Vice President of the Manager. Previously she served as a portfolio
manager and equity research analyst for Chemical Bank.
- 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 the aggregate
net assets over $800 million. The Manager has voluntarily undertaken to
waive a portion of its management fee, whereby the Fund shall pay an
annual management fee of 0.58% of its aggregate net assets in excess of
$1.5 billion. The Fund's management fee for its last fiscal year was
0.72% of average annual net assets for Class A, Class B and Class C shares
of the Fund.
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,
brokers and other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts
as the Fund's Distributor. The Distributor also distributes the shares
of other "Oppenheimer funds" managed by the Manager and is sub-distributor
for funds managed by a subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder
servicing agent for the Fund on an "at-cost" basis. It also acts as the
shareholder servicing agent for the other Oppenheimer funds. Shareholders
should direct inquiries about their account to the Transfer Agent at the
address and toll-free numbers shown below in this Prospectus and on the
back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the 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. These returns measure the performance of a
hypothetical account in the Fund over various periods, and do not show the
performance of each shareholder's account (which will vary if dividends
are received in cash or shares are sold or purchased). This performance
information may be useful to help you see how well your investment has
done over time and to compare it to other funds or market indices, as we
have done on pages __ and ___.
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. More detailed information about how total returns
are calculated is contained in the Statement of Additional Information,
which also contains information about other ways to measure and compare
the Fund's performance. The Fund's investment performance will vary over
time, depending on market conditions, the composition of the portfolio,
expenses and which class of shares you purchase.
- Total Returns. There are different types of total returns used to
measure the Fund's performance. Total return is the change in value of
a hypothetical investment in the Fund over a given period, assuming that
all dividends and capital gains distributions are reinvested in additional
shares. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return
shows the average rate of return for each year in a period that would
produce the cumulative total return over the entire period. However,
average annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the contingent
deferred sales charge that applies to the period for which total return
is shown has been deducted. However total returns may also be quoted at
net asset value, without considering the effect of the sales charge, and
those returns would be less if sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended December 31, 1995,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based market index.
- Management's Discussion of Performance. During its past fiscal
year, the Fund's performance benefitted from the strong stock market. The
Manager concentrated the Fund's investments in the securities of larger
companies, which did better than the securities of smaller companies. In
addition, the Manager concentrated the Fund's investments in three
industry sectors - technology, financial services and health care, all of
which outperformed the broad market over the past year. As fears of a
strengthening dollar reduced the price of securities for multi-national
corporations, large U.S.-based firms doing business abroad, the Manager
added to the Fund's holdings in those corporations. During the second
half of the year, when the stock markets had experienced a sizable run-up,
the Manager positioned the Fund's portfolio somewhat more defensively,
selling the securities that had risen to the price the Manager had
targeted for them, purchasing securities of companies the Manager believed
were undervalued and allowing the Fund's cash position to rise.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in Class A,
Class B and Class C shares of the Fund at December 31, 1995: in the case
of Class A shares, over a ten-year period, in the case of Class B shares
from the inception of the class on November 1, 1995, 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)
Average Annual Total Return of Class A shares of the Fund at 12/31/95
1 Year 5 Years 10 Years
27.10% 15.64% 10.91%
Class B Shares
Comparison of Change in Value
of $10,000 Hypothetical Investment in
Oppenheimer Target Fund Class B Shares
and the S&P 500 Index
(Graph)
Cumulative Total Return of Class B Shares of the Fund at 12/31/95
Life
(2.90)
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
(Graph)
Average Annual Total Return of Class C shares at 12/31/95
1 Year Life
32.56% 15.26%
1. The average annual total returns and the ending account value in the
graph reflect reinvestment of all dividends and capital gains
distributions and are shown net of the applicable 5.75% maximum initial
sales charge.
2.Class B shares of the Fund were first publicly offered on 11/1/95.
The average annual total returns reflect reinvestment of all dividends and
capital gains distributions and are shown net of the applicable 5%
contingent deferred sales charge for the life of the class. The ending
account value in the graph is net of the applicable 5% contingent deferred
sales charge.
3. Class C shares of the Fund were first publicly offered on 12/1/93. The
average annual total returns reflect reinvestment of all dividends and
capital gains distributions. The 1-year return is shown net of the
applicable 1% contingent deferred sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans). If you purchase Class A
shares as part of an investment of at least $1 million ($500,000 for
OppenheimerFunds prototype 401(k) plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if you
sell any of those shares within 18 months of buying them, you may pay a
contingent deferred sales charge. The amount of that sales charge will
vary depending on the amount you invested. Sales charge rates are
described in "Buying Class A Shares" below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years of buying them, you will normally pay a contingent deferred sales
charge. That sales charge varies depending on how long you own your
shares described in "Buying Class B shares" below.
- Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred sales
charge of 1% as discussed in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors to consider are how much
you plan to invest and how long you plan to hold your investment. If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class considering the effect of the
annual asset-based sales charge on Class B and Class C expenses (which,
like all expenses, will affect your investment return). For the sake of
comparison, we have assumed that there is a 10% rate of appreciation in
the investment each year. Of course, the actual performance of your
investment cannot be predicted and will vary, based on the Fund's actual
investment returns and the operating expenses borne by each class of
shares, and which class of shares you invest in. The factors discussed
below are not intended to be investment advice or recommendations, because
each investor's financial considerations are different. The discussion
below of the factors to consider in purchasing a particular class of
shares assumes that you will purchase only one class of shares and not a
combination of shares of different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of
Class A shares may, over time, offset the effect of paying an initial
sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on Class B or Class C
shares for which no initial sales charge is paid.
- Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem in less than 7 years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short term. Class C shares might
be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C shares, and
the contingent deferred sales charge does not apply to amounts you sell
after holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater impact on your account over the
longer term than the reduced front-end sales charge available for larger
purchases of Class A shares. For example, Class A shares might be more
advantageous than Class C (as well as Class B) shares for investments of
more than $100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or more),
Class A shares may become more advantageous than Class C (and Class B)
shares. If investing $500,000 or more, Class A shares may be more
advantageous as your investment horizon approaches 3 years or more.
And for investors who invest $1 million or more, in most cases Class
A shares will be the most advantageous choice, no matter how long you
intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or more of Class B shares or
$1 million or more of Class C shares, from a single investor.
- Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need access
to your money for seven years or more, Class B shares may be an
appropriate consideration, if you plan to invest less than $100,000. If
you plan to invest more than $100,000 over the long term, Class A shares
will likely be more advantageous than Class B shares or Class C shares,
as discussed above, because of the effect of the expected lower expenses
for Class A shares and the reduced initial sales charges available for
larger investments in Class A shares under the Fund's Right of
Accumulation.
Of course these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumed annual performance returns stated above, and
therefore, you should analyze your options carefully.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for Class B or Class
C shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. For example, share certificates are not available for Class B or
Class C shares and if you are considering using your shares as collateral
for a loan, that may be a factor to consider. Additionally, the dividends
payable to Class B and Class C shareholders will be reduced by the
additional expenses borne solely by 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 of shares than for selling another class. It is important that
investors understand that the purpose of the Class B and Class C
contingent deferred sales charge and asset-based sales charges are the
same as the purpose of the front-end sales charge on sales of Class A
shares: that is, to compensate the Distributor for commissions it pays to
dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans.
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension, profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as
little as $250 (if your IRA is established under an Asset Builder Plan,
the $25 minimum applies), and subsequent investments may be as little as
$25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends from the Fund or other Oppenheimer funds
(a list of them appears in the Statement of Additional Information, or you
can ask your dealer or call the Transfer Agent), or by reinvesting
distributions from unit investment trusts that have made arrangements with
the Distributor.
- How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a sales
agreement with the Distributor, directly through the Distributor or
automatically from your bank account through an Asset Builder Plan under
the OppenheimerFunds AccountLink service. When you buy shares, be sure
to specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares. However, it
is recommended that you discuss your investment first with a financial
advisor, to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member. You can then transmit funds electronically to purchase shares,
or to have the Transfer Agent send redemption proceeds or to transmit
dividends and distributions to your bank account.
Shares are purchased for your account on AccountLink on the regular
business day the Distributor is instructed by you to initiate the ACH
transfer to buy shares. You can provide those instructions automatically,
under an Asset Builder Plan, described below, or by telephone instructions
using OppenheimerFunds PhoneLink, also described below. You should
request AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the
Statement of Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver, Colorado. In most cases, to enable you to
receive that day's offering price, the Distributor must receive your order
by the time of day The New York Stock Exchange closes, which is normally
4:00 P.M., New York time, but may be earlier on some days (all references
to time in this Prospectus mean "New York time"). The net asset value of
each class of shares is determined as of that time on each day The New
York Stock Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the close of The New York Stock Exchange on a regular business
day and transmit it to the Distributor so that it is received before the
Distributor's close of business that day, which is normally 5:00 P.M. The
Distributor may reject any purchase order for the Fund's shares, in its
sole discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix A to
this Prospectus sets forth conditions for the waiver of, or exemption
from, sales charges or the special sales charge rates that apply to
purchases of shares of the Fund (including purchases by exchange) by a
person who was a shareholder of one of the Former Quest for Value Funds
(as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, where purchases are not subject to an
initial sales charge, the offering price will be the net asset value. In
some cases, reduced sales charges may be available, as described below.
Out of the amount you invest, the Fund receives the net asset value to
invest for your account. The sales charge varies depending on the amount
of your purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as follows:
_______________________________________________________________________
________
<TABLE>
<CAPTION> Front-End Sales ChargeFront-End Sales ChargeCommission as
As a Percentage of: 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 million2.00% 2.04% 1.60%
________________________________________________________________________________
</TABLE>
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
- purchases aggregating $1 million or more, or
- purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more or (2) has, at the time of purchase,
100 or more eligible participants, or (3) certifies that it projects to
have annual plan purchases of $200,000 or more.
The Distributor pays dealers of record commissions on those purchases
in an amount equal to the sum of 1.0% of the first $2.5 million, plus
0.50% of the next $2.5 million, plus 0.25% of purchases over $5 million.
That commission will be paid only on the amount of those purchases in
excess of $1 million ($500,000 for purchases by OppenheimerFunds prototype
401(k) plans) that were not previously subject to a front-end sales charge
and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") may be deducted
from the redemption proceeds. That sales charge may be equal to 1.0% of
either (1) the aggregate net asset value of the redeemed shares (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your dealer
on all Class A shares of all Oppenheimer funds you purchased subject to
the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's Exchange Privilege (described below). However,
if the shares acquired by exchange are redeemed within 18 months of the
end of the calendar month of the purchase of the exchanged shares, the
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 Oppenheimer funds
(other than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge
rates that apply to larger purchases of Class A shares, you and your
spouse can add together Class A and Class B shares you purchase for your
individual accounts, or jointly, or for trust or custodial accounts on
behalf of your children who are minors. A fiduciary can count all shares
purchased for a trust, estate or other fiduciary account (including one
or more employee benefit plans of the same employer) that has multiple
accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also include Class A and Class B shares of Oppenheimer funds you
previously purchased subject to an initial or contingent deferred sales
charge to reduce the sales charge rate for current purchases of Class A
shares, provided that you still hold your investment in one of the
Oppenheimer funds. The value of those shares will be based on the greater
of the amount you paid for the shares or their current value (at offering
price). The Oppenheimer funds are listed in "Reduced Sales Charges" in
the Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, if you purchase Class
A shares or Class A and Class B shares of the Fund and other Oppenheimer
funds during a 13-month period, you can reduce the sales charge rate that
applies to your purchases of Class A shares. The total amount of the
intended purchases of both Class A and Class B shares will determine your
reduced sales charge rate for the Class A shares purchased during that
period. This can include purchases made up to 90 days before the date of
the Letter. More information is contained in the Application and in
"Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are
not imposed in the circumstances described below. There is an explanation
of this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor (1) providing specifically
for the use of shares of the Fund in particular investment products made
available to their clients (those clients may be charged a transaction fee
by their dealer, broker or adviser for the purchase or sale of Fund
shares) and (2) to sell shares to defined contribution employee
retirement plans for which the dealer, broker or investment adviser
provides administration services;
- directors, trustees, officers or full-time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
- accounts for which Oppenheimer Capital is the investment adviser
(the Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial
owner of such accounts;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of
the Class B and C TRAC-2000 program on November 24, 1995; or
- qualified retirement plans that had agreed with the former Quest
for Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through DCXchange,
a sub-transfer agency mutual fund clearinghouse, provided that such
arrangements are consummated and share purchases commence by December 31,
1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor;
- shares purchased and paid for with the proceeds of shares redeemed
in the past 12 months from a mutual fund (other than a fund managed by the
Manager or any of its subsidiaries) on which an initial sales charge or
contingent deferred sales charge was paid (this waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver. There is a further discussion of this policy in "Reduced
Sales Charges" in the Statement of Additional Information; or
- purchased with proceeds or maturing principal units of any
Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge does not apply
to purchases of Class A shares at net asset value without sales charge as
described in the two sections above. It is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans
or other employee benefit plans, including OppenheimerFunds prototype
401(k) plans (these are all referred to as "Retirement Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules
and Policies," below);
- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees in writing to accept the dealer's portion of the
commission payable on the sale in installments of 1/18th of the commission
per month (and no further commission will be payable if the shares are
redeemed within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code, or (6) separation from service.
- Service Plan for Class A Shares. The Fund has adopted a Service
Plan for Class A shares to reimburse the Distributor for a portion of its
costs incurred in connection with the personal service and maintenance of
shareholder accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average
annual net assets of Class A shares of the Fund. The Distributor uses all
of those fees to compensate dealers, brokers, banks and other financial
institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares and to reimburse
itself (if the Fund's Board of Trustees authorizes such reimbursements,
which it has not yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by an increase in
net asset value over the initial purchase price. The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its expenses
of providing distribution-related services to the Fund in connection with
the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period. The contingent deferred sales charge is not imposed in the
circumstances described in "Waivers of Class B and Class C Sales Charges,"
below.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to
Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.
- Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders at that
time of the asset-based sales charge that applies to Class B shares under
the Class B Distribution and Service Plan, described below. The conversion
is based on the relative net asset value of the two classes, and no sales
load or other charge is imposed. When Class B shares convert, any other
Class B shares that were acquired by the reinvestment of dividends and
distributions on the converted shares will also convert to Class A shares.
The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and
Class C Shares" in the Statement of Additional Information.
- Distribution and Service Plan for Class B shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for distributing Class B shares and servicing accounts.
This Plan is described below under "Buying Class C Shares - Distribution
and Service Plans for Class B and Class C shares."
- Waivers of Class B Sales Charges. The Class B contingent deferred
sales charge will not apply to shares purchases in certain types of
transactions, nor will it apply to shares redeemed in certain
circumstances, as described below under "Waivers of Class B and Class C
Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value per
share without 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. 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.
- Distribution and Service Plans for Class B and Class C Shares.
The Fund has adopted Distribution and Service Plans for Class B and Class
C shares to compensate the Distributor for distributing Class B and Class
C shares and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual "asset-based sales charge" of 0.75% per year on
Class B shares that are outstanding for 6 years or less and on Class C
shares. The Distributor also receives a service fee of 0.25% per year
under each plan.
Under each Plan, both fees are computed on the average of the net
asset value of shares in the respective class, determined as of the close
of each regular business day during the period. The asset-based sales
charge and service fees increase Class B and Class C expenses by up to
1.00% of the net assets per year of the respective class.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B or Class C
shares. Those services are similar to those provided under the Class A
Service Plan, described above. The Distributor pays the 0.25% service
fees to dealers in advance for the first year after Class B or Class C
shares have been sold by the dealer and retains the service fee paid by
the Fund in that year. After the shares have been held for a year, the
Distributor pays the service fees to dealers on a quarterly basis.
The Distributor currently pays sales commissions of 3.75% of the
purchase price of Class B shares to dealers from its own resources at the
time of sale. Including the advance of the service fee, the total amount
paid by the Distributor to the dealer at the time of sales of Class B
shares is 4.00% of the purchase price. The Fund pays the asset-based
sales charge to the Distributor for its services rendered in connection
with the distribution of Class B shares. Those payments, retained by the
Distributor, are at a fixed rate which is not related to the Distributor's
expenses. The services rendered by the Distributor include paying and
financing the payment of sales commissions, service fees, and other costs
of distributing and selling Class B shares.
The Distributor currently pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale of
Class C shares. Including the advance of the service fee, the total
amount paid by the Distributor to the dealer at the time of sale of Class
C shares is 1.00% of the purchase price. The Distributor retains the
asset-based sales charge during the first year Class C shares are
outstanding to recoup sales commissions it has paid, the advances of
service fee payments it has made, and its financing costs and other
expenses. 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. At December 31, 1995, the end
of the Class C Plan year, the Distributor had incurred unreimbursed
expenses under the Plan of $90,387 (equal to 1.25% of the Fund's net
assets represented by Class C shares on that date) which have been carried
over into the present Plan year.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to Class B
and Class C shares redeemed in certain circumstances as described below.
The reasons for this policy are in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class B and
Class C contingent deferred sales charges will be waived for redemptions
of shares in the following cases if the Transfer Agent is notified that
these conditions apply to the redemption:
- distributions to participants or beneficiaries from Retirement
Plans, if the distributions are made (a) under an Automatic Withdrawal
Plan after the participant reaches age 59-1/2, as long as the payments are
no more than 10% of the account value annually (measured from the date the
Transfer Agent receives the request), or (b) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must have occurred after the
account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder including a trustee
of a "grantor" trust or revocable living trust for which the trustee is
also the sole beneficiary (the death or disability must have occurred
after the account was established and for disability you must provide
evidence of a determination of disability by the Social Security
Administration);
- returns of excess contributions to Retirement Plans;
- distributions from retirement plans to make "substantially equal
periodic payments" as permitted in section 72(t) of the Internal Revenue
Code that do not exceed 10% of the account value annually, measured from
the date the Transfer Agent receives the request);
- shares issued in plans of reorganization to which the Fund is a
party; or
- distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the Internal Revenue Code; (3) to meet minimum distribution
requirements as defined in the Internal Revenue Code; (4) to make
"substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code; or (5) for separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; or
- shares redeemed in involuntary redemptions as described above.
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 by sending signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply to
each shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank
account information must be made by signature-guaranteed instructions to
the Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the 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 Oppenheimer funds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below, for details.
Automatic Withdrawal and Exchange Plans. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is worth $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or annual
basis. The checks may be sent to you or sent automatically to your bank
account on AccountLink. You may even set up certain types of withdrawals
of up to $1,500 per month by telephone. You should consult the
Application and Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange automatically an amount you establish in advance for shares of
up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other Oppenheimer funds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A or
Class B shares of the Fund, you have up to 6 months to reinvest all or
part of the redemption proceeds in Class A shares of the Fund or other
Oppenheimer funds without paying a sales charge. This privilege applies
to Class A shares that you purchased subject to an initial sales charge
and to Class A or Class B shares on which you paid a contingent deferred
sales charge when you redeemed them. This privilege does not apply to
Class C shares. You must be sure to ask the Distributor for this
privilege when you send your payment. Please consult the Statement of
Additional Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- 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
other employers
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling (redeeming)
some or all of your shares on any regular business day. Your shares will
be sold at the next net asset value calculated after your 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
- A redemption check is not payable to all shareholders listed on the
account statement
- A redemption check is not sent to the address of record on your
account statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If
you are signing on behalf of a corporation, partnership or other business,
or as a fiduciary, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell
shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. You may not redeem
shares held in an OppenheimerFunds retirement plan or under a share
certificate by telephone.
- To redeem shares through a service representative, call 1-800-852-
8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone in any 7-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account
statement. This service is not available within 30 days of changing the
address on an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH transfer to your bank
is initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be transferred.
Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please refer
to "Special Arrangements For Repurchase of Shares From Dealers and
Brokers" in the Statement of Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain Oppenheimer
funds at net asset value per share at the time of exchange, without sales
charge. To exchange shares, you must meet several conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you
can exchange Class A shares of this Fund only for Class A shares of
another fund. At present, Oppenheimer Money Market Fund, Inc., offers only
one class of shares, which are considered "Class A" shares for this
purpose. In some cases, sales charges may be imposed on exchange
transactions. Please refer to "How to Exchange Shares" in the Statement
of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by
calling a service representative at 1-800-525-7048. That list can change
from time to time.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M., but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into up
to 7 days if it determines it would be disadvantaged by a same-day
transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy
might require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege
at any time. Although the Fund will attempt to provide you notice
whenever it is reasonably able to do so, it may impose these changes at
any time.
- For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund,
which may result in a capital gain or loss. For more information about
taxes affecting exchanges, please refer to "How to Exchange Shares" in the
Statement of Additional Information.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
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, on each day the Exchange
is open by dividing the value of the Fund's net assets attributable to a
class by the number of shares of that class that are outstanding. The
Fund's Board of Trustees has established procedures to value the Fund's
securities to determine net asset value. In general, securities values
are based on market value. There are special procedures for valuing
illiquid and restricted securities and obligations for which market values
cannot be readily obtained. These procedures are described more
completely in the Statement of Additional Information.
- 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 the Transfer Agent nor the Fund will
be liable for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may not be
able to complete a telephone transaction and should consider placing your
order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients
by participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
- The redemption price for shares will vary from day to day because
the values of the securities in the Fund's portfolio fluctuate, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. For accounts registered
in the name of a broker-dealer, payment will be forwarded within 3
business days. The Transfer Agent may delay forwarding a check or
processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $200 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of the Fund may be redeemed
"in kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to "How to Sell
Shares" in the Statement of Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from taxable dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or Employer Identification Number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of income.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How to Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B and
Class C shares from net investment income, if any, 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 B and Class C shares because expenses allocable
to Class B and Class C shares will generally be higher than Class A
shares. There is no fixed dividend rate and there can be no assurance
that the Fund will pay any dividends.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of capital gains following the end of its
fiscal year. 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
assurance that the Fund will pay any capital gains distributions in a
particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or
sent to your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them
sent to your bank on AccountLink.
- Reinvest Your Distributions in Another Oppenheimer Fund Account.
You can reinvest all distributions in another Oppenheimer fund account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the
Fund. 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. Generally speaking,
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 A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers
for Class A, Class B and Class C shares of the Fund described elsewhere
in this Prospectus are modified as described below for those shareholders
of (i) Quest for Value Fund, Inc., Quest for Value Growth and Income Fund,
Quest for Value Opportunity Fund, Quest for Value Small Capitalization
Fund and Quest for Value Global Equity Fund, Inc. on November 24, 1995,
when OppenheimerFunds, Inc. became the investment adviser to those funds,
and (ii) Quest for Value U.S. Government Income Fund, Quest for Value
Investment Quality Income Fund, Quest for Value Global Income Fund, Quest
for Value New York Tax-Exempt Fund, Quest for Value National Tax-Exempt
Fund and Quest for Value California Tax-Exempt Fund when those funds
merged into various Oppenheimer funds on November 24, 1995. The funds
listed above are referred to in this Prospectus as the "Former Quest for
Value Funds." The waivers of initial and contingent deferred sales
charges described in this Appendix apply to shares of the Fund (i)
acquired by such shareholder pursuant to an exchange of shares of one of
the Oppenheimer funds that was one of the Former Quest for Value Funds or
(ii) received by such shareholder pursuant to the merger of any of the
Former Quest for Value Funds into an Oppenheimer fund on November 24,
1995.
Class A Sales Charges
- - Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
- Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for
Class A shares purchased by a "Qualified Retirement Plan" through a single
broker, dealer or financial institution, or by members of "Associations"
formed for any purpose other than the purchase of securities if that
Qualified Retirement Plan or that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this purpose
only, a "Qualified Retirement Plan" includes any 401(k) plan, 403(b) plan,
and SEP/IRA or IRA plan for employees of a single employer.
<TABLE>
<CAPTION>
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of PercentagePercentage of
Eligible Employees of Offeringof Amount Offering
or Members Price Invested Price
<S> <C> <C> <C>
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
</TABLE>
For purchases by Qualified Retirement Plans and Associations having
50 or more eligible employees or members, there is no initial sales charge
on purchases of Class A shares, but those shares are subject to the Class
A contingent deferred sales charge described on pages __ to __ of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees
in a Qualified Retirement Plan or members of an Association or the sales
charge rate that applies under the Rights of Accumulation described above
in the Prospectus. In addition, purchases by 401(k) plans that are
Qualified Retirement Plans qualify for the waiver of the Class A initial
sales charge if they qualified to purchase shares of any of the Former
Quest For Value Funds by virtue of projected contributions or investments
of $1 millon or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of Associations, or
as eligible employees in Qualified Retirement Plans also may purchase
shares for their individual or custodial accounts at these reduced
sales charge rates, upon request to the Fund's Distributor.
- - Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of Former
Quest for Value Funds into those Oppenheimer Funds, and which shares were
subject to a Class A contingent deferred sales charge prior to November
24, 1995, will be subject to a contingent deferred sales charge at the
following rates: if they are redeemed within 18 months of the end of the
calendar month in which they were purchased, at a rate equal to 1.0% if
the redemption occurs within 12 months of their initial purchase and at
a rate of 0.50 of 1.0% if the redemption occurs in the subsequent six
months. Class A shares of any of the Former Quest for Value Funds
purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- - Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
- Shareholders of the Fund who were shareholders of the AMA Family
of Funds on February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former Quest
for Value Fund by merger of any of the portfolios of the Unified Funds.
- - Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to redemptions
of Class A shares of the Fund purchased by the following investors who
were shareholders of any Former Quest for Value Fund:
- Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted
under that law.
- Participants in Qualified Retirement Plans that purchased shares
of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
- - Waivers for Redemptions of Shares Purchased Prior to March 6, 1995
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, Class B or Class C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest for Value Fund
or into which such fund merged, if those shares were purchased prior to
March 6, 1995: in connection with (i) distributions to participants or
beneficiaries of plans qualified under Section 401(a) of the Internal
Revenue Code or from custodial accounts under Section 403(b)(7) of the
Code, Individual Retirement Accounts, deferred compensation plans under
Section 457 of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals under an
automatic withdrawal plan holding only either Class B or Class C shares
if the annual withdrawal does not exceed 10% of the initial value of the
account, and (iii) liquidation of a shareholder's account if the aggregate
net asset value of shares held in the account is less than the required
minimum value of such accounts.
- - Waivers for Redemptions of Shares Purchased on or After March 6, 1995
but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, Class B or Class C shares of the Fund
acquired by merger of a Former Quest for Value Fund into the Fund or by
exchange from an Oppenheimer fund that was a Former Quest For Value Fund
or into which such fund merged, if those shares were purchased on or after
March 6, 1995, but prior to November 24, 1995: (1) distributions to
participants or beneficiaries from Individual Retirement Accounts under
Section 408(a) of the Internal Revenue Code or retirement plans under
Section 401(a), 401(k), 403(b) and 457 of the Code, if those distributions
are made either (a) to an individual participant as a result of separation
from service or (b) following the death or disability (as defined in the
Code) of the participant or beneficiary; (2) returns of excess
contributions to such retirement plans; (3) redemptions other than from
retirement plans following the death or disability of the shareholder(s)
(as evidenced by a determination of total disability by the U.S. Social
Security Administration); (4) withdrawals under an automatic withdrawal
plan (but only for Class B or Class C shares) where the annual withdrawals
do not exceed 10% of the initial value of the account; and (5) liquidation
of a shareholder's account if the aggregate net asset value of shares held
in the account is less than the required minimum account value. A
shareholder's account will be credited with the amount of any contingent
deferred sales charge paid on the redemption of any Class A, Class B or
Class C shares of the Fund described in this section if within 90 days
after that redemption, the proceeds are invested in the same
Class of shares in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and that were transferred to an OppenheimerFunds
prototype 401(k) plan shall be eligible for an additional one-time payment
by the Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to Quest
for Value prototype 401(k) plans that were maintained on the TRAC-2000
recordkeeping system and (i) the shares held by those plans were exchanged
for Class A shares, or (ii) the plan assets were transferred to an
OppenheimerFunds prototype 401(k) plan, shall be eligible for an
additional one-time payment by the Distributor of 1% of the value of the
plan assets transferred, but that payment may not exceed $5,000.
<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. For Class A shares, that graph will cover
each of the Fund's last ten fiscal years from 12/31/86 through 12/31/95,
in the case of the Fund's Class B shares the graph will cover the period
from the inception of the Class (November 1, 1995) through 12/31/95 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 12/31/95. 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."
Fiscal Year Oppenheimer S&P 500
(Period) Ended Target Fund A Index
12/31/86 $10,205 $11,854
12/31/87 $ 8,374 $12,526
12/31/88 $11,086 $14,573
12/31/89 $13,115 $19,122
12/31/90 $12,835 $18,524
12/31/91 $18,141 $24,081
12/31/92 $20,003 $25,872
12/31/93 $20,788 $28,439
12/31/94 $20,882 $28,804
12/31/95 $28,161 $39,495
Fiscal Oppenheimer S&P
Period Ended Target Fund B 500 Index
11/01/95(2) $10,000 $10,000
12/31/95 $9,710 $10,653
Fiscal Oppenheimer S&P
Period Ended Target Fund C 500 Index
11/30/93(1) $10,000 $10,000
12/31/93 $10,117 $10,121
12/31/94 $10,066 $10,254
12/31/95 $13,443 $14,060
- ----------------------
(1) Class C shares of the Fund were first publicly offered on December
1, 1993.
(2) Class B shares of the Fund were first publicly offered on November
1, 1995.
<PAGE>
Oppenheimer Target Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus or the Statement of Additional Information
and, if given or made, such information and representations must not be
relied upon as having been authorized by the Fund, OppenheimerFunds, Inc.
OppenheimerFunds Distributor, Inc., or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
PR0320.001.0496 *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 April 20, 1996
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 April 20,
1996. It should be read together with the Prospectus, which may be
obtained by writing to the Fund's Transfer Agent, OppenheimerFunds
Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling the
Transfer Agent at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Trustees and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How to Buy Shares
How to Sell Shares
How to Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Financial Information About the Fund
Financial Statements
Independent Auditors' Report
Appendix A: Industry Classifications
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies
of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund invests, as well as 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 Covered 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 the Fund 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 that 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.
- Risks of Hedging With Options and Futures. 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 offers the Fund potential benefits not
available from investing solely in securities of domestic issuers, such
as the opportunity to invest in foreign issuers that appear to offer
growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. In buying
foreign securities, the Fund may convert U.S. dollars into foreign
currency, but only to effect securities transactions on foreign securities
exchanges and not to hold such currency as an investment. If the Fund's
portfolio securities are held abroad, the countries in which they may be
held and the sub-custodians holding them must be approved by the Fund's
Board of Trustees where required under applicable rules of the Securities
and Exchange Commission. In buying foreign securities, the Fund may
convert U.S. dollars into foreign currency, but only to effect securities
transactions on foreign securities exchanges and not to hold such currency
as an investment.
- Risks of Foreign Investing. 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 the credit requirements set by the Fund's
Board of Trustees from time to time. The repurchase price exceeds the
purchase price by an amount that reflects an agreed-upon interest rate
effective for the period during which the repurchase agreement is in
effect. The majority of these transactions run from day to day, and
delivery pursuant to the resale typically will occur within one to five
days of the purchase. Repurchase agreements are considered "loans" under
the Investment Company Act, collateralized by the underlying security.
The Fund's repurchase agreements require that at all times while the
repurchase agreement is in effect, the value of the collateral must equal
or exceed the repurchase price to fully collateralize the repayment
obligation. Additionally, the Manager will impose creditworthiness
requirements to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.
- 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. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and recognize a capital
gain.
- 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:
- Invest in companies for the purpose of acquiring control or
management thereof;
- 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;
- 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;
- 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;
- 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";
- 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;
- 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;
- 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
- Invest in interests in oil, gas or mineral exploration leases or
development programs.
For purposes of tho Fund's policy not to concentrate its investments
in any one industry as described 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 Growth Fund, Oppenheimer
Discovery Fund, Oppenheimer Enterprise Fund, Oppenheimer Global Emerging
Growth Fund, Oppenheimer Gold & Special Minerals Fund, Oppenheimer
International Growth Fund, Oppenheimer Tax-Free Bond Fund, Oppenheimer
Money Market Fund, Inc., Oppenheimer Target Fund, Oppenheimer New York
Tax-Exempt Fund, Oppenheimer California Tax-Exempt Fund, Oppenheimer
Multi-State Tax-Exempt Trust, Oppenheimer Asset Allocation Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Multi-Sector Income Trust
and Oppenheimer Multi-Government Trust (collectively the "New York-based
Oppenheimer funds"). Ms. Macaskill and Messrs. Spiro, Bishop, Bowen,
Donohue, Farrar and Zack respectively hold the same offices with the other
New York-based Oppenheimer funds as with the Fund. As of April 1, 1996,
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 statement does not reflect ownership of shares held
of record by an employee benefit plan for employees of the Manager (for
which plan a Trustee and an officer listed below, Ms. Macaskill and Mr.
Donohue, respectively, are trustees), other than the shares beneficially
owned under that plan by the officers of the Fund listed below.
Leon Levy, Chairman of the Board of Trustees; Age: 70
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment partnership) and
Chairman of Avatar Holdings, Inc. (real estate development).
Robert G. Galli, Trustee*; Age: 62
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: Executive Vice
President and General Counsel of the Manager and OppenheimerFunds
Distributor, Inc. (the "Distributor"), a director of the Manager and
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 Oppenheimer funds
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.
Bridget A. Macaskill, President and Trustee; Age: 47
President, Chief Executive Officer and a Director of the Manager;
Chairman and a Director of SSI, Vice President and a Director of OAC;
a Director of HarbourView and of Oppenheimer Partnership Holdings,
Inc., a holding company subsidiary of the Manager; formerly an
Executive Vice President of the Manager.
Elizabeth B. Moynihan, Trustee; Age: 66
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery of
Art (Smithsonian Institution), the Institute of Fine Arts (New York
University), National Building Museum; a member of the Trustees
Council, Preservation League of New York State; a member of the Indo-
U.S. Sub-Commission on Education and Culture.
______________________
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
<PAGE>
Kenneth A. Randall, Trustee; Age: 68
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility holding
company), Dominion Energy, Inc. (electric power and oil & gas
producer), Enron-Dominion Cogen Corp. (cogeneration company), Kemper
Corporation (insurance and financial services company), 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).
Edward V. Regan, Trustee; Age: 65
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York;
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: 64
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: 84
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; and a director of The Korea Fund, Inc.
(closed-end investment company); a member of the Board of Advisors,
Olympus Private Placement Fund, L.P.; Professor Emeritus of Finance,
Adelphi University.
Donald W. Spiro, Vice Chairman Trustee*; Age: 70
Chairman Emeritus and a director of the Manager; formerly Chairman of
the Manager and Oppenheimer Funds Distributor, Inc. (the
"Distributor").
Pauline Trigere, Trustee; Age: 83
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: 65
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) and
Texas Instruments, Inc. (electronics), 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: 45
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a director Centennial; an officer of other
Oppenheimer funds; formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor; prior to which he
was a Partner in Kraft & McManimon (a law firm), an officer of First
Investors Corporation (a broker-dealer) and First Investors Management
Company, Inc. (broker-dealer and investment adviser), and a director
and an officer of First Investors Family of Funds and First Investors
Life Insurance Company.
Jane Putnam, Vice President and Portfolio Manager; Age:
Assistant Vice President of the Manager; previously a portfolio manager
and equity research analyst for Chemical Bank.
George C. Bowen, Treasurer; Age: 59
3410 South Galena Street, Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial; Vice
President, Treasurer and Secretary of SSI and SFSI; an officer of
other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert Bishop, Assistant Treasurer; Age: 37
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund Controller for
the Manager, prior to which he was an Accountant for Yale & Seffinger,
P.C., an accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 30
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; previously a Fund Controller for
the Manager, prior to which he was an International Mutual Fund
Supervisor for Brown Brothers Harriman Co., a bank, and previously a
Senior Fund Accountant for State Street Bank & Trust Company.
- Remuneration of Trustees. The officers of the Fund are affiliated
with the Manager; they and the Trustees of the Fund who are affiliated
with the Manager (Ms. Macaskill is also an officer) receive no salary or
fee from the Fund. The Trustees of the Fund excluding Ms. Macaskill and
Messrs. Galli and Spiro received the total amounts shown below (i) from
the Fund, during its fiscal year ended December 31, 1995, and (ii) from
all 17 of the New York-based Oppenheimer funds (including the Fund) listed
in the first paragraph of this section (and from Oppenheimer Mortgage
Income Fund and Oppenheimer Time Fund, which ceased operation following
the acquisition of their assets by certain other Oppenheimer funds), for
services in the positions shown.
<TABLE>
<CAPTION>
Retirement
Aggregate Benefits Total Compensation
Compensation Accrued as From All
Name and from Part of New York-based
Position Fund Fund ExpensesOppenheimer Funds1
<S> <C> <C> <C>
Leon Levy $9,398 $36,252 $141,000.00
Chairman and
Trustee
Benjamin Lipstein $5,745 $22,162 $86,200.00
Study Committee
Member and Trustee
Elizabeth B. Moynihan$5,745 $22,162 $86,200.00
Study Committee
Member and Trustee2
Kenneth A. Randall $5,226 $22,157 $78,400.00
Audit Committee
Member and Trustee
Edward V. Regan $4,586 $17,689 $68,800.00
Audit Committee
Member and Trustee3
Russell S. Reynolds, Jr.$3,473 $13,395 $52,100.00
Trustee
Sidney M. Robbins $8,139 $31,392 $122,100.00
Study Committee
Chairman, Audit
Committee Vice-Chairman
and Trustee
Pauline Trigere $3,473 $13,395 $52,100.00
Trustee
Clayton K. Yeutter $ 3,473 $13,385 $52,100.00
Trustee
______________________
<FN>
1 For the 1995 calendar year.
2 Committee position held during a portion of the period shown. The Study and Audit Committees meet for all
New York-based Oppenheimer funds and all fees are allocated among the funds by the Board.
</TABLE>
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was
received. A Trustee must serve in that capacity for any of the New
York-based Oppenheimer funds for at least 15 years to be eligible for the
maximum payment. Because each Trustee's retirement benefits will depend
on the amount of the Trustee's future compensation and length of service,
the amount of 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 sums were accrued during the fiscal
year ended December 31, 1995 for the Fund's projected retirement benefit
obligations.
- Major Shareholders. As of April 1, 1996, 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, 1993,
1994 and 1995, the management fees paid by the Fund to the Manager were
$3,028,433, $2,475,491 and $3,882,505 respectively.
The advisory agreement contains no provision limiting the Fund's
expenses. However, independently of the advisory agreement, the Manager
has voluntarily 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
has voluntarily undertaken to waive a portion of its management fee
whereby the Fund shall pay an annual management fee of 0.58% of its net
assets in excess of $1.5 billion. 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, Class B 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, 1993, 1994, and 1995, the aggregate sales charges
on sales of the Fund's Class A shares were $698,109, $351,806, and
$594,161 respectively, of which the Distributor and an affiliated broker-
dealer retained in the aggregate $298,443, $141,646 and $190,816 in those
respective years. During the Fund's fiscal year ended December 31, 1995,
the contingent deferred sales charges collected on the Fund's Class B
shares totalled $50, all of which the Distributor retained. During the
Fund's fiscal year ended December 31, 1995, contingent deferred sales
charges collected on the Fund's Class C shares totalled $2,953 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. OppenheimerFunds Services, the Fund's Transfer
Agent, is responsible for maintaining the Fund's shareholder registry and
shareholder accounting records, and for shareholder servicing and
administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the 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 or for certain fixed-income agency
transactions in the secondary market, and are otherwise paid only if it
appears likely that a better price or execution can be obtained. When the
Fund engages in an option transaction, ordinarily the same broker will be
used for the purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent orders
to purchase or sell the same security by more than one of the accounts
managed by the Manager or its affiliates are combined. The transactions
effected pursuant to such combined orders are averaged as to price and
allocated in accordance with the purchase or sale orders actually placed
for each account.
Most purchases of money market instruments and debt obligations are
principal transactions at net prices. Instead of using a broker for those
transactions, the Fund normally deals directly with the selling or
purchasing principal or market maker unless it determines that a better
price or execution can be obtained by using a broker. Purchases of these
securities from underwriters include a commission or concession paid by
the issuer to the underwriter. Purchases from dealers include a spread
between the bid and asked 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 for in
commission dollars. The Board of Trustees has permitted the Manager to
use concessions on fixed price offerings to obtain research, in the same
manner as is permitted for agency transactions. The Board has also
permitted the Manager to use stated commissions on secondary fixed-income
agency trades to obtain research where the broker has represented to the
Manager that (i) the trade is not from or for the broker's own inventory,
(ii) the trade was executed by the broker on an agency basis at the stated
commissions and (iii) the trade is not a riskless principal transaction.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager, by making available
additional views for consideration and comparisons, and by enabling the
Manager to obtain market information for the valuation of securities held
in the Fund's portfolio or being considered for purchase. The Board of
Trustees, including the "independent" Trustees of the Fund (those Trustees
of the Fund who are not "interested persons" as defined in the Investment
Company Act, and who have no direct or indirect financial interest in the
operation of the advisory agreement or the Distribution Plans described
below) annually reviews information furnished by the Manager as to the
commissions paid to brokers furnishing such services so that the Board may
ascertain whether the amount of such commissions was reasonably related
to the value or benefit of such services.
During the Fund's fiscal years ended December 31, 1993, 1994, and
1995, total brokerage commissions paid by the Fund (not including spreads
or concessions on principal transactions on a net trade basis) were
$319,608, $564,504, and $923,800, respectively. During the fiscal year
ended December 31, 1995, $399,912 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 $219,618,763. 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 advertised class of shares of the
Fund for the 1, 5, and 10-year periods (or the life of the class, if less)
ending as of the most recently-ended calendar quarter prior to the
publication of the advertisement. This enables an investor to compare the
Fund's performance to the performance of other funds for the same periods.
However, a number of factors should be considered before using such
information as a basis for comparison with other investments. An
investment in the Fund is not insured; its returns and share prices are
not guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a prediction or
representation by the Fund of future returns. The returns of each class
of shares of the Fund are affected by portfolio quality, the type of
investments the Fund holds and its operating expenses allocated to the
particular class.
- Average Annual Total Returns. The "average annual total return" of
each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
(ERV)1/n
_____ -1 = Average Annual Total Return
( P )
- Cumulative Total Returns. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over
an entire period of years. Its calculation uses some of the same factors
as average annual total return, but it does not average the rate of return
on an annual basis. Cumulative total return is determined as follows:
ERV-P
____ = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering price) is
deducted from the initial investment ("P") (unless the return is shown at
net asset value, as described below). For Class B shares, payment of a
contingent deferred sales charge of 5.0% for the first year, 4.0% for the
second year, 3.0% for the third and fourth year, 2.0% for the fifth year
and 1.0% for the sixth year, and none thereafter, is applied as described
in the Prospectus. 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, 1995, were -27.10%, 15.64% and 10.91%, respectively. The
"cumulative total return" on Class A shares for the ten year period ended
December 31, 1995, was 181.61%. 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 cumulative total return on Class B shares of the Fund for the period
from November 1, 1995 through December 31, 1995 was -2.90%. The average
annual total returns on Class C shares for the period from December 1,
1993, (the commencement of the offering of the shares) through December
31, 1995 and for the one-year period ended through December 31, 1995 were
15.26% and 32.56%, 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, Class B or Class
C shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions. The cumulative total return
at net asset value of the Fund's Class A shares for the ten-year period
ended December 31, 1995 was 198.78%. The average annual total returns at
net asset value for the one, five and ten-year periods ended December 31,
1995, for Class A shares were 34.85%, 17.02% and 11.57%, respectively.
The cumulative total return at net asset value for Class B shares for the
period from November 1, 1995 through December 31, 1995 was 1.67%. The
average annual total return at net asset value for Class C shares for the
period from December 1, 1993, (the commencement of the offering of the
shares) through December 31, 1995 and for the one-year period ended
through December 31, 1995 were 15.26% and 33.56% respectively.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B or Class C shares. However,
when comparing total return of an investment in Class A, Class B 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, Class B 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's classes are 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 the performance
of its Class A, Class B and Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's (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 measures fund performance below 90-day U.S. Treasury bill monthly
returns. Risk and investment return are combined to produce star rankings
reflecting performance relative to the average fund in a fund's category.
Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is
"below average" (next 22.5%) and one star is "lowest" (bottom 10%).
Morningstar ranks the Fund in relation to other 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 performance of the Fund's Class A, Class B 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.
The performance of the Fund's Class A, Class B and Class C shares may also
be compared in publications to (i) performance of various market indices
or other investments for which reliable performance data is available, and
(ii) to averages, performance rankings or other benchmarks prepared by
recognized mutual fund statistical services.
Total return information may be useful to investors in reviewing the
performance of the Fund's Class A, Class B and Class C shares. However,
when comparing total return of an investment in Class A, Class B and Class
C Shares of the Fund, a number of factors should be considered before
using such information as a basis for comparison with other investment.
For example, investors may also wish to compare the Fund's Class A, Class
B or Class C return to the returns on fixed income investments available
from banks and thrift institutions, such as certificates of deposit,
ordinary interest-paying checking and savings accounts, and other forms
of fixed or variable time deposits, and various other instruments such as
Treasury bills. However, the Fund's returns and share price are not
guaranteed by the FDIC or any other agency and will fluctuate daily, while
bank depository obligations may be insured by the FDIC and may provide
fixed rates of return, and Treasury bills are guaranteed as to principal
and interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance
rankings of the Oppenheimer funds themselves. Those ratings or rankings
of shareholder/investor services by third parties may compare the
Oppenheimer funds' services to those of other mutual fund families
selected by the rating or ranking services and may be based upon the
opinions of the rating or ranking service itself, based on its research
or judgment, or based upon surveys of investors, brokers, shareholders or
others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and a
Distribution and Service Plans for Class B and Class C shares of the Fund
under Rule 12b-1 of the Investment Company Act pursuant to which the Fund
makes payments to the Distributor quarterly 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 the Class B shares and Class C shares, such votes were cast by the
Manager as the sole initial holder of Class B and Class C shares of the
Fund.
In addition, under the Plans the Manager and the Distributor, in their
sole discretion, from time to time may use their own resources (which, in
the case of the Manager, may include profits from the advisory fee it
receives from the Fund) to make payments to brokers, dealers or other
financial institutions (each is referred to as a "Recipient" under the
Plans) for distribution and administrative services they perform at no
cost to the Fund. The Distributor and the Manager may, in their sole
discretion, increase or decrease the amount of payments they make from
their own resources to Recipients.
Unless terminated as described below, each Plan continues in effect
from year to year but only as long as its continuance is specifically
approved at least annually by the Fund's Board of Trustees and its
Independent Trustees by a vote cast in person at a meeting called for the
purpose of voting on such continuance. Each Plan may be terminated at any
time by the vote of a majority of the Independent Trustees or by the vote
of the holders of a "majority" (as defined in the Investment Company Act)
of the outstanding shares of that class. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, the Fund is required to
obtain the approval of Class B as well as Class A shareholders for a
proposed amendment to the Class A Plan that would materially increase the
amount to be paid by Class A shareholders under the Class A Plan. Such
approval must be by a "majority" of the Class A and Class B shares (as
defined in the Investment Company Act), voting separately by class. All
material amendments must be approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports to the Fund's Board of Trustees at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which each payment was made and the identity of each Recipient
that received any payment. The reports for the Class B and Class C Plans
shall also include the distribution costs for that quarter, and such costs
for previous fiscal periods that have been carried forward, as explained
in the Prospectus and below. Those reports, including the allocations on
which they are based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each Plan
further provides that while it is in effect, the selection and nomination
of those Trustees of the Fund who are not "interested persons" of the Fund
is committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in such selection and nomination if the
final decision on selection or nomination is approved by a majority of the
Independent Trustees.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers, 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, 1995, payments under the
Class A Plan totalled $839,340, all of which was paid by the Distributor
to Recipients, including $45,762 paid to MML Investor Services, Inc., an
affiliate of the Distributor. Payments made under the Class B Plan during
the period from November 1, 1995 through December 31, 1995 totalled $1,030
of which $870 was returned by the Distributor. Payments made under the
Class C Plan during that fiscal period totalled $37,800 including $699
paid to MML Investor Services, Inc. and $28,402 which was retained by the
Distributor.
Any unreimbursed expenses incurred by the Distributor with respect to
Class A shares for any fiscal year may not be recovered in subsequent
years. Payments received by the Distributor under the Plan for Class A
shares will not be used to pay any interest expense, carrying charge, or
other financial costs, or allocation of overhead by the Distributor. The
Class B and Class C Plans allow the service fee payment to be paid by the
Distributor to Recipients in advance for the first year such shares are
outstanding, and thereafter on a quarterly basis, as described in the
Prospectus. The advance payment is based on the net asset value of the
shares sold. An exchange of shares does not entitle the Recipient to an
advance service fee payment. In the event shares are redeemed during the
first year that the shares are outstanding, the Recipient will be
obligated to repay a pro rata portion of the advance payment for those
shares to the Distributor.
Although the Class B and Class C Plans permit the Distributor to retain
both the asset-based sales charges and the service fees on Class B and
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 B and Class C Plans by
the Board. Initially, the Board has set no minimum holding period. All
payments under the Class B and Class C Plans are subject to the
limitations imposed by the Rules of Fair Practice of The Nasdaq Stock
Market, 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, Class B and Class C Shares. The
availability of three classes of shares permits an investor to choose the
method of purchasing shares that is more beneficial to the investor
depending on the amount of the purchase, the length of time the investor
expects to hold shares and other relevant circumstances. Investors should
understand that the purpose and function of the deferred sales charge and
asset-based sales charge with respect to Class B and Class C shares are
the same as those of the initial sales charge with respect to Class A
shares. Any salesperson or other person entitled to receive compensation
for selling Fund shares may receive different compensation with respect
to one class of shares than the other. The Distributor normally will not
accept any order for $500,000 or more of Class B shares or $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 three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on Class B and Class C
shares will be reduced by incremental expenses borne solely by that class,
including the asset-based sales charge to which Class B and Class C shares
are subject.
The conversion of Class B shares to Class A shares after six years is
subject to the continuing availability of a private letter ruling from the
Internal Revenue Service, or an opinion of counsel or tax adviser, to the
effect that the conversion of Class B shares does not constitute a taxable
event for the holder under Federal income tax law. If such a revenue
ruling or opinion is no longer available, the automatic conversion feature
may be suspended, in which event no further conversions of Class B shares
would occur while such suspension remained in effect. Although Class B
shares could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a sales
charge or fee, such exchange could constitute a taxable event for the
holder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes
two types of expenses. General expenses that do not pertain specifically
to any class are allocated pro rata to the shares of each class, based on
the percentage of the net assets of such class to the Fund's total assets,
and then equally to each outstanding share within a given class. Such
general expenses include (i) management fees, (ii) legal, bookkeeping and
audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to Independent Trustees, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution and/or
Service Plan fees, (ii) incremental transfer and shareholder servicing
agent fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a specific
class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values per
share of Class A, Class B and Class C shares of the Fund are determined
as of the close of business of The New York Stock Exchange (the
"Exchange") on each day that the Exchange is open, by dividing the value
of the Fund's net assets attributable to that class by the number of
shares of that class that are outstanding. The Exchange normally closes
at 4:00 P.M. New York time, but may close earlier on some days (for
example, in case of weather emergencies or days falling before a holiday).
The Exchange's most recent annual holiday schedule (which is subject to
change) states that it will close on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days. The Fund may invest a
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 of Class A, Class B and Class C shares of the Fund may be
significantly affected of days when shareholders may not purchase or
redeem shares.
The Fund's Board of Trustees has established procedures for the
valuation of the Fund's securities, generally as follows: (i) equity
securities traded on a securities exchange or on NASDAQ for which last
sale information is regularly reported are valued at the last reported
sale price on their primary exchange or NASDAQ that day (or, in the
absence of sales that day, at values based on the last sales prices of the
preceding trading day, or closing bid and asked prices); (ii) securities
actively traded on a foreign securities exchange are valued at the last
sales price available to the pricing service approved by the Fund's Board
of Trustees or to the Manager as reported by the principal exchange on
which the security is traded; (iii) unlisted foreign securities or listed
foreign securities not actively traded are valued as in (i) above, if
available, or at the mean between "bid" and "asked" prices obtained from
active market makers in the security on the basis of reasonable inquiry;
(iv) long-term debt securities having a remaining maturity in excess of
60 days are valued at the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained from active market makers in the security on the
basis of reasonable inquiry; (v) debt instruments having a maturity of
more than one year when issued, and non-money market type instruments
having a maturity of one year or less when issued, which have a remaining
maturity of 60 days or less are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's
Board of Trustees or obtained from active market makers in the security
on the basis of reasonable inquiry; (vi) money market-type debt securities
having a maturity of less than one year when issued that having a
remaining maturity of 60 days or less are valued at cost, adjusted for
amortization of premiums and accretion of discounts; (vii) securities
(including restricted securities) not having readily-available market
quotations are valued at fair value under the Board's procedures; and
(viii) securities traded on Foreign exchanges are valued at the closing
or last sales price reported on a principal exchange, or, if none, at the
mean between closing bid and asked prices and reflect the prevailing rates
of exchange taken from the closing price on the London foreign exchange
market that day.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the Exchange.
Events affecting the values of foreign securities traded in stock markets
that occur between the time their prices are determined and the close of
the Exchange will not be reflected in the Fund's calculation of net asset
value unless the Board of Trustees or the Manager, under procedures
established by the Board of Trustees, determines that the particular event
would materially affect the Fund's net asset value, in which case an
adjustment would be made. Foreign currency, including forward contracts,
will be valued at the closing price in the London foreign exchange market
that day as provided by a reliable bank, dealer or pricing service. The
values of securities denominated in foreign currency will be converted to
U.S. dollars at the closing price in the London foreign exchange market
that day as provided by a reliable bank, dealer or pricing service. In
the case of U.S. government securities and corporate bonds, where last
sale information is not generally available, such pricing procedures may
indue "matrix" comparisons to the prices for comparable instruments on the
basis of quality, yield, maturity and other special factors involved. The
Trustees will monitor the accuracy of pricing services by comparing prices
used for portfolio evaluation to actual sales prices of selected
securities.
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 Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth
Fund
Oppenheimer International Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Bond Fund for Growth
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth Fund
Oppenheimer LifeSpan Income Fund
<PAGE>
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Value Fund
Rochester Fund Municipals*
Rochester Portfolio Series - Limited Term New York Municipal Fund*
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation 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.
* Shares of the Fund are not presently exchangeable for shares of these
funds
There is an initial sales charge on the purchase of Class A shares of
each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent (referred to as a "Letter")
is an investor's statement in writing to the Distributor of the intention
to purchase Class A shares of the Fund (and Class A and Class B shares of
other Oppenheimer funds during a 13-month period (the "Letter of Intent
period"), which may, at the investor's request, include purchases made up
to 90 days prior to the date of the Letter. The Letter states the
investor's intention to make the aggregate amount of purchases of shares
which, when added to the investor's holdings of shares of those funds,
will equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to
count the Class A and Class B shares purchased under the Letter to obtain
the reduced sales charge rate on purchases of Class A shares of the Fund
(and other Oppenheimer funds) that applies under the Right of Accumulation
to current purchases of Class A shares. Each purchase of Class A shares
under the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
OppenheimerFunds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchase
amount under the Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commissions paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent period
do not equal or exceed the intended purchase amount, the commissions
previously paid to the dealer of record for the account and the amount of
sales charge retained by the Distributor will be adjusted to the rates
applicable to actual purchases. If total eligible purchases during the
Letter of Intent period exceed the intended purchase amount and exceed the
amount needed to qualify for the next sales charge rate reduction set
forth in the applicable prospectus, the sales charges paid will be
adjusted to the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid to the
dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be
used to purchase additional shares for the investor's account at the net
asset value per share in effect on the date of such purchase, promptly
after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value up to 5% of
the intended purchase amount specified in the Letter shall be held in
escrow by the Transfer Agent. For example, if the intended purchase
amount is $50,000, the escrow shall be shares valued in the amount of
$2,500 (computed at the public offering price adjusted for a $50,000
purchase). Any dividends and capital gains distributions on the escrowed
shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the holding
of which may be counted toward completion of a Letter) include (a) Class
A shares sold with a front-end sales charge or subject to a Class A
contingent deferred sales charge, (b) Class B shares acquired subject to
a contingent deferred sales charge, and (c) Class A or B shares acquired
in exchange for either (i) Class A shares of one of the other Oppenheimer
funds that were acquired subject to a Class A initial or contingent
deferred sales charge or (ii) Class B shares of one of the other
Oppenheimer funds that were acquired subject to a contingent deferred
sales charge.
6. Shares held in escrow hereunder will automatically be exchanged for
shares of another fund to which an exchange is requested, as described in
the section of the Prospectus entitled "How to Exchange Shares," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for the
Fund's shares (for example, when a purchase check is returned to the Fund
unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Payments "In Kind". The Prospectus states that payment for shares
tendered for redemption is ordinarily made in cash. However, the Board
of Trustees of the Fund may determine that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment
of a redemption order wholly or partly in cash. In that case the Fund may
pay the redemption proceeds in whole or in part by a distribution "in
kind" of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act, pursuant to which the Fund is obligated to redeem
shares solely in cash up to the lesser of $250,000 or 1% of the net assets
of the Fund during any 90-day period for any one shareholder. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage or
other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method
the Fund uses to value its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
- 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 that you purchased subject to an initial sales charge, or the
Class A contingent deferred sales charge when you redeemed them or (ii)
Class B shares that were subject to the Class B contingent deferred sales
charge when you redeemed them, without a sales charge. This privilege
does not apply to Class C shares. The reinvestment may be made without
sales charge only in Class A shares of the Fund or any of the other
Oppenheimer funds into which shares of the Fund are exchangeable as
described below, at the net asset value next computed after the Transfer
Agent receives the reinvestment order. The shareholder must ask the
Distributor for such privilege at the time of reinvestment. Any capital
gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain.
If there has been a capital loss on the redemption, some or all of the
loss may not be tax deductible, depending on the timing and amount of the
reinvestment. Under the Internal Revenue Code, if the redemption
proceeds of Fund shares on which a sales charge was paid are reinvested
in shares of the Fund or another of the Oppenheimer funds within 90 days
of payment of the sales charge, the shareholder's basis in the shares of
the Fund that were redeemed may not include the amount of the sales charge
paid. That would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added to the
basis of the shares acquired by the reinvestment of the redemption
proceeds. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of transfer to
the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B or Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans,
or pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants (other than self-employed persons maintaining an account in
their own name) in OppenheimerFunds-sponsored prototype pension, profit-
sharing or 401(k) plans may not directly redeem or exchange shares held
for their account under those plans. The employer or plan administrator
must sign the request. Distributions from pension and profit sharing
plans are subject to special requirements under the Internal Revenue Code
and certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the Transfer
Agent) must be submitted to the Transfer Agent with the distribution
request, or the distribution may be delayed. Unless the shareholder has
provided the Transfer Agent with a certified tax identification number,
the Internal Revenue Code requires that tax be withheld from any
distribution even if the shareholder elects not to have tax withheld. The
Fund, the Manager, the Distributor, the Trustee and the Transfer Agent
assume no responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any tax
penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers on behalf of their customers. The
shareholder should contact the broker or declare to arrange this type of
redemption. The repurchase price per share will be the net asset value
next computed after the Distributor receives the order placed by the
dealer or broker, except if the Distributor receives a repurchase order
from a dealer or broker after the close of the 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 customers 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.).
Ordinarily for accounts redeemed by a broker-dealer under this procedure,
payment will be made within three business days after the shares have been
redeemed upon the Distributor's receipt of the required redemption
documents in proper form, with signature(s) of the registered owners
guaranteed on the redemption document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of the
Fund valued at $5,000 or more can authorize the Transfer Agent to redeem
shares (minimum $50) automatically on a monthly, quarterly, semi-annual
or annual basis under an Automatic Withdrawal Plan. Shares will be
redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from OppenheimerFunds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How to Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the
OppenheimerFunds New Account Application or signature-guaranteed
instructions. The Fund cannot guarantee receipt of a payment on the date
requested and reserves the right to amend, suspend or discontinue offering
such plans at any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans because of the imposition of the contingent deferred
sales charge on such withdrawals (except where the Class B or Class C
contingent deferred sales charge is waived as described in the Prospectus
under "Waivers of Class B and Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated
below and in the provisions of the OppenheimerFunds Application relating
to such Plans, as well as the Prospectus. These provisions may be amended
from time to time by the Fund and/or the Distributor. When adopted, such
amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment. It may not be
desirable to purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases when
made. Accordingly, a shareholder normally may not maintain an Automatic
Withdrawal Plan while simultaneously making regular purchases of Class A
shares.
The Transfer Agent will administer the investor's Automatic Withdrawal
Plan (the "Plan") as agent for the investor (the "Planholder") who
executed the Plan authorization and application submitted to the Transfer
Agent. The Transfer Agent and the Fund 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 Class A shares in
certificated form. Share certificates are not issued for Class B or Class
C shares. Upon written request from the Planholder, the Transfer Agent
will determine the number of Class A shares for which a certificate may
be issued without causing the withdrawal checks to stop because of
exhaustion of uncertificated shares needed to continue payments. However,
should such uncertificated shares become exhausted, Plan withdrawals will
terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund, the
Planholder will be deemed to have appointed any successor transfer agent
to act as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. Shares of
the Oppenheimer funds that have a single class without a class designation
are deemed "Class A" shares for this purpose. All of the Oppenheimer
funds offer Class A, Class B and Class C shares except Oppenheimer Money
Market Fund, Inc., Centennial Money Market Trust, Centennial Tax Exempt
Trust, Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial California Tax Exempt Trust, Centennial America Fund, L.P., and
Daily Cash Accumulation Fund, Inc., which only offer Class A shares and
Oppenheimer Main Street California Tax-Exempt Fund which only offers Class
A and Class B shares, (Class B and Class C shares of Oppenheimer Cash
Reserves are generally available only by exchange from the same class of
shares of other Oppenheimer funds or through OppenheimerFunds sponsored
401(k) plans). A current list showing which funds offer which class can
be obtained by calling the Distributor at 1-800-525-7048. Prior to May
1, 1996, Oppenheimer Disciplined Allocation Fund, Oppenheimer Disciplined
Value Fund, Oppenheimer LifeSpan Balanced Fund, Oppenheimer LifeSpan
Income Fund, and Oppenheimer LifeSpan Growth Fund offer only Class A and
Class B shares and are not eligible for exchange to or from other
Oppenheimer funds.
For accounts established on or before March 8, 1996 holding Class
M shares of Oppenheimer Bond Fund for Growth, Class M shares can be
exchanged only for Class A shares of other Oppenheimer funds, including
Rochester Fund Municipals and Limited Term New York Municipal Fund. Class
A shares of Rochester Fund Municipals or Limited Term New York Municipal
Fund acquired on the exchange of Class M shares of Oppenheimer Bond Fund
for Growth may be exchanged for Class M shares of that fund. For accounts
of Oppenheimer Bond Fund for Growth established after March 8, 1996, Class
M shares may be exchanged for Class A shares of other Oppenheimer funds
except Rochester Fund Municipals and Limited Term New York Municipals.
Exchanges to Class M shares of Oppenheimer Bond Fund for Growth are
permitted from Class A shares of Oppenheimer Money Market Fund, Inc. or
Oppenheimer Cash Reserves that were acquired by exchange from Class M
shares. Otherwise no exchanges of any class of any Oppenheimer fund into
Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of any Money Market Fund. Shares of any Money Market Fund
purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge). However, shares of
Oppenheimer Money Market Fund, Inc. purchased with the redemption proceeds
of shares of other mutual funds (other than funds managed by the Manager
or its subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or
the investor's dealer must notify the Distributor of eligibility for this
privilege at the time the shares of Oppenheimer Money Market Fund, Inc.
are purchased, and, if requested, must supply proof of entitlement to this
privilege.
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except Cash
Reserves) or from any unit investment trust for which reinvestment
arrangements have been made with the Distributor may be exchanged at net
asset value for shares of any of the Oppenheimer funds. No contingent
deferred sales charge is imposed on exchanges of shares of either class
purchased subject to a contingent deferred sales charge. However, when
Class A shares acquired by exchange of Class A shares of other Oppenheimer
funds purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months of the end of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred
sales charge is imposed on the redeemed shares (see "Class A Contingent
Deferred Sales Charge" in the Prospectus). The Class B and Class C
contingent deferred sales charge are imposed on shares acquired by
exchange if they are redeemed within 12 months or 6 years respectively of
the initial purchase of the exchanged shares.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How to Buy Shares" in the Prospectus for the
imposition of the Class B and Class C contingent deferred sales charge
will be followed in determining the order in which the shares are
exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class of shares must
specify whether they intend to exchange Class A, Class B or Class C
shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of more than one account.
The Fund may accept requests for exchanges of up to 50 accounts per day
from representatives of authorized dealers that qualify for this
privilege. In connection with any exchange request, the number of shares
exchanged may be less than the number requested if the exchange or the
number requested would include shares subject to a restriction cited in
the Prospectus or this Statement of Additional Information or would
include shares covered by a share certificate that is not tendered with
the request. In those cases, only the shares available for exchange
without restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either have an
existing account in, or obtain and acknowledge receipt of a prospectus of,
the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax 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 Oppenheimer funds listed in "Reduced
Sales Charges," above, at net asset value without sales charge. To elect
this option, a shareholder must notify the Transfer Agent in writing and
either have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Distributor to establish an account. The investment will be made at the
net asset value per share in effect at the close of business on the
payable date of the dividend or distribution. Dividends and/or
distributions from shares of other Oppenheimer funds may be invested in
shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on the
portfolio securities and handling the delivery of such securities to and
from the Fund. The Manager has represented to the Fund that the banking
relationships between the Manager and the Custodian have been and will
continue to be unrelated to and unaffected by the relationship between the
Fund and the Custodian. It will be the practice of the Fund to deal with
the Custodian in a manner uninfluenced by any banking relationship the
Custodian may have with the Manager and its affiliates. The Fund's cash
balances 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>
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, 1995, 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, 1995, 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, 1995, 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 22, 1996
<PAGE>
Statement of Investments December 31, 1995
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
<S> <C> <C>
=====================================================
===
Convertible Corporate Bonds and Notes--0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Danka Business Systems PLC, 6.75% Cv. Sub. Nts., 4/1/02 $1,700,000
$ 2,384,250
---------------------------------------------------------------------------------------------------------------
First Financial Management Corp., 5% Cv. Debs., 12/15/99 2,000,000
3,122,500
------------
Total Convertible Corporate Bonds and Notes (Cost $3,723,750)
5,506,750
Shares
=====================================================
===
Common Stocks--80.8%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--5.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--2.7%
Georgia Gulf Corp. 163,000 5,012,250
---------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 90,000 3,678,750
---------------------------------------------------------------------------------------------------------------
Morton International, Inc. 80,000 2,870,000
---------------------------------------------------------------------------------------------------------------
Sterling Chemicals, Inc.(1) 462,500 3,757,812
---------------------------------------------------------------------------------------------------------------
Terra Industries, Inc. 270,100 3,815,162
---------------------------------------------------------------------------------------------------------------
Union Carbide Corp. 40,000 1,500,000
------------
20,633,974
- -----------------------------------------------------------------------------------------------------------------------------------
Metals--0.8%
Asarco, Inc. 87,500 2,800,000
---------------------------------------------------------------------------------------------------------------
Cyprus Amax Minerals Co. 30,000 783,750
---------------------------------------------------------------------------------------------------------------
Reynolds Metals Co. 45,000 2,548,125
------------
6,131,875
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--1.7%
Boise Cascade Corp. 82,000 2,839,250
---------------------------------------------------------------------------------------------------------------
Bowater, Inc. 105,000 3,727,500
---------------------------------------------------------------------------------------------------------------
Chesapeake Corp. 35,000 1,036,875
---------------------------------------------------------------------------------------------------------------
Federal Paper Board Co. 35,000 1,815,625
---------------------------------------------------------------------------------------------------------------
Willamette Industries, Inc. 62,000 3,487,500
------------
12,906,750
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--13.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--1.2%
Pulte Corp. 110,000 3,698,750
---------------------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 225,000 5,175,000
------------
8,873,750
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.5%
Circus Circus Enterprises, Inc.(1) 120,000 3,345,000
---------------------------------------------------------------------------------------------------------------
Department 56, Inc.(1) 77,600 2,977,900
---------------------------------------------------------------------------------------------------------------
Mattel, Inc. 37,500 1,153,125
---------------------------------------------------------------------------------------------------------------
Walt Disney Co. 125,000 7,375,000
---------------------------------------------------------------------------------------------------------------
Wendy's International, Inc. 217,800 4,628,250
------------
19,479,275
- -----------------------------------------------------------------------------------------------------------------------------------
Media--0.5%
Viacom, Inc., Cl. B(1) 75,768 3,589,509
</TABLE>
7 Oppenheimer Target Fund
<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: General--3.5%
Jones Apparel Group, Inc.(1) 88,600 $ 3,488,625
---------------------------------------------------------------------------------------------------------------
Nautica Enterprises, Inc. 50,800 2,222,500
---------------------------------------------------------------------------------------------------------------
Revco D.S., Inc.(1) 100,000 2,825,000
---------------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(1) 245,000 10,381,875
---------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 200,000 4,475,000
---------------------------------------------------------------------------------------------------------------
Warnaco Group, Inc. (The), Cl. A 142,000
3,550,000
------------
26,943,000
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: Specialty--5.5%
Bed Bath & Beyond, Inc.(1) 120,000 4,657,500
---------------------------------------------------------------------------------------------------------------
CUC International, Inc.(1) 80,000 2,730,000
---------------------------------------------------------------------------------------------------------------
General Nutrition Cos., Inc.(1) 412,400 9,485,200
---------------------------------------------------------------------------------------------------------------
Home Depot, Inc. 70,000 3,351,250
---------------------------------------------------------------------------------------------------------------
Nike, Inc., Cl. B 140,000 9,747,500
---------------------------------------------------------------------------------------------------------------
Office Depot, Inc.(1) 90,000 1,777,500
---------------------------------------------------------------------------------------------------------------
OfficeMax, Inc. 96,500 2,159,187
---------------------------------------------------------------------------------------------------------------
Staples, Inc. 117,000 2,851,875
---------------------------------------------------------------------------------------------------------------
Viking Office Products, Inc.(1) 120,000 5,580,000
------------
42,340,012
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--14.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages--1.2%
Coca-Cola Co. (The) 55,000 4,083,750
---------------------------------------------------------------------------------------------------------------
PepsiCo, Inc. 80,000 4,470,000
---------------------------------------------------------------------------------------------------------------
Whitman Corp. 35,000 813,750
------------
9,367,500
- -----------------------------------------------------------------------------------------------------------------------------------
Food--2.9%
H.J. Heinz Co. 127,000 4,206,875
---------------------------------------------------------------------------------------------------------------
IBP, Inc. 180,000 9,090,000
---------------------------------------------------------------------------------------------------------------
Kroger Co.(1) 46,000 1,725,000
---------------------------------------------------------------------------------------------------------------
Safeway, Inc.(1) 120,000 6,180,000
---------------------------------------------------------------------------------------------------------------
Smithfield Foods, Inc.(1) 40,000 1,270,000
------------
22,471,875
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--5.2%
Abbott Laboratories 190,000 7,932,500
---------------------------------------------------------------------------------------------------------------
Amgen, Inc.(1) 50,000 2,968,750
---------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 60,000 5,152,500
---------------------------------------------------------------------------------------------------------------
Elan Corp. PLC, ADR(1) 85,000 4,133,125
---------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 185,000 11,655,000
---------------------------------------------------------------------------------------------------------------
Schering-Plough Corp. 150,000 8,212,500
------------
40,054,375
</TABLE>
8 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies &
Services--3.1%
Cordis Corp.(1) 33,000 $ 3,316,500
---------------------------------------------------------------------------------------------------------------
HealthCare COMPARE Corp.(1) 110,000
4,785,000
---------------------------------------------------------------------------------------------------------------
Horizon/CMS Healthcare Corp.(1) 30,000
757,500
---------------------------------------------------------------------------------------------------------------
Integrated Health Services, Inc. 25,000 625,000
---------------------------------------------------------------------------------------------------------------
Lincare Holdings, Inc.(1) 189,000 4,725,000
---------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 120,000 6,705,000
---------------------------------------------------------------------------------------------------------------
Quorum Health Group, Inc.(1) 120,000 2,640,000
------------
23,554,000
- -----------------------------------------------------------------------------------------------------------------------------------
Household Goods--0.6%
Procter & Gamble Co. 50,000 4,150,000
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--1.9%
Philip Morris Cos., Inc. 91,000 8,235,500
---------------------------------------------------------------------------------------------------------------
UST, Inc. 195,000 6,508,125
------------
14,743,625
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--1.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services &
Producers--0.1%
Tidewater, Inc. 36,000 1,134,000
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--1.3%
Mobil Corp. 60,000 6,720,000
---------------------------------------------------------------------------------------------------------------
USX-Marathon Group 130,000 2,535,000
---------------------------------------------------------------------------------------------------------------
YPF Sociedad Anonima, Sponsored ADR 30,000
648,750
------------
9,903,750
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--14.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--4.1%
Bank of Boston Corp. 125,000 5,781,250
---------------------------------------------------------------------------------------------------------------
Chemical Banking Corp. 50,000 2,937,500
---------------------------------------------------------------------------------------------------------------
First Interstate Bancorp 25,000 3,412,500
---------------------------------------------------------------------------------------------------------------
Fleet Financial Group, Inc. 62,454 2,545,000
---------------------------------------------------------------------------------------------------------------
Midlantic Corp. 55,000 3,609,375
---------------------------------------------------------------------------------------------------------------
NationsBank Corp. 90,000 6,266,250
---------------------------------------------------------------------------------------------------------------
Northern Trust Corp. 10,000 560,000
---------------------------------------------------------------------------------------------------------------
SouthTrust Corp. 90,000 2,306,250
---------------------------------------------------------------------------------------------------------------
State Street Boston Corp. 87,400 3,933,000
------------
31,351,125
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--7.9%
Advanta Corp., Cl. A 175,000 6,693,750
---------------------------------------------------------------------------------------------------------------
Advanta Corp., Cl. B 32,000 1,164,000
---------------------------------------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette, Inc.(1) 49,100 1,534,375
---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 60,000
5,010,000
---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. 25,000 3,103,125
---------------------------------------------------------------------------------------------------------------
First USA, Inc. 190,000 8,431,250
---------------------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 450,000 11,868,750
---------------------------------------------------------------------------------------------------------------
Money Store, Inc. (The) 95,750 1,496,094
---------------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. 40,000 3,225,000
---------------------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates 82,300 4,053,275
---------------------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. (The) 185,000 3,723,125
---------------------------------------------------------------------------------------------------------------
Travelers Group, Inc. 160,000 10,060,000
------------
60,362,744
</TABLE>
9 Oppenheimer Target Fund
<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--2.5%
AFLAC, Inc. 115,000 $ 4,988,125
---------------------------------------------------------------------------------------------------------------
MGIC Investment Corp. 87,900 4,768,575
---------------------------------------------------------------------------------------------------------------
Reliastar Financial Corp. 41,700 1,850,437
---------------------------------------------------------------------------------------------------------------
SunAmerica, Inc. 165,000 7,837,500
------------
19,444,637
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial--7.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--2.6%
Emerson Electric Co. 110,000 8,992,500
---------------------------------------------------------------------------------------------------------------
General Electric Co. 70,000 5,040,000
---------------------------------------------------------------------------------------------------------------
Kemet Corp. 20,000 477,500
---------------------------------------------------------------------------------------------------------------
Molex, Inc., Cl. A 185,937 5,694,321
------------
20,204,321
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Materials--1.0%
Ball Corp. 48,000 1,320,000
---------------------------------------------------------------------------------------------------------------
Centex Corp. 95,700 3,325,575
---------------------------------------------------------------------------------------------------------------
Rayonier, Inc. 103,700 3,460,988
------------
8,106,563
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Services--2.4%
Cintas Corp. 90,000 4,005,000
---------------------------------------------------------------------------------------------------------------
Danka Business System PLC, Sponsored ADR 145,000
5,365,000
---------------------------------------------------------------------------------------------------------------
Loewen Group, Inc. 70,000 1,771,875
---------------------------------------------------------------------------------------------------------------
Manpower, Inc. 125,000 3,515,625
---------------------------------------------------------------------------------------------------------------
Reynolds & Reynolds Co., Cl. A 90,000
3,498,750
------------
18,156,250
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--0.3%
Kulicke & Soffa Industries, Inc. 90,000 2,092,500
---------------------------------------------------------------------------------------------------------------
O.T.F. Equities, Inc.(1) 400,000 --
------------
2,092,500
- -----------------------------------------------------------------------------------------------------------------------------------
Transportation--1.6%
Burlington Northern Santa Fe Corp. 42,000 3,276,000
---------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd. 305,000 5,528,125
---------------------------------------------------------------------------------------------------------------
Illinois Central Corp. 88,100 3,380,838
------------
12,184,963
</TABLE>
10 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--23.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.5%
Goodrich (B.F.) Co. 57,000 $ 3,883,125
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Hardware--6.3%
3Com Corp.(1) 130,000 6,061,250
---------------------------------------------------------------------------------------------------------------
Adaptec, Inc.(1) 130,000 5,330,000
---------------------------------------------------------------------------------------------------------------
Andrew Corp.(1) 100,000 3,825,000
---------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 110,000 8,910,000
---------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 65,000 4,850,625
---------------------------------------------------------------------------------------------------------------
Compaq Computer Corp.(1) 125,000
6,000,000
---------------------------------------------------------------------------------------------------------------
EMC Corp.(1) 360,000 5,535,000
---------------------------------------------------------------------------------------------------------------
Gateway 2000, Inc.(1) 133,000 3,258,500
---------------------------------------------------------------------------------------------------------------
Lexmark International Group, Inc., Cl. A(1) 51,100
932,575
---------------------------------------------------------------------------------------------------------------
Sun Microsystems, Inc.(1) 61,000 2,783,125
---------------------------------------------------------------------------------------------------------------
Western Digital Corp.(1) 75,000 1,340,625
------------
48,826,700
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Software--10.0%
Adobe Systems, Inc. 10,000 620,000
---------------------------------------------------------------------------------------------------------------
Automatic Data Processing, Inc. 60,000 4,455,000
---------------------------------------------------------------------------------------------------------------
BMC Software, Inc.(1) 200,000 8,550,000
---------------------------------------------------------------------------------------------------------------
Cheyenne Software, Inc.(1) 195,900 5,117,888
---------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 50,000 2,843,750
---------------------------------------------------------------------------------------------------------------
First Data Corp. 217,577 14,550,462
---------------------------------------------------------------------------------------------------------------
Informix Corp.(1) 385,000 11,550,000
---------------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 202,000 17,725,500
---------------------------------------------------------------------------------------------------------------
Oracle Corp.(1) 275,900 11,691,263
------------
77,103,863
- -----------------------------------------------------------------------------------------------------------------------------------
Electronics--3.8%
Arrow Electronics, Inc.(1) 70,000 3,018,750
---------------------------------------------------------------------------------------------------------------
Cypress Semiconductor Corp.(1) 140,000 1,785,000
---------------------------------------------------------------------------------------------------------------
General Instrument Corp.(1) 70,000 1,636,250
---------------------------------------------------------------------------------------------------------------
Intel Corp. 150,000 8,512,500
---------------------------------------------------------------------------------------------------------------
Motorola, Inc. 100,000 5,700,000
---------------------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 20,000 1,080,000
---------------------------------------------------------------------------------------------------------------
Phillips Electronics NV, ADR 100,000 3,587,500
---------------------------------------------------------------------------------------------------------------
Teradyne, Inc. 140,000 3,500,000
------------
28,820,000
- -----------------------------------------------------------------------------------------------------------------------------------
Telecommunications-
Technology--2.4%
AT&T Corp. 50,000 3,237,500
---------------------------------------------------------------------------------------------------------------
DSC Communications Corp.(1) 55,000
2,028,125
---------------------------------------------------------------------------------------------------------------
Hong Kong Telecommunications Ltd., Sponsored ADR 25,000
443,750
---------------------------------------------------------------------------------------------------------------
L.M. Ericsson Telephone Co., Cl. B, ADR 190,000
3,705,000
---------------------------------------------------------------------------------------------------------------
Telecom Corp. of New Zealand Ltd., Sponsored ADR 30,000
2,081,250
---------------------------------------------------------------------------------------------------------------
Tellabs, Inc. 180,000 6,660,000
------------
18,155,625
</TABLE>
11 Oppenheimer Target Fund
<PAGE>
Statement of Investments (Continued)
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
<S> <C> <C>
=====================================================
===
Utilities--0.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--0.3%
Empresa Nacional de Electricidad SA, Sponsored ADR 45,000 $
2,576,250
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone Utilities--0.4%
Cincinnati Bell, Inc. 90,000 3,127,500
------------
Total Common Stocks (Cost $445,812,097)
620,673,436
Units
=====================================================
===
Rights, Warrants and Certificates--0.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Windmere Corp. Wts., Exp. 1/98 7,094
- --
------------
Total Rights, Warrants and Certificates (Cost $0) --
Face
Amount
=====================================================
=====================================================
=========================
Repurchase Agreements--18.9%
Repurchase agreement with First Chicago Capital Markets,
5.90%, dated 12/29/95, to be repurchased at $125,182,010 on 1/2/96,
collateralized by U.S. Treasury Nts., 5.125%--8.75%, 12/31/96--11/5/04,
with a value of $67,905,186, U.S. Treasury Bonds, 6.25%--11.25%,
8/15/03--8/15/23, with a value of $41,152,176, and U.S. Treasury Bills
maturing 11/14/96, with a value of $18,661,921 $125,100,000
125,100,000
---------------------------------------------------------------------------------------------------------------
Repurchase agreement with PaineWebber, Inc., 5.90%, dated 12/29/95,
to be repurchased at $19,933,059 on 1/2/96, collateralized by U.S. Treasury
Nts., 6.875%, 8/31/99, with a value of $7,118,080, and U.S. Treasury Bonds,
7.125%--7.625%, 11/15/22--2/15/23, with a value of $13,411,820 19,920,000
19,920,000
------------
Total Repurchase Agreements (Cost $145,020,000)
145,020,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $594,555,847) 100.4%
771,200,186
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.4) (2,773,388)
------------ ------------
Net Assets 100.0% $768,426,798
============
============
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
12 Oppenheimer Target Fund
<PAGE>
Statement of Assets and Liabilities December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
=====================================================
=====================================================
=========================
Assets Investments, at value (including repurchase agreements of $145,020,000)
(cost $594,555,847)--see accompanying statement
$771,200,186
---------------------------------------------------------------------------------------------------------------
Cash 65,607
---------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 3,206,531
Shares of beneficial interest sold 1,271,341
Interest and dividends 757,223
---------------------------------------------------------------------------------------------------------------
Other 210,652
------------
Total assets 776,711,540
=====================================================
=====================================================
=========================
Liabilities Payables and other liabilities:
Investments purchased 5,355,873
Shares of beneficial interest redeemed 1,383,530
Distribution and service plan fees--Note 4 295,184
Deferred trustees' fees--Note 1 221,911
Shareholder reports 75,397
Other 952,847
------------
Total liabilities 8,284,742
=====================================================
=====================================================
=========================
Net Assets $768,426,798
============
=====================================================
=====================================================
=========================
Composition of
Net Assets
Paid-in capital $587,467,438
---------------------------------------------------------------------------------------------------------------
Overdistributed net investment income (168,578)
---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions
4,483,599
---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3
176,644,339
------------
Net assets $768,426,798
============
=====================================================
=====================================================
=========================
Net Asset Value
Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of $758,439,152 and
27,639,405 shares of beneficial interest outstanding) $27.44
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price)
$29.11
---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $2,751,009 and 100,518 shares of beneficial interest outstanding)
$27.37
---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $7,236,637 and 266,928 shares of beneficial interest outstanding)
$27.11
</TABLE>
See accompanying Notes to Financial Statements.
13 Oppenheimer Target Fund
<PAGE>
Statement of Operations For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
=====================================================
=====================================================
=========================
Investment Income Interest $ 6,740,731
---------------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $22,014)
4,679,929
------------
Total income 11,420,660
=====================================================
=====================================================
=========================
Expenses Management fees--Note 4 3,882,505
---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 839,340
Class B 1,030
Class C 37,800
---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 568,898
---------------------------------------------------------------------------------------------------------------
Shareholder reports 132,075
---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 67,500
---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 41,449
---------------------------------------------------------------------------------------------------------------
Insurance expenses 23,612
---------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 318
Class B 931
Class C 1,864
---------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 202
---------------------------------------------------------------------------------------------------------------
Other 19,830
------------
Total expenses 5,617,354
=====================================================
=====================================================
=========================
Net Investment Income 5,803,306
=====================================================
=====================================================
=========================
Realized and Unrealized Gain
Net realized gain on investments 71,199,990
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments
58,150,018
------------
Net realized and unrealized gain 129,350,008
=====================================================
=====================================================
=========================
Net Increase in Net Assets Resulting From Operations
$135,153,314
============
</TABLE>
See accompanying Notes to Financial Statements.
14 Oppenheimer Target Fund
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994
<S> <C> <C>
=====================================================
=====================================================
=========================
Operations Net investment income $ 5,803,306 $
2,339,881
---------------------------------------------------------------------------------------------------------------
Net realized gain 71,199,990 38,815,275
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 58,150,018
(40,560,449)
------------ ------------
Net increase in net assets resulting from operations 135,153,314
594,707
=====================================================
=====================================================
=========================
Dividends and
Distributions to
Shareholders
Dividends from net investment income:
Class A (5,896,377) (2,361,728)
Class B (8,658) --
Class C (24,850) (2,907)
---------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (69,237,207) (35,048,552)
Class B (100,605) --
Class C (663,926) (102,047)
=====================================================
=====================================================
=========================
Beneficial Interest
Transactions
Net increase (decrease) in net assets resulting from
beneficial interest transactions--Note 2:
Class A 397,611,091 (30,283,681)
Class B 2,840,388 --
Class C 5,989,404 1,154,378
=====================================================
=====================================================
=========================
Net Assets Total increase (decrease) 465,662,574
(66,049,830)
---------------------------------------------------------------------------------------------------------------
Beginning of period 302,764,224 368,814,054
------------ ------------
End of period (including overdistributed net investment
income of $168,578 and $69,749, respectively) $768,426,798
$302,764,224
============
============
</TABLE>
See accompanying Notes to Financial Statements.
15 Oppenheimer Target Fund
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------
Year Ended December 31,
1995 1994 1993 1992 1991(2)
=====================================================
=====================================================
=====
<S> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning
of period $22.63 $25.72 $25.25 $23.76 $17.47
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 .20 .13 .16 .27
Net realized and unrealized
gain (loss) 7.61 (.11) .86 2.28 6.87
-------- -------- -------- -------- --------
Total income (loss) from
investment operations 7.85 .09 .99 2.44 7.14
- ---------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net
investment income (.24) (.20) (.12) (.17) (.18)
Distributions from net
realized gain (2.80) (2.98) (.40) (.78) (.67)
-------- -------- -------- -------- --------
Total dividends and
distributions to shareholders (3.04) (3.18) (.52) (.95) (.85)
- ---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $27.44 $22.63 $25.72 $25.25 $23.76
======== ======== ======== ========
========
=====================================================
=====================================================
=====
Total Return, at Net Asset Value(5) 34.85% .46% 3.93% 10.27% 41.33%
=====================================================
=====================================================
=====
Ratios/Supplemental Data:
Net assets, end of period
(in thousands) $758,439 $301,698 $368,806 $401,256 $369,351
- ---------------------------------------------------------------------------------------------------------------
Average net assets
(in thousands) $538,210 $325,003 $383,875 $362,295 $209,596
- ---------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 1.08% .72% .47% .69% 1.25%
Expenses 1.03% 1.16% 1.07% 1.09% 1.17%
- ---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(7) 71.9% 34.7% 22.9% 42.3% 65.6%
- ---------------------------------------------------------------------------------------------------------------
Average brokerage
commission rate(8) $0.07 -- -- -- --
</TABLE>
1. For the period from December 1, 1993 (inception of offering) to December 31,
1993.
2. Per share amounts calculated based on the weighted average number of shares
outstanding during the period.
3. For the period from November 1, 1995 (inception of offering) to December 31,
1995.
4. During 1986, the Fund had average monthly debt outstanding of $688,172; the
average monthly number of shares outstanding for the year ended December 31,
1986 was 5,799,198, and the average monthly debt per share was $0.12.
5. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period, with all dividends and distributions reinvested
in additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Sales charges
are not reflected in the total returns. Total returns are not annualized for
periods of less than one full year.
16 Oppenheimer Target Fund
<PAGE>
<TABLE>
<CAPTION>
Class B Class C
- ---------------------------------------------------------------- ------------ -----------------------------------
Period Ended
December 31, Year Ended December 31,
1990 1989 1988 1987 1986(4) 1995(3)(9) 1995 1994(2) 1993(1)
=====================================================
=====================================================
===================
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
$18.26 $16.04 $12.38 $20.49 $19.30 $29.77 $22.50 $25.72 $25.92
- -----------------------------------------------------------------------------------------------------------------------------
.39 .59 .27 .17 .11 (.14) .09 -- (.01)
(.78) 2.34 3.74 (3.68) 1.46 .78 7.43 (.15) .31
- ------- ------- ------- -------- -------- ------ ------ ------ ------
(.39) 2.93 4.01 (3.51) 1.57 .64 7.52 (.15) .30
- -----------------------------------------------------------------------------------------------------------------------------
(.40) (.62) (.26) (.31) (.38) (.24) (.11) (.09) (.10)
-- (.09) (.09) (4.29) -- (2.80) (2.80) (2.98) (.40)
- ------- ------- ------- -------- -------- ------ ------ ------ ------
(.40) (.71) (.35) (4.60) (.38) (3.04) (2.91) (3.07) (.50)
- -----------------------------------------------------------------------------------------------------------------------------
$17.47 $18.26 $16.04 $12.38 $20.49 $27.37 $27.11 $22.50 $25.72
======= ======= ======= ======== ========
====== ====== ====== ======
=====================================================
=====================================================
===================
(2.13)% 18.31% 32.39% (17.95)% 8.28% 1.67% 33.56% (.50)%
2.11%
=====================================================
=====================================================
===================
$52,526 $66,050 $68,031 $60,888 $111,417 $2,751 $7,237 $1,066
$8
- -----------------------------------------------------------------------------------------------------------------------------
$56,208 $70,874 $68,068 $107,475 $128,757 $661 $3,792 $467
$6
- -----------------------------------------------------------------------------------------------------------------------------
2.08% 2.93% 1.64% .60% .36% (.54)%(6) .19% (.02)%
(.07)%(6)
1.33% 1.27% 1.29% 1.16% 1.16% 2.62%(6) 1.90% 2.18%
2.18%(6)
- -----------------------------------------------------------------------------------------------------------------------------
51.2% 68.3% 108.4% 95.1% 69.9% 71.9% 71.9% 34.7%
22.9%
- -----------------------------------------------------------------------------------------------------------------------------
-- -- -- -- -- $0.07 $0.07 -- --
</TABLE>
6. Annualized.
7. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended December 31, 1995 were $311,600,277 and $293,869,853, respectively.
8. Total brokerage commissions paid on purchases and sales of portfolio
securities for the period divided by the total number of related shares
purchased and sold.
9. Based on average shares outstanding for the period.
See accompanying Notes to Financial Statements.
17 Oppenheimer Target Fund
<PAGE>
Notes to Financial Statements
=====================================================
===========================
1. Significant
Accounting Policies
Oppenheimer Target Fund (the Fund) is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. The Fund's investment objective is to seek capital appreciation. The
Fund's investment advisor is OppenheimerFunds,Inc. (the Manager). The Fund
offers Class A, Class B and Class C shares. Class A shares are sold with a
front-end sales charge. Class B and Class C shares may be subject to a
contingent deferred sales charge. All three classes of shares have identical
rights to earnings, assets and voting privileges, except that each class has its
own distribution and/or service plan, expenses directly attributable to a
particular class and exclusive voting rights with respect to matters affecting a
single class. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
asked price or the last sale price on the prior trading day. Long-term and
short-term "non-money market" debt securities are valued by a portfolio
pricing service approved by the Board of Trustees. Such securities which cannot
be valued by the approved portfolio pricing service are valued using
dealer-supplied valuations provided the Manager is satisfied that the firm
rendering the quotes is reliable and that the quotes reflect current market
value, or are valued under consistently applied procedures established by the
Board of Trustees to determine fair value in good faith. Short-term "money
market type" debt securities having a remaining maturity of 60 days or less are
valued at cost (or last determined market value) adjusted for amortization to
maturity of any premium or discount.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, and Gains and Losses. Income, expenses (other
than those attributable to a specific class) and gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
- --------------------------------------------------------------------------------
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers, to shareholders. Therefore, no
federal income or excise tax provision is required.
- --------------------------------------------------------------------------------
Trustees' Fees and Expenses. The Fund has adopted a nonfunded retirement plan
for the Fund's independent trustees. Benefits are based on years of service and
fees paid to each trustee during the years of service. During the year ended
December 31, 1995, a provision of $14,864 was made for the Fund's projected
benefit obligations, and a payment of $2,026 was made to a retired trustee,
resulting in an accumulated liability of $221,911 at December 31, 1995.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
18 Oppenheimer Target Fund
<PAGE>
=====================================================
===========================
1. Significant Accounting
Policies (continued)
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from 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.
During the year ended December 31, 1995, the Fund changed the
classification of distributions determined in accordance with income tax
regulations. Accordingly, during the year ended December 31, 1995, amounts have
been reclassified to reflect a decrease in paid-in capital and overdistributed
net investment income of $27,750.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for on the date the investments are
purchased or sold (trade date) and dividend income is recorded on the
ex-dividend date. Realized gains and losses on investments and unrealized
appreciation and depreciation are determined on an identified cost basis, which
is the same basis used for federal income tax purposes.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
=====================================================
===========================
2. Shares of
Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of beneficial
interest. Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1995(1) Year Ended December 31, 1994
------------------------------- -----------------------------
Shares Amount Shares Amount
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A:
Sold 3,305,271 $ 90,988,885 1,091,689 $ 27,823,899
Dividends and distributions reinvested 2,635,092 71,461,980 1,592,900 35,776,790
Issued in connection with the acquisition
of Oppenheimer Time Fund--Note 5 11,277,345 315,314,574 -- --
Redeemed (2,909,180) (80,154,348) (3,693,115) (93,884,370)
---------- ------------ ---------- ------------
Net increase (decrease) 14,308,528 $397,611,091 (1,008,526) $(30,283,681)
========== ============ ==========
============
- ---------------------------------------------------------------------------------------------------------------
Class B:
Sold 107,562 $ 3,071,314 -- $ --
Dividends and distributions reinvested 3,988 107,888 -- --
Redeemed (11,032) (338,814) -- --
---------- ------------ ---------- ------------
Net increase 100,518 $ 2,840,388 -- $ --
========== ============ ==========
============
- ---------------------------------------------------------------------------------------------------------------
Class C:
Sold 257,084 $ 7,022,376 65,435 $ 1,619,304
Dividends and distributions reinvested 22,545 604,205 4,518 100,882
Redeemed (60,076) (1,637,177) (22,893) (565,808)
---------- ------------ ---------- ------------
Net increase 219,553 $ 5,989,404 47,060 $ 1,154,378
========== ============ ==========
============
</TABLE>
1. For the year ended December 31, 1995 for Class A and Class C shares and for
the period from November 1, 1995 (inception of offering) to December 31, 1995
for Class B shares.
=====================================================
===========================
3. Unrealized Gains and
Losses on Investments
At December 31, 1995, net unrealized appreciation on investments of $176,644,339
was composed of gross appreciation of $188,523,516, and gross depreciation of
$11,879,177.
19 Oppenheimer Target Fund
<PAGE>
Notes to Financial Statements (Continued)
=====================================================
===========================
4. Management Fees
And Other Transactions
With Affiliates
Management fees paid to the Manager were in accordance with the investment
advisory agreement with the Fund which provides for a fee of .75% on the first
$200 million of average annual net assets, .72% 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. The Manager has agreed to reimburse the Fund if
aggregate expenses (with specified exceptions) exceed the most stringent state
regulatory limit on Fund expenses.
For the year ended December 31, 1995, commissions (sales charges paid by
investors) on sales of Class A shares totaled $594,161, of which $190,816 was
retained by OppenheimerFunds Distributor, Inc. (OFDI), a subsidiary of the
Manager, as general distributor, and by an affiliated broker/dealer. Sales
charges advanced to broker/dealers by OFDI on sales of the Fund's Class B and
Class C shares totaled $14,218 and $32,832, of which $934 and $1,056,
respectively, was paid to an affiliated broker/dealer. During the year ended
December 31, 1995, OFDI received contingent deferred sales charges of $50 and
$2,953, respectively, upon redemption of Class B and Class C shares as
reimbursement for sales commissions advanced by OFDI at the time of sale of such
shares.
OppenheimerFunds Services (OFS), a division of the Manager, is the transfer
and shareholder servicing agent for the Fund, and for other registered
investment companies. OFS's total costs of providing such services are allocated
ratably to these companies.
Under separate approved plans, each class may expend up to .25% of its net
assets annually to compensate OFDI for costs incurred in connection with the
personal service and maintenance of accounts that hold shares of the Fund,
including amounts paid to brokers, dealers, banks and other institutions. In
addition, Class B and Class C shares are subject to an asset-based sales charge
of .75% of net assets annually, to compensate 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 B or Class C plan, the
Board of Trustees may allow the Fund to continue payment of the asset-based
sales charge to OFDI for distribution expenses incurred on Class B or Class C
shares sold prior to termination or discontinuance of the plan. At December 31,
1995, OFDI had incurred unreimbursed expenses of $29,515 for Class B and $90,387
for Class C. During the year ended December 31, 1995, OFDI paid $45,762, and
$699, respectively, to an affiliated broker/dealer as compensation for Class A
and Class C personal service and maintenance expenses, and retained $870 and
$28,402, respectively, as compensation for Class B and Class C sales commissions
and service fee advances, as well as financing costs.
=====================================================
===========================
5. Acquisition of
Oppenheimer Time Fund
On June 23, 1995, the Fund acquired all of the net assets of Oppenheimer Time
Fund, pursuant to an Agreement and Plan of Reorganization approved by the
Oppenheimer Time Fund shareholders on June 20, 1995. The Fund issued 11,277,345
shares of beneficial interest (Class A), valued at $315,314,574 in exchange for
the net assets, resulting in combined Class A net assets of $686,360,280 on June
23, 1995. The net assets acquired included net unrealized appreciation of
$67,068,398. The exchange qualifies as a tax-free reorganization for federal
income tax purposes.
<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
<PAGE>
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
* For purposes of the Fund's policy not to concentrate in securities
of issuers in the same industry, utilities are divided into "industries"
according to their Services (e.g. gas utilities, gas transmission
utilities, electric utilities and telephone utilities are each considered
a separate industry.
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, 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
<PAGE>
OPPENHEIMER TARGET FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements
--------------------
1. Financial Highlights - See Parts A and B: Filed herewith.
2. Independent Auditors' Report - See Part B: Filed herewith.
3. Statement of Investments: at 12/31/95 (audited) - See Part
B: Filed herewith.
4. Statement of Assets and Liabilities: at 12/31/95 (audited)
- (See Part B) - See Part B: Filed herewith.
5. Statement of Operations: at 12/31/95 (audited) - See Part
B: Filed herewith.
6. Statements of Changes in Net Assets - See Part B: Filed
herewith.
7. Notes to Financial Statements - See Part B: Filed herewith.
(b) Exhibits
--------
1. (i) Amended and Restated Declaration of Trust dated
August 21, 1995: Filed with Post-Effective Amendment
No. 32, to Registrant's Registration Statement,
8/29/95, and incorporated herein by reference.
2. Amended By-Laws of Oppenheimer Target Fund dated 8/6/87 -
Filed with Registrant's Form SE for its Form N-SAR for the
fiscal year ending 12/31/87 and refiled with Registrant's
Post-Effective Amendment No. 31, 5/1/95, pursuant to Item
102 of Regulation S-T and incorporated herein by reference.
3. Not applicable.
4. (i) Specimen Share Certificate for Class A shares of
Oppenheimer Target Fund: Filed with Post-Effective
Amendment No. 27 to Registrant's Registration
Statement, 3/2/94, and incorporated herein by
reference.
(ii) Specimen Share Certificate for Class B shares of
Oppenheimer Target Fund: Previously filed with Post-
Amendment No. 33 to Registrant's Registration
Statement, 10/26/95, and incorporated herein by
reference.
(iii) Specimen Share Certificate for Class C shares of
Oppenheimer Target Fund: Filed with Post-Effective
Amendment No. 27 to Registrant's Registration
Statement, 3/2/94, and incorporated herein by
reference.
5. Investment Advisory Agreement dated 6/20/91 between
Oppenheimer Target Fund and Oppenheimer Management
Corporation - Filed with Post-Effective Amendment No. 23
to Registrant's Registration Statement, 2/28/92, and
refiled with Post-Effective Amendment No. 31 to
Registrant's Registration Statement, 5/1/95, pursuant to
Item 102 of Regulation S-T and incorporated herein by
reference.
6. (i) General Distributor's Agreement dated 12/10/92: Filed
with Post-Effective Amendment No. 27 to Registrant's
Registration Statement, 3/2/94, and incorporated
herein by reference.
(ii) Form of Oppenheimer Funds Distributor, Inc. Dealer
Agreement: 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) Form of Oppenheimer Funds Distributor, Inc. Broker
Agreement: 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.
(iv) Form of Oppenheimer Funds Distributor, Inc. Agency
Agreement: 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.
(v) Oppenheimer Funds Distributor, Inc. Agreement with
Newbridge Securities, dated 10/1/86: Filed with Post-
Effective Amendment No. 25 to the Registration
Statement of Oppenheimer Growth Fund (Reg. No. 2-
45272) dated 11/1/86 and 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.
7. Retirement Plan for Non-Interested Trustees, 6/7/90: Filed
with Post-Effective Amendment No. 97 to the Registration
Statement of Oppenheimer Fund (Reg. No. 2-14586) dated
8/30/90 and refiled with Post-Effective Amendment No. 45 to
the Registration Statement 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. Custody Agreement dated 11/12/92: Filed with Post-Effective
Amendment No. 25 to Registrant's Registration Statement,
4/23/93, and refiled with Post-Effective Amendment No. 31
to Registrant's Registration Statement, 5/1/95, pursuant to
Item 102 of Regulation S-T and incorporated herein by
reference.
9. Not applicable.
10. Opinion and Consent of Counsel dated 5/1/87: Filed with
Post-Effective Amendment No. 11 to Registrant's Registration
Statement, 5/1/87, and refiled with Post-Effective Amendment
No. 31 to Registrant's Registration Statement, 5/1/95,
pursuant to Item 102 of Regulation S-T and incorporated
herein by reference.
11. Independent Auditors' Consent: Filed herewith.
12. Not applicable.
13. Not applicable.
14. (i) Form of Individual Retirement Account Trust Agreement:
Filed with Post-Effective Amendment No. 21 of
Oppenheimer U.S. Government Trust (Reg. No. 2-76645),
8/25/93, and incorporated herein by reference.
(ii) Form of prototype Standardized and Non-Standardized
Profit-Sharing Plan and Money Purchase Pension Plan for
self-employed persons and corporations: Filed with
Post-Effective Amendment No. 15 to the Registration
Statement of Oppenheimer Mortgage Income Fund, (Reg.
No. 33-6614), 1/19/95, and incorporated herein by
reference.
(iii) Form of Tax Sheltered Retirement Plan and Custody
Agreement for Employees of Public Schools and Tax
Exempt Organizations: Filed with Post-Effective
Amendment No. 47 to the Registration Statement of
Oppenheimer Growth Fund (Reg. No. 2-45272), 10/21/94,
and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Filed with
Post-Effective Amendment No. 15 to the Registration
Statement of Oppenheimer Mortgage Income Fund (Reg. No.
33-6614), 1/19/95, and incorporated herein by
reference.
(v) Form of SAR-SEP Simplified Employee Pension IRA: Filed
with Post-Effective Amendment No. 19 to the
Registration Statement for Oppenheimer Integrity Funds
(Reg. No. 2-76547), 3/1/94, and incorporated herein by
reference.
(vi) Form of Prototype 401(k) plan: Filed with Post-
Effective Amendment No. 7 to the Registration Statement
of Oppenheimer Strategic Income & Growth Fund (Reg. No.
33-47378), 9/28/95, and incorporated herein by
reference.
15. (i) Service Plan and Agreement for Class A shares of
Registrant dated 6/10/93: Filed with Post-Effective
Amendment No. 28, 4/29/94, and incorporated herein by
reference.
(ii) Distribution and Service Plan for Class B shares of
Registrant dated 11/1/95: Previously filed with Post-
Effective Amendment No. 33 to Registrant's
Registration Statement, 10/26/95, and incorporated
herein by reference.
(iii) Distribution and Service Plan for Class C shares of
Registrant dated 12/1/93: Filed with Post-Effective
Amendment No. 27 to Registrant's Registration
Statement, 3/2/94, and incorporated herein by
reference.
16. Performance Data Computation Schedule - Filed herewith.
17. Financial Data Schedule for:
(i) Class A shares at 12/31/95: Filed herewith.
(ii) Class B shares at 12/31/95. Filed herewith.
(iii) Class C shares at 12/31/95: Filed herewith.
-- Powers of Attorney (including certified resolutions of
Registrant's Board of Trustees): Filed herewith (Bridget
A.Macaskill) and previously filed (all other Trustees) with
Registrant's Post-Effective Amendment No. 28, 4/29/94, and
incorporated herein by reference.
18. OppenheimerFunds Multiple Class Plan under Rule 18f-3
dated 10/24/95: Filed herewith (with Post-Effective
Amendment No. 12 to the Registration Statement of
Oppenheimer California Tax-Exempt Fund (Reg. No. 33-
23566), 11/1/95, and incorporated herein by
reference.
Item 25. Persons Controlled by and Under Common Control with Registrant
--------------------------------------------------------------
None
Item 26. Number of Holders of Securities
-------------------------------
Number of Record Holders
Title of Class as of April 1, 1996
-------------- ------------------------
Class A Shares of Beneficial
Interest 59,937
Class B Shares of Beneficial
Interest 305
Class C Shares of Beneficial
Interest 838
Item 27. Indemnification
---------------
Reference is made to the provisions of Article SEVENTH of Registrant's
Declaration of Trust filed as an exhibit to this Registration Statement.
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 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
Name & Current Position Other Business and Connections with
OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Robert J. Bishop,
Assistant Vice President Treasurer of the Oppenheimer Funds
(listed below); previously a Fund
Controller for OppenheimerFunds,
Inc. (the "Manager").
Bruce Bartlett,
Vice President Vice President and Portfolio
Manager of Oppenheimer Total Return
Fund, Inc., Oppenheimer Main Street
Funds, Inc. and Oppenheimer
Variable Account Funds; formerly a
Vice President and Senior Portfolio
Manager at First of America
Investment Corp.
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Secretary and Treasurer of the
Denver-based Oppenheimer Funds.
Vice President and Treasurer of
OppenheimerFunds Distributor, Inc.
(the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director
of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of
the Manager; Vice President,
Treasurer and Secretary of
Shareholder Services, Inc. ("SSI")
and Shareholder Financial Services,
Inc. ("SFSI"), transfer 18
agent subsidiaries of the Manager; President, Treasurer and Director of
Centennial Capital Corporation; Vice President and Treasurer of Main
Street Advisers.
Michael A. Carbuto,
Vice President Vice President and Portfolio
Manager of Centennial California
Tax Exempt Trust, Centennial New
York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice
President of Centennial.
William Colbourne,
Assistant Vice President Formerly, Director of Alternative
Staffing Resources, and Vice
President of Human Resources,
American Cancer Society.
Lynn Coluccy,
Vice President Formerly Vice President / Director
of Internal Audit of the Manager.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President Vice President and Portfolio
Manager of Oppenheimer Growth Fund,
Oppenheimer Variable Account Funds;
Senior Vice President and Portfolio
Manager of Oppenheimer Strategic
Income & Growth Fund; Vice
President of Oppenheimer Quest
Value Fund, Inc., Oppenheimer Quest
Officers Value Fund, Oppenheimer
Quest For Value Funds and
Oppenheimer Quest Global Value
Fund, Inc.
John Doney,
Vice President Vice President and Portfolio
Manager of Oppenheimer Equity
Income Fund.
Andrew J. Donohue,
Executive Vice President
& General Counsel Secretary of the New York-
basedOppenheimer Funds; Vice
President of the Denver-based
Oppenheimer Funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a Director of
Centennial; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
Kenneth C. Eich,
Executive Vice President /
Chief Financial Officer Treasurer of Oppenheimer
Acquisition Corporation ("OAC").
George Evans,
Vice President Vice President and Portfolio
Manager of Oppenheimer Global
Emerging Growth Fund.
Scott Farrar,
Assistant Vice President Assistant Treasurer of the
Oppenheimer Funds; previously a
Fund Controller for the Manager.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView, Main
Street Advisers, Inc. and
Centennial; Secretary, Vice
President and Director of
Centennial Capital Corp.
Ronald H. Fielding,
Senior Vice President Chairman of the Board and Director
of Rochester Fund Distributors,
Inc. ("RFD"); President and
Director of Fielding Management
Company, Inc. ("FMC"); President
and Director of Rochester Capital
Advisors, Inc. ("RCAI"); President
and Director of Rochester Fund
Services, Inc. ("RFS"); President
and Director of Rochester Tax
Managed Fund, Inc.; Vice President
and Portfolio Manager of Rochester
Fund Municipals and Rochester
Portfolio Series - Limited Term New
York Municipal Fund.
Jon S. Fossel,
Chairman of the Board and Director Director of OAC, the Manager's
parent holding company; President,
CEO and a director of HarbourView;
a director of SSI and SFSI;
President, Director, Trustee, and
Managing General Partner of the
Denver-based Oppenheimer Funds;
President and Chairman of the Board
of Main Street Advisers, Inc.;
formerly Chief Executive Officer of
the Manager.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions: a
director of the Distributor, Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer Funds
and Executive Vice President &
General Counsel of the Manager and
the Distributor.
Linda Gardner,
Assistant Vice President None.
Ginger Gonzalez,
Vice President Formerly 1st Vice President /
Director of Creative Services for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht,
Vice President Vice President and Portfolio
Manager of Oppenheimer Insured Tax-
Exempt Fund and Oppenheimer
Intermediate Tax Exempt Fund; an
officer of other Oppenheimer Funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
Barbara Hennigar,
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the Manager President and Director of SFSI.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Bennett Inkeles,
Assistant Vice President Formerly employed by Doremus &
Company, an advertising agency.
Frank Jennings,
Vice President Portfolio Manager of Oppenheimer
Global Growth & Income Fund.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Stephen Jobe,
Vice President None.
Heidi Kagan,
Assistant Vice President None.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Assistant Vice President Portfolio Manager of Oppenheimer
Variable Account Funds and
Oppenheimer Variable Account Funds;
Associate Portfolio Manager of
Oppenheimer Discovery Fund.
Formerly a Securities Analyst for
Columbus Circle Investors.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Senior Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of
the Oppenheimer Funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of Main
Street Advisers, Inc.; Chairman and
Director of SSI.
Sally Marzouk,
Vice President None.
Marilyn Miller,
Vice President Formerly a Director of marketing
for TransAmerica Fund Management
Company.
Robert J. Milnamow,
Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Asset
Allocation Fund, Oppenheimer
Strategic Income Fund, Oppenheimer
Strategic Income & Growth Fund; an
officer of other Oppenheimer Funds.
Barbara Niederbrach,
Assistant Vice President None.
Stuart Novek,
Vice President Formerly a Director Account
Supervisor for J. Walter Thompson.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc., Oppenheimer Multi-
State Tax-Exempt Trust, Oppenheimer
Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund,
Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond
Fund; Vice President of The New
York Tax-Exempt Income Fund, Inc.;
Vice President of Oppenheimer
Multi-Sector Income Trust.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
Jane Putnam,
Vice President Associate Portfolio Manager of
Oppenheimer Growth Fund; Vice
President and Portfolio Manager of
Oppenheimer Target Fund and
Oppenheimer Variable Account Funds.
Formerly Senior Investment Officer
and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Formerly an International Finance
Consultant for Dow Chemical.
Thomas Reedy,
Vice President Vice President of Oppenheimer
Multi-Sector Income Trust and
Oppenheimer Multi-Government Trust;
an officer of other Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Assistant Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President Vice President of RFS; President
and Director of RFD; Vice President
and Director of FMC; Vice President
and director of RCAI; General
Partner of RCA; Vice President and
Director of Rochester Tax Managed
Fund Inc.; Vice President and
Portfolio Manager of Rochester Fund
Series - The Bond Fund For Growth.
David Rosenberg,
Vice President Vice President and Portfolio
Manager of Oppenheimer Limited-Term
Government Fund, Oppenheimer U.S.
Government Trust and Oppenheimer
Integrity Funds. Formerly Vice
President and Senior Portfolio
Manager for Delaware Investment
Advisors.
Richard H. Rubinstein,
Vice President Vice President and Portfolio
Manager of Oppenheimer Asset
Allocation Fund, Oppenheimer Fund
and Oppenheimer Variable Account
Funds; an officer of other
Oppenheimer Funds; formerly Vice
President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Diane Sobin,
Vice President Vice President and Portfolio
Manager of Oppenheimer Gold &
Special Minerals Fund, Oppenheimer
Total Return Fund, Inc. Oppenheimer
Main Street Funds, Inc. and
Oppenheimer Variable Account Funds;
formerly a Vice President and
Senior Portfolio Manager for Dean
Witter InterCapital, Inc.
Nancy Sperte,
Senior Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director President and Trustee of the New
York-based Oppenheimer Funds;
formerly Chairman of the Manager
and the Distributor.
Arthur Steinmetz,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Strategic
Income Fund, Oppenheimer Strategic
Income & Growth Fund; an officer of
other Oppenheimer Funds.
Ralph Stellmacher,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Champion
Income Fund and Oppenheimer High
Yield Fund; an officer of other
Oppenheimer Funds.
John Stoma,
Vice President Formerly Vice President of Pension
Marketing with Manulife Financial.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director
of Centennial; formerly President
and Director of OAMC, and Chairman
of the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Jeffrey Van Giesen,
Vice President Formerly employed by Kidder Peabody
Asset Management.
Ashwin Vasan,
Vice President Vice President and Portfolio
Manager of Oppenheimer Multi-Sector
Income Trust, Oppenheimer Multi-
Government Trust and Oppenheimer
International Bond Fund; an officer
of other Oppenheimer Funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President Vice President and Portfolio
Manager of Daily Cash Accumulation
Fund, Inc., Oppenheimer Cash
Reserves, Centennial America Fund,
L.P., Centennial Government Trust
and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells,
Vice President None.
William L. Wilby,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Global
Fund and Oppenheimer Global Growth
& Income Fund; Vice President of
HarbourView; an officer of other
Oppenheimer Funds.
Susan Wilson-Perez,
Vice President None.
Carol Wolf,
Vice President Vice President and Portfolio
Manager of Oppenheimer Money Market
Fund, Inc., Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Eva A. Zeff,
Assistant Vice President An officer of certain Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
Arthur J. Zimmer,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial; an officer of other
Oppenheimer Funds.
The Oppenheimer Funds include the New York-based Oppenheimer Funds and the
Denver-based Oppenheimer Funds set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Rochester-based Funds
- ---------------------
Rochester Fund Municipals
Oppenheimer Bond Fund For Growth
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-
0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital
Corp., and Main Street Advisers, Inc. is 3410 South Galena Street, Denver,
Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
Item 29. Principal Underwriter
-------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc.
is the investment adviser, as described in Part A and B of this
Registration Statement and listed in Item 28(b) above.
(b)The directors and officers of the Registrant's principal
underwriter are:
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
George Clarence Bowen+ Vice President & Treasurer Vice President
and Treasurer
of the NY-based
Oppenheimer
funds / Vice
President,
Secretary and
Treasurer of
the Denver-
based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
1400 Laurel Avenue
Apt. W710
Minneapolis, MN 55403
Mary Crooks+ Vice President None
Paul Delli-Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary of
President & Director the New York-
based Oppen-
heimer funds /
Vice President
of the Denver-
based Oppen-
heimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President None
Reed F. Finley Vice President - None
1657 Graefield Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
19 Spinnaker Way
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
Michael S. Rosen++ Vice President None
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807
(c) Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of Oppenheimer
Management Corporation, at its offices at 3410 South Galena Street,
Denver, Colorado 80231.
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and 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 16th day of April, 1996
OPPENHEIMER TARGET FUND
By: /s/ Bridget A. Macaskill*
----------------------------------------
Bridget A. Macaskill, 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/ Leon Levy* Chairman of the April 16, 1996
- -------------- Board of Trustees
Leon Levy
/s/ Donald W. Spiro* Trustee April 16, 1996
- --------------------
Donald W. Spiro
/s/ George Bowen* Chief Financial April 16, 1996
- ----------------- and Accounting
George Bowen Officer
/s/ Robert G. Galli* Trustee April 16, 1996
- -------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee April 16, 1996
- ----------------------
Benjamin Lipstein
/s/ Bridget A. Macaskill President, PrincipalApril 16, 1996
- ------------------------ Executive Officer
Bridget A. Macaskill and Trustee
/s/ Elizabeth B. Moynihan* Trustee April 16, 1996
- --------------------------
Elizabeth B. Moynihan
/s/ Kenneth A. Randall* Trustee April 16, 1996
- -----------------------
Kenneth A. Randall
/s/ Edward V. Regan* Trustee April 16, 1996
- --------------------
Edward V. Regan
/s/ Russell S. Reynolds, Jr.* Trustee April 16, 1996
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Sidney M. Robbins* Trustee April 16, 1996
- ----------------------
Sidney M. Robbins
/s/ Pauline Trigere* Trustee April 16, 1996
- --------------------
Pauline Trigere
/s/ Clayton K. Yeutter* Trustee April 16, 1996
- -----------------------
Clayton K. Yeutter
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
<PAGE>
OPPENHEIMER TARGET FUND
Exhibit Index
Item No. Description of Document
- -------- -----------------------
24(b)(11) Independent Auditors' Consent
24(b)(16) Performance Data Computation Schedule
24(b)(17)(i) Financial Data Schedule for Class A Shares at
12/31/95
24(b)(17)(ii) Financial Data Schedule for Class B Shares at
12/31/95
24(b)(17)(iii) Financial Data Schedule for Class C Shares at 12/31/95
- -- Power of Attorney for Bridget A. Macaskill
INDEPENDENT AUDITORS' CONSENT
To The Board of Trustees of Oppenheimer Target Fund:
We consent to the use in this Post-Effective Amendment No. 34 to
Registration Statement No. 2-69719 of Oppenheimer Target Fund of our
report dated January 22, 1996, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
reference to us under the heading "Financial Highlights" appearing in the
Prospectus, which is also a part of such Registration Statement.
/s/ KPMG Peat Marwick LLP
- -------------------------
KPMG Peat Marwick LLP
Denver, Colorado
April 15, 1996
Oppenheimer Target Fund
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns are
calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term
Reinvestment
(Ex)Date Income Capital Gains Price
Class A Shares
01/25/86 0.3800 0.0000 19.100
01/26/87 0.1150 0.1900 21.910
12/24/87 0.1900 4.1000 12.640
06/24/88 0.0000 0.0900 15.780
12/23/88 0.2550 0.0000 15.940
06/23/89 0.0500 0.0000 18.350
12/22/89 0.5700 0.0850 17.990
06/22/90 0.0150 0.0000 19.300
12/21/90 0.3850 0.0000 17.400
12/20/91 0.1780 0.6720 21.690
12/18/92 0.1680 0.7820 25.270
12/27/93 0.1200 0.3980 25.560
12/16/94 0.2010 2.9820 22.460
12/21/95 0.2383 2.8027 27.120
Class B Shares
12/21/95 0.2412 2.8027 27.050
Class C Shares
12/27/93 0.1010 0.3980 25.560
12/16/94 0.0850 2.9820 22.330
12/21/95 0.1049 2.8027 26.800
<PAGE>
Oppenheimer Target Fund
Page 2
1. Average Annual Total Returns for the Periods Ended 12/31/95:
The formula for calculating average annual total return is as
follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000
payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,270.97 1 $2,067.85 .2
(---------) - 1 = 27.10% (---------) - 1 = 15.64%
$1,000 $1,000
Ten Year
$2,816.08 .1
(---------) - 1 = 10.91%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00%
for the inception year:
Inception
$ 971.01 6.0000
(---------) - 1 = -16.18%
$1,000
Class C Shares
Example assuming a maximum contingent deferred sales charge of
1.00% for the first year, and 0.00% for the inception year:
One Year Inception
$1,325.60 1 $1,344.36 .4800
(---------) - 1 = 32.56% (---------) - 1 = 15.26%
$1,000 $1,000
<PAGE>
Oppenheimer Target Fund
Page 3
1. Average Annual Total Returns for the Periods Ended 12/31/95
(Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,348.51 1 $2,194.05 .2
(---------) - 1 = 34.85% (---------) - 1 = 17.02%
$1,000 $1,000
Ten Year
$2,987.83 .1
(---------) - 1 = 11.57%
$1,000
Class B Shares
Inception
$1,016.69 6.0000
(---------) - 1 = 10.44%
$1,000
Class C Shares
One Year Inception
$1,335.60 1 $1,344.36 .4800
(---------) - 1 = 33.56% (---------) - 1 = 15.26%
$1,000 $1,000
2. Cumulative Total Returns for the Periods Ended 12/31/95:
The formula for calculating cumulative total return is as follows:
ERV - P
------- = Cumulative Total Return
P
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,270.97 - $1,000 $2,067.85 - $1,000
------------------ = 27.10% ------------------ = 106.79%
$1,000 $1,000
Ten Year
$2,816.08 - $1,000
------------------ = 181.61%
$1,000
<PAGE>
Oppenheimer Target Fund
Page 4
2. Cumulative Total Returns for the Periods Ended 12/31/95
(Continued):
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00%
for the inception year:
Inception
$ 971.01 - $1,000
------------------ = -2.90%
$1,000
Class C Shares
Example assuming a maximum contingent deferred sales
charge of 1.00% for the first year, and 0.00% from inception:
One Year Inception
$1,325.60 - $1,000 $1,344.36 - $1,000
------------------ = 32.56% ------------------ = 34.44%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,348.51 - $1,000 $2,194.05 - $1,000
------------------ = 34.85% ------------------ = 119.41%
$1,000 $1,000
Ten Year
$2,987.83 - $1,000
------------------ = 198.78%
$1,000
Class B Shares
Inception
$1,016.69 - $1,000
------------------ = 1.67%
$1,000
Class C Shares
One Year Inception Year
$1,335.60 - $1,000 $1,344.36 - $1,000
------------------ = 33.56% ------------------ = 34.44%
$1,000 $1,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NUMBER-OF-SHARES-SOLD> 107562
<NUMBER-OF-SHARES-REDEEMED> 11032
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes
and appoints Andrew J. Donohue or Robert G. Zack, and each of them, her
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for her and in her capacity as a trustee
of OPPENHEIMER TARGET FUND, a Massachusetts business trust (the "Fund"),
to sign on her behalf any and all Registration Statements (including any
post-effective amendments to Registration Statements) under the Securities
Act of 1933, the Investment Company Act of 1940 and any amendments and
supplements thereto, and other documents in connection thereunder, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, and
each of them, may lawfully do or cause to be done by virtue hereof.
Dated this 5th day of October, 1995.
/s/ Bridget A. Macaskill
- ---------------------------------
Bridget A. Macaskill
POWERS/BAM.POA
