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. [35] /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. [29] /X/
Oppenheimer [Capital Appreciation Fund
(formerly named "Oppenheimer Target Fund")]
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
212-323-0200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/X/ On [December 18], 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.
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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 [August] 31, [1996] was filed on [October 30], 1996.
<PAGE>
FORM N-1A
OPPENHEIMER [CAPITAL APPRECIATION FUND
(formerly named "Oppenheimer Target Fund")]
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
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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
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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
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* Not applicable or negative answer.
<PAGE>
O P P E N H E I M E R
[Capital Appreciation Fund
(formerly named "Oppenheimer Target Fund")]
Prospectus dated [December 18], 1996
Oppenheimer [Capital Appreciation] 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 [refer to "Investment Risks" for a discussion
of] the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it for
future reference. You can find more detailed information about the Fund in the
[December 18], 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.
1
<PAGE>
Contents
ABOUT THE FUND
[3] Expenses
[5] A Brief Overview of the Fund
[7] Financial Highlights
[11] Investment Objective and Policies
[12 Investment Risks
14 Investment Techniques and Strategies
17 Other Investment Restrictions
18] How the Fund is Managed
[20] Performance of the Fund
ABOUT YOUR ACCOUNT
[24] How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
[37] Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
[39] How to Sell Shares
By Mail
By Telephone
[41] How to Exchange Shares
[43] Shareholder Account Rules and Policies
[45] Dividends, Capital Gains and Taxes
[A-1] Appendix A: Special Sales Charge Arrangements
2
<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 [period ended August 31,
1996. The Fund has changed its fiscal year from December 31 to August 31.]
o Shareholder Transaction Expenses are charges you pay when you buy or
sell shares of the Fund. Please refer to "About Your Account" from pages [24]
through [46] for an explanation of how and when these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
<S> <C> <C> <C>
Maximum Sales Charge [5.75% None None]
on Purchases (as a % of
offering price)
[Maximum Deferred Sales None(1) 5% in the first 1% if shares]
Charge (as a % of the year, declining are redeemed
[lower of the original] to 1% in the within 12 months
[purchase price or] sixth year and of purchase(2)
[redemption proceeds)] eliminated
thereafter(2)
[Maximum Sales Charge on None None None
on Reinvested Dividends
Redemption Fee None(3) None(3) None(3)]
Exchange Fee None None None
</TABLE>
[1.] If you invest $1 million or more ($500,000 or more for purchases by
["Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge on
page 28)] in Class A shares, you may have to pay a sales charge of up to 1% if
you sell your shares within 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. [3. There is a $10 transaction fee for
redemptions paid by Federal Funds wire, but not for redemptions paid by ACH
transfer through AccountLink. See "How to Sell Shares."]
o Annual Fund Operating Expenses are paid out of the Fund's assets and
represent the Fund's expenses in operating its business. For example, the Fund
pays management fees to its investment adviser, OppenheimerFunds, Inc. (which is
referred to in this Prospectus as the "Manager"). The rates of the Manager's
fees are set forth in "How the Fund is Managed," below. The Fund has other
regular expenses for services, such as transfer agent fees, custodial fees paid
to the bank that holds its portfolio securities, audit fees and legal expenses.
Those expenses are detailed in the Fund's Financial Statements in the Statement
of Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets)[:]
Class A Class B Class C
Shares [Shares Shares]
Management Fees [0.70% 0.70% 0.70%]
12b-1 Plan Fees 0.16% 1.00% 1.00%
Other Expenses [0.23% 0.24% 0.23%]
Total Fund Operating Expenses [1.09% 1.94% 1.93%]
The numbers [for Class A, Class B and Class C shares] in the chart above
are based upon the Fund's expenses in its last fiscal [period] ended [August]
31, [1996]. These amounts are shown as a percentage of the average net assets of
each class of the Fund's shares for that [period, and have been annualized]. 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.
[The "12b-1 Plan Fees" for Class A shares are the service fees. For Class B
and Class C shares, the "12b-1 Plan Fees" are the service fees and the
asset-based sales charge. The service fee for each class is 0.25% of average
annual net assets of the class and the asset-based sales charge for Class B and
Class C shares is 0.75%.] These plans are described in greater detail in "How to
Buy Shares."
o Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown below.
Assume that you make a $1,000 investment in each class of shares of the Fund,
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 [$68 $90 $114 $183]
Class B Shares $70 $91 $125 $184]
Class C Shares [$30 $61 $104 $225]
If you did not redeem your investment, it would incur the following expenses:
1 year 3 years 5 years 10 years*
Class A Shares [$68 $90 $114 $183 ]
[Class B Shares $20 $61 $105 $184 ]
[Class C Shares $20 $61 $104 $225 ]
[*In the first example, expenses include the Class A initial sales charge and
the applicable Class B or Class C contingent deferred sales charge. In the
second example, Class A expenses include the initial sales charge, but Class B
and Class C expenses do not include contingent deferred sales charges.] The
Class B expenses in years 7 through 10 are based on the Class A expenses shown
above, because the Fund automatically converts your Class B shares into Class A
shares after 6 years. Because of the effect of the asset-based sales charge and
the contingent deferred sales charge imposed on Class B and Class C shares
long-term holders of Class B and Class C shares could pay the economic
equivalent of more than the maximum front-end sales charge allowed under
applicable regulations. For Class B shareholders, the automatic conversion
of Class B shares to Class A shares is designed to minimize the likelihood that
this will occur. Please refer to "How to Buy Shares - Buying Class B Shares" for
more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment returns of
the Fund, all of which may be more or less than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below, with references
to the section of this Prospectus where more complete information can be found.
You should carefully read the entire Prospectus before making a decision about
investing in the Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to sell or exchange
shares.
o What Is The Fund's Investment Objective? The Fund's investment objective
is to seek capital appreciation.
o What Does the Fund Invest In? To seek capital appreciation, the Fund
primarily invests in common stocks, 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 [11].
o Who Manages the Fund? The Fund's investment adviser (the "Manager") is
OppenheimerFunds, Inc. [The Manager,] (including a subsidiary)[,] manages
investment company portfolios having over [$60] billion in assets at [November
30], 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. --
o How Risky is the Fund? All investments carry risks to some degree.
[The] Fund is designed for [investors who are willing to accept greater risks of
loss in the hopes of greater gains, and is not intended for those who desire
assured income and preservation of capital. The Fund emphasizes investments in
"growth" stocks that tend to be more volatile than other equity investments].
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 [or
changes] in value of particular stocks [because of] an event affecting the
issuer. These changes affect the value of the Fund's investments and its [prices
per share. The Fund's investments in foreign securities are subject to
additional risks not associated with domestic investments, such as the risk of
adverse currency fluctuation and risks associated with investment in
underdeveloped countries and markets. Hedging instruments and derivative
investments involve certain risks, as discussed under "Hedging" and "Derivative
Investments," below. The Fund may borrow money from banks to buy securities, a
practice known as leverage that is subject to certain risks discussed below
under "Special Risks - Borrowing for Leverage."
The Fund may be viewed as] an aggressive growth fund, [and is generally
expected to be more volatile than the other stock funds, the income and growth]
funds and the more conservative income funds [in the Oppenheimer funds
spectrum]. While the Manager tries to reduce risks by diversifying investments,
by carefully researching securities before they are purchased for the portfolio,
and in some cases by using hedging techniques, there is no guarantee of success
in achieving the Fund's [objective] and your shares may be worth more or less
than their original cost when you redeem them. Please refer to "Investment
[Risks]" starting on page for a more complete discussion of the Fund's
investment risks. --
o How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How to Buy Shares" on page for more
details.
o Will I Pay a Sales Charge to Buy Shares? The Fund offers three
classes of shares. Each class [of shares] has the same investment portfolio but
different expenses. Class A shares are offered with a front-end sales charge,
starting at 5.75%, and reduced for larger purchases. Class B shares and Class C
shares are offered without a front-end sales charge, but may be subject to a
contingent deferred sales charge if redeemed within 6 years or 12 months,
respectively, of purchase. There is also an annual asset-based sales charge on
Class B shares and Class C shares. 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.
o How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How to Sell Shares" on page [39]. The Fund also offers
exchange privileges to other Oppenheimer funds, described in "How to Exchange
Shares" on page [41.]
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 [period] ended [August] 31, [1996], is
included in the Statement of Additional Information. [The Fund has changed its
fiscal year from December 31 to August 31.] Class B shares were only offered
during a portion of the fiscal [period] ended [August] 31, [1996], commencing on
November 1, 1995.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Class A
----------------------------------------------------------------------------------
Eight Months
Ended
August 31, Year Ended December 31,
1996(3) 1995 1994 1993 1992 1991(2)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $27.44 $22.63 $25.72 $25.25 $23.76 $17.47
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .11 .24 .20 .13 .16 .27
Net realized and unrealized gain (loss) 3.26 7.61 (.11) .86 2.28 6.87
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations 3.37 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 $30.81 $27.44 $22.63 $25.72 $25.25 $23.76
====== ====== ====== ====== ====== ======
====================================================================================================================================
Total Return, at Net Asset Value(6) 12.28% 34.85% 0.46% 3.93% 10.27% 41.33%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $788,504 $758,439 $301,698 $368,806 $401,256 $369,351
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $789,903 $538,210 $325,003 $383,875 $362,295 $209,596
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.55%(7) 1.08% 0.72% 0.47% 0.69% 1.25%
Expenses 1.09%(7) 1.03% 1.16% 1.07% 1.09% 1.17%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 45.2% 71.9% 34.7% 22.9% 42.3% 65.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Average brokerage commission rate(9) $0.0595 $0.0578 -- -- -- --
<CAPTION>
Class B Class C
------------------------- -------------------------------------------
Eight Months Period Eight Months
Ended Ended Ended
August 31, December 31, August 31, Year Ended December 31,
1996(3) 1995(4) 1996(3) 1995 1994(2) 1993(1)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $27.37 $29.77 $27.11 $22.50 $25.72 $25.92
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) --(5) (.14) (.03) .09 -- (.01)
Net realized and unrealized gain (loss) 3.19 .78 3.19 7.43 (.15) .31
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations 3.19 .64 3.16 7.52 (.15) .30
- -------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.24) -- (.11) (.09) (.10)
Distributions from net realized gain -- (2.80) -- (2.80) (2.98) (.40)
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders -- (3.04) -- (2.91) (3.07) (.50)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $30.56 $27.37 $30.27 $27.11 $22.50 $25.72
====== ====== ====== ====== ====== ======
=========================================================================================================================
Total Return, at Net Asset Value(6) 11.65% 1.67% 11.66% 33.56% (0.50)% 2.11%
=========================================================================================================================
<PAGE>
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $5,448 $2,751 $10,355 $7,237 $1,066 $8
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,285 $661 $9,053 $3,792 $467 $6
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.25)%(7) (0.54)%(7) (0.30)%(7) 0.19% (0.02)% (0.07)%(7)
Expenses 1.94%(7) 2.62%(7) 1.93%(7) 1.90% 2.18% 2.18%(7)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 45.2% 71.9% 45.2% 71.9% 34.7% 22.9%
- -------------------------------------------------------------------------------------------------------------------------
Average brokerage commission rate(9) $0.0595 $0.0578 $0.0595 $0.0578 -- --
</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. The Fund changed its fiscal year end from December 31 to August 31.
4. For the period from November 1, 1995 (inception of offering) to December 31,
1995.
5. Less than $0.005 per share.
6. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
7. Annualized.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended August 31, 1996 were $309,153,341 and $317,132,673, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
3
<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. [In general, the Manager believes that capital appreciation possibilities
are more likely to be found in the securities of "growth-type" companies. The
Fund seeks superior earnings growth characteristics with respect to its entire
portfolio.] 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.
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 [consumer durable and
technology sectors] 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.
[|X|] 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.
o 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.
{* 2 moved from here; text not shown}
o 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. [Investment Risks
All investments carry risks to some degree, whether they are risks that
market prices of the investment will fluctuate (this is known as "market risk")
or that the underlying issuer will experience financial difficulties and may
default on its obligation under a fixed-income investment to pay interest and
repay principal (this is referred to as "credit risk"). These general investment
risks, and the special risks of certain types of investments that the Fund may
hold are described below. They affect the value of the Fund's investments, its
investment performance, and the prices of its shares. These risks collectively
form the risk profile of the Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for investors who are
investing for the long term. It is not intended for investors seeking assured
income or preservation of capital. While the Manager tries to reduce risks by
diversifying instruments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes in overall
market prices can occur at any time, and because the income earned on securities
is subject to change, there is no assurance that the Fund will achieve its
investment objective. When you redeem your shares, they may be worth more or
less that what you paid for them.
o Stock Investment Risks. Because the Fund may invest a substantial
portion (or all) of its assets in stocks, the value of the Fund's portfolio will
be affected by changes in the stock markets. At times, the stock markets can be
volatile and stock prices can change substantially. This market risk will affect
the Fund's net asset values per share, which will fluctuate as the values of the
Fund's portfolio securities change. Not all stock prices change uniformly or at
the same time, not all stock markets move in the same direction at the same
time, and other factors can affect a particular stock's prices (for example,
poor earnings reports by an issuer, loss of major customers, major litigation
against an issuer, changes in government regulations affecting an industry). Not
all of these factors can be predicted. The Fund attempts to limit market risks
by diversifying its investments, that is, by not holding a substantial amount of
the stock of any one company and by not investing too great a percentage of the
Fund's assets in any one company. Also, the Fund does not concentrate its
investments in any one industry or group of industries.
o Foreign Securities Have Special Risks. While foreign securities offer
special investment opportunities, there are also special risks. The change in
value of a foreign currency against the U.S. dollar will result in a change in
the U.S. dollar value of securities denominated in that foreign currency.
Foreign issuers are not subject to the same accounting and disclosure
requirements that U.S. companies are subject to. The value of foreign
investments may be affected by exchange control regulations, expropriation or
nationalization of a company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy in the U.S. or
abroad, or other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is contained in
the Statement of Additional Information.]
[** 1] [o] 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. For example, 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. If writing a put, there is
a risk that the Fund may be required to buy the underlying security at a
disadvantageous price. The use of forward contracts may reduce the gain that
would otherwise result from a change in the relationship between the U.S. dollar
and a foreign currency. These risks are described in greater detail in the
Statement of Additional Information.
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.
[** 2] o 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. [Under the Investment Company Act,
the Fund can borrow only if it maintains at least a 300% ratio of assets to
borrowings at all time.]
o 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 assets in
warrants [and] rights. That 5% does not apply to warrants [and rights] the Fund
has acquired [as part of] 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 [and rights] 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.
o 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 [total] assets invested in foreign
securities. Foreign currency
will be held by the Fund only in connection with the purchase or sale of foreign
securities.
[o ]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 [total] assets in the next year in securities
of small, unseasoned issuers.
o 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."
[|X| 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 investment grade debt securities
(securities rated at least "Baa" by Moody's Investors Service, Inc. ("Moody's"),
a nationally recognized statistical rating organization, or at least "BBB" by
Standard & Poor's Corporation ("Standard & Poor's"), also a nationally
recognized statistical rating organization, or, if unrated, judged by the
Manager to be of comparable quality to securities rated within such grades), and
preferred stocks, cash or cash equivalents, such as U.S. Treasury Bills and
other short-term obligations of the U.S. Government, its agencies or
instrumentalities, or commercial paper rated "A-1" or better by Standard &
Poor's or "P-1" or better by Moody's.]
o 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 [may be] 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.
o Futures. The Fund may buy and sell futures contracts that relate to
[(1) stock indices (referred to as Stock Index Futures), (2) other securities
indices (together with Stock Index Futures, referred to as Financial Futures),
(3) interest rates] (these are referred to as [Interest Rate Futures), or (4)
foreign currencies (these are referred to as Forward Contracts). These types of
Futures are described in "Hedging with Options and Futures Contracts" in the
Statement of Additional Information.]
o Put and Call Options. The Fund may buy and sell certain kinds of put
options (puts) and call options (calls). [A call or put option may not be
purchased if the value of all the Fund's put and call options would exceed 5% of
the Fund's total assets.
The Fund may buy calls on securities, ]broadly-based securities indices [,]
foreign currencies, [Interest Rate Futures or Financial Futures. The Fund may
buy calls] to terminate its obligation on a call the Fund previously wrote. The
Fund may write (that is, sell) call options. When the Fund writes a call, it
receives cash (called a premium). [Each call the Fund writes must be "covered"
while the call is outstanding. That means the Fund owns] the investment on which
the call was written [. The Fund may write calls on Futures contracts it owns,
but these calls must be covered by securities or other liquid assets the Fund
owns and segregates to enable it to satisfy its obligations if the call is
exercised. After writing any call, not more than 25% of the Fund's total assets
may be subject to calls. ] [The Fund may buy and sell put options. The Fund can
buy] those puts that relate to securities the Fund owns, [broadly-based
securities indices, foreign currencies, or Interest Rate Futures or Financial]
Futures (whether or not the Fund [holds] the particular Future in its portfolio)
. Writing puts requires the segregation of liquid assets to cover the put. The
Fund will not write a put if it [will] require more than [25% of the Fund's
total] assets to be segregated to cover the put obligation.
The Fund may buy [or sell foreign currency puts and calls only if they are
traded on a ]securities or commodities exchange or [over-the-counter market, or
are] quoted by recognized dealers in [those options.
o Forward Contracts. Forward contracts are foreign currency exchange
contracts. The are used to buy or sell foreign currency for future delivery at a
fixed price. The Fund uses them to "lock in" the U.S. dollar price of a security
denominated in a foreign currency that the Fund has bought or sold, or to
protect against possible losses from changes in the relative values of the U.S.
dollar and a foreign currency. The Fund may also use "cross- hedging" where the
Fund hedges against changes in currencies other than the currency in which a
security it holds is denominated.]
{* 1 moved from here; text not shown}
o Derivative Investments. In general, a "derivative investment" is a
specially designed investment. Its performance is linked to the performance of
another investment or security, 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 [will] 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 [see] "Illiquid and
Restricted Securities" [, below].
o 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 Board may increase that limit to 15%)]. The Fund's percentage limitation
on these investments does not apply to certain restricted securities that are
eligible for resale to qualified institutional purchasers. [The Manager monitors
holdings of illiquid securities on an ongoing basis and at times the Fund may be
required to sell some holdings to maintain adequate liquidity.]
o Loans of Portfolio Securities. To raise cash for liquidity purposes,
the Fund may lend its portfolio securities to brokers, dealers and other [types
of] financial institutions [approved by the Board of Trustees]. The Fund must
receive collateral for a loan. [After any loan, the value of the securities
loaned must not exceed] 25% of the value of the Fund's [total] assets and are
subject to [other] conditions described in the Statement of Additional
Information. The Fund presently does not intend to [lend its portfolio
securities, but if it does, the value of the securities loaned] will exceed 5%
of the value of [its] total assets in the coming year.
o Repurchase Agreements. The Fund may enter into repurchase agreements
[to generate income for liquidity purposes to meet anticipated redemptions, or
pending the investment of proceeds from sales of Fund shares or settlement of
purchases of portfolio investments]. Repurchase agreements must be fully
collateralized. However, if the vendor of the securities fails to pay the resale
price on the delivery date, the Fund may incur costs in disposing of the
collateral[,] and losses if there is any delay in its ability to do so. 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. [The Fund will not enter into a
repurchase transaction that causes more than 10% of its net assets to be subject
to repurchase agreements having a maturity of more than seven days].
Other Investment Restrictions
The Fund has [certain] investment restrictions [that] are fundamental policies.
Under these [restrictions], the Fund cannot do any of the following:
o [The Fund cannot,] as to 75% of its assets, 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)[.]
o [The] Fund cannot invest more than 25% of its total assets in
securities of companies in any one industry[.]
o [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.
[Unless the prospectus states that a percentage restriction applies on
an ongoing basis, it applies] only at the time the Fund [makes an investment],
and the Fund need not [sell securities to meet the percentage limits if the
value of the investment increases in proportion] to the size of the Fund. [Other
investment restrictions are listed in "Investment Restrictions"] in the
Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was [organized in 1980 as a] Maryland
[corporation] but was reorganized in 1987 as a Massachusetts business trust. The
Fund is an open-end, management investment company.
The Fund is governed by a Board of Trustees, which is responsible for
protecting the interests of shareholders under Massachusetts law. The Trustees
meet periodically throughout the year to oversee the Fund's activities, review
its performance, and review the actions of the Manager. "Trustees and Officers
of the Fund" in the Statement of Additional Information names the Trustees and
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 [on matters submitted to the vote of shareholders. Shares of each
class may have separate voting rights on matters in which interests of one class
are different from interests of another class, and 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 [handles] its day-to-day business. The Manager carries out
its duties, subject to the policies established by the Board of Trustees, under
an [Investment Advisory Agreement] which states the Manager's responsibilities.
The [Agreement] sets forth the fees paid by the Fund to the Manager and
describes the expenses that the Fund is responsible [to pay] to conduct its
business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than [$60] billion as of
[November 30], 1996, and with more than [3] million shareholder accounts.
The Manager is owned by Oppenheimer Acquisition Corp., a holding company that is
owned in part by senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
o Portfolio Manager. The Portfolio Manager of the Fund is 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.
o Fees and Expenses. Under the [investment advisory agreement, as
amended per a resolution of the Board of Trustees dated December 14, 1995 to
reduce the fee on assets in excess of $1.5 billion (the "Investment Advisory
Agreement")], the Fund pays the Manager [a monthly fee at] the following annual
[rates, which may be higher than the rates paid by some other mutual funds, and]
which decline on additional assets as the Fund grows: 0.75% of the first $200
million of [average annual] net assets, 0.72% of the next $200 million, 0.69% of
the next $200 million, 0.66% of the next $200 million, [0.60% of the next $700
million, and 0.50% of average annual ]net assets in excess of $1.5 billion. The
Fund's management fee for its last fiscal [period ended August 31, 1996 was
0.70%] 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 [fees] and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset value of
shares, and therefore are indirectly borne by shareholders through their
investment. More information about the Investment Advisory Agreement and the
other expenses paid by the Fund is contained in the Statement of Additional
Information.
There is also information about the Fund's brokerage policies and
practices in "Brokerage Policies of the Fund" in the Statement of Additional
Information. That section discusses how brokers and dealers are selected for the
Fund's portfolio transactions. When deciding which brokers to use, the Manager
is permitted by the Investment Advisory Agreement to consider whether brokers
have sold shares of the Fund or any other funds for which the Manager serves as
investment adviser.
o The Distributor. The Fund's shares are sold through dealers, brokers
and other financial institutions that have a sales agreement with
OppenheimerFunds Distributor, Inc., a subsidiary of the Manager that acts as the
Fund's Distributor. The Distributor also distributes the shares of other
"Oppenheimer funds" managed by the Manager and is sub-distributor for funds
managed by a subsidiary of the Manager.
o The Transfer Agent. The Fund's [Transfer Agent] is OppenheimerFunds
Services, a division of the Manager, which acts as the shareholder servicing
agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for the other Oppenheimer funds.
Shareholders should direct inquiries about their account to the Transfer Agent
at the address and toll-free [number] shown below in this Prospectus and on the
back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms ["]total return"
and "average annual total return" to illustrate its performance. [The]
performance of each class of shares [is shown] separately, because the
performance of each class of shares will usually be different as a result of the
different kinds of expenses each class bears. These returns measure the
performance of a hypothetical account in the Fund over various periods, and do
not show the performance of each shareholder's account (which will vary if
dividends are received in cash or shares are sold or purchased). [The Fund's]
performance [data] may be useful to help you see how well your investment has
done over time and to compare it to market indices, as we have done [below].
It is important to understand that the Fund's total returns represent
past performance and should not be considered to be predictions of future
returns or performance. More detailed information about how total returns are
calculated is contained in the Statement of Additional Information, which also
contains information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary , depending on market
conditions, the composition of the portfolio, expenses and which class of shares
you purchase.
o Total Returns. There are different types of ["]total returns["] used
to measure the Fund's performance. Total return is the change in value of a
hypothetical investment in the Fund over a given period, assuming that all
dividends and capital gains distributions are reinvested in additional shares.
The cumulative total return measures the change in value over the entire period
(for example, ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do not show
the Fund's actual year-by-year performance.
When total returns are quoted for Class A shares, normally the current
maximum initial sales charge has been deducted. When total returns are shown for
Class B or Class C shares, normally the contingent deferred sales charge that
applies to the period for which total return is shown has been deducted. However
total returns may also be quoted at net asset value, without considering the
effect of 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 fiscal [period] ended [August] 31, [1996], followed by a
graphical comparison of the Fund's performance to an appropriate broad-based
market index.
o Management's Discussion of Performance. During [the] past fiscal
year, the Fund's [positive performance was affected by low U.S. inflation,
falling interest rates and moderate economic growth on the stock markets. The
Manager sought to identify innovative companies, with a focus on the companies'
management. The Fund's new investments included stock of companies in consumer
cyclicals (such as apparel companies), computer software, healthcare management,
and energy and industrial companies. The Fund sold certain positions in its
financial holdings that] the Manager believed [had become nearly fully-valued.
The Fund's portfolio and its portfolio manager's strategies are subject to
change].
o Comparing the Fund's Performance to the Market. The graphs below show
the performance of a hypothetical $10,000 investment in Class A, Class B and
Class C shares of the Fund at [August] 31, [1996]: 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 [Fund's
performance reflects the deduction of the 5.75% current maximum initial sales
charge on Class A shares, the applicable contingent deferred sales charge on
Class B and Class C shares, and reinvestment of all dividends and capital gains
distributions.
The Fund's performance is compared below] to the performance of the
[Standard & Poor's ("S&P")] 500 Index, a broad-based index of equity securities
widely regarded as a general [measure] of the performance of the U.S. equity
securities market. Index performance reflects the reinvestment of dividends but
does not consider the effect of capital gains or transaction costs, and none of
the data [in the graphs] below shows the effect of taxes. [Moreover, index
performance data does not reflect any assessment of the risk of the investments
included in the index. The] Fund's performance reflects the effect of Fund
business and operating expenses. While index comparisons may be useful to
provide a benchmark for the Fund's performance, it must be noted that the Fund's
investments are not limited to the securities in the [indices shown].
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investment [In:]
Oppenheimer [Capital Appreciation] Fund [(Class A)] Shares and S&P 500 Index
{Graph}
Average Annual Total Return of Class A shares of the Fund at
[8/31/961]
1 Year 5 Years 10 Years
- ------ ------- --------
[11.51% 12.20% 10.09%]
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investment [In:]
Oppenheimer [Capital Appreciation] Fund [(Class B)] Shares and S&P 500 Index
{Graph}
Cumulative Total Return of Class B Shares of the Fund at [8/31/962]
Life
[8.52%]
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investment [In:]
Oppenheimer [Capital Appreciation] Fund Class C Shares and S&P 500 Index
[Graph]
Average Annual Total Return of Class C shares at [8/31/963]
1 Year Life
[16.32% 50.11%]
[The ]total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions [. The Fund's
fiscal year has changed from 12/31 to 8/31. 1The inception date of the Fund
(Class A shares) was 1/22/81. Class A returns] are shown net of the applicable
5.75% maximum initial sales charge. [2Class] B shares of the Fund were first
publicly offered on 11/1/95. The [cumulative total return and the ending account
value in the graph] are shown net of the applicable 5% contingent deferred sales
charge [. ] [3Class] C shares of the Fund were first publicly offered on
12/1/93. 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.
o Class A Shares. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases by
["Retirement Plans," as defined in "Class A Contingent Deferred Sales Charge" on
page 28)]. If you purchase Class A shares as part of an investment of at least
$1 million [(at least] $500,000 for [Retirement Plans)] in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if you sell any
of those shares within 18 months of buying them, you may pay a contingent
deferred sales charge.
o Class B Shares. If you buy Class B shares, you pay no sales charge at
the time of purchase, but if you sell your shares within six years of buying
them, you will normally pay a contingent deferred sales charge. That sales
charge varies depending on how long you own your shares[, as] described in
"Buying Class B [Shares]" below.
o Class C Shares. If you buy Class C shares, you pay no sales charge at
the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1%[,] as
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[,
guidelines] or recommendations, because each investor's financial considerations
are different. The discussion below of the factors to consider in purchasing a
particular class of shares assumes that you will purchase only one class of
shares and not a combination of shares of different classes.
o How Long Do You Expect to Hold Your Investment? While future financial
needs cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist 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.
o Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six years), you
should probably consider purchasing Class A or Class C shares rather than Class
B shares, because of the effect of the Class B contingent deferred sales charge
if you redeem 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.
o Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to your
money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to invest
more than $100,000 over the long term, Class A shares will likely be more
advantageous than Class B shares or Class C shares, as discussed above, because
of the effect of the expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A shares under
the Fund's Right of Accumulation.
Of course these examples are based on approximations of the effect of
current sales charges and expenses on a hypothetical investment over time, using
the assumed annual performance returns stated above, and therefore, you should
analyze your options carefully.
o Are There Differences in Account Features That Matter to You? Because
some account features may not be available [to] Class B or Class C shareholders,
[or other features (such as Automatic Withdrawal Plans) might not be advisable
(because of the effect of contingent deferred sales charge) for Class B and
Class C shareholders,] you should carefully review how you plan to use your
investment account before deciding which class of shares [to buy]. 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 [Class B and Class
C] asset-based sales charge described below and in the Statement of Additional
Information.
o How Does It Affect Payments to My Broker? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares may receive different compensation for selling one class 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 the same as the purpose of the front-end sales charge
on sales of Class A shares: to compensate the Distributor for commissions it
pays to dealers and financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans.
[o] With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of at least
$25 can be made by telephone through AccountLink.
[o] Under pension, profit-sharing and 401(k) plans and Individual
Retirement Accounts (IRAs), you can make an initial investment of as little as
$250 (if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
[o] There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other Oppenheimer funds (a list of
them appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
o How Are Shares Purchased? You can buy shares several ways --through
any dealer, broker or financial institution that has a sales agreement with the
Distributor, directly through the Distributor or automatically from your bank
account through an Asset Builder Plan under the OppenheimerFunds AccountLink
service. [The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders.] When you buy
shares, be sure to specify Class A, Class B or Class C shares. If you do not
choose, your investment will be made in Class A shares.
o Buying Shares Through Your Dealer. Your dealer will place your order with
the Distributor on your behalf.
o Buying Shares Through the Distributor. Complete an OppenheimerFunds New
Account Application and return it with a check payable to "OppenheimerFunds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, [we recommend] that you discuss your
investment first with a financial advisor, to be sure [that] it is appropriate
for you. o Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member. You can
then transmit funds electronically to purchase shares, to have the Transfer
Agent send redemption proceeds[,] or to transmit dividends and distributions to
your bank account.
Shares are purchased for your account [through] AccountLink 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.
o Asset Builder Plans. You may purchase shares of the Fund (and up to
four other Oppenheimer funds) automatically each month from your account at a
bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of Additional
Information.
o At What Price Are Shares Sold? Shares are sold at the public offering
price based on the net asset value (and any initial sales charge that applies)
that is next determined after the Distributor receives the purchase order in
Denver, Colorado. In most cases, to enable you to receive that day's offering
price, the Distributor [or its designated agent] must receive your order by the
time of day The New York Stock Exchange closes, which is normally 4:00 P.M., 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, purchases are not subject to an initial sales charge, [and] the
offering price will be the net asset value. In some cases, reduced sales charges
may be available, as described below. Out of the amount you invest, the Fund
receives the net asset value to invest for your account. The sales charge varies
depending on the amount of your purchase. A portion of the sales charge may be
retained by the Distributor and allocated to your dealer as commission. The
current sales charge rates and commissions paid to dealers and brokers are as
follows:
Front-End Front-End Commission
Sales Charge Sales Charge as Percentage
as Percentage of as Percentage of of Offering
Amount of Purchase Offering Price Amount Invested Price
- ------------------ ---------------- ---------------- -------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
o Class A Contingent Deferred Sales Charge. There is no initial sales
charge on purchases of Class A shares of any one or more of the Oppenheimer
funds in the following cases:
o [Purchases] aggregating $1 million or more[;]
[o Purchases by a retirement plan qualified under sections 401(a) or
401(k) of the Internal Revenue Code, by a non-qualified deferred compensation
plan (not including Section 457 plans), employee benefit plan, group retirement
plan (see "How to Buy Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial plan
account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans are collectively
referred to as "Retirement Plans");] that: (1) buys shares costing $500,000 or
more or (2) has, at the time of purchase, 100 or more eligible participants, or
(3) certifies that it projects to have annual plan purchases of $200,000 or
more[; or
o Purchases by an OppenheimerFunds Rollover IRA if the purchases are
made (1) through a broker, dealer, bank or registered investment adviser that
has made special arrangements with the Distributor for these purchases, or (2)
by a direct rollover of a distribution from a qualified retirement plan if the
administrator of that plan has made special arrangements with the Distributor
for those purchases].
The Distributor pays dealers of record commissions on those purchases
in an amount equal to [(i) 1.0% for non-Retirement Plan accounts, and (ii) for
Retirement Plan accounts,] 1.0% of the first $2.5 million, plus 0.50% of the
next $2.5 million, plus 0.25% of purchases over $5 million. That commission will
be paid only on [those purchases ]that were not previously subject to a
front-end sales charge and dealer commission. [No sales commission will be paid
to the dealer, broker or financial institution on sales of Class A shares
purchased with the redemption proceeds of shares of a mutual fund offered as an
investment option in a Retirement Plan in which Oppenheimer funds are also
offered as investment options under a special arrangement with the Distributor
if the purchase occurs more than 30 days after the addition of the Oppenheimer
funds as an investment option to the Retirement Plan.]
If you redeem any of those shares 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 [the lesser of] (1) the
aggregate net asset value of the redeemed shares (not including shares purchased
by reinvestment of dividends or capital [gains] distributions) or (2) the
original [offering price (which is the original net asset value) of the redeemed
shares]. However, the Class A contingent deferred sales charge will not exceed
the aggregate amount of the commissions the Distributor paid to your dealer on
all Class A shares of all Oppenheimer funds you purchased subject to the Class A
contingent deferred sales charge.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's Exchange Privilege (described below). However, if the
shares acquired by exchange are redeemed within 18 months of the end of the
calendar month of the purchase of the exchanged shares, the contingent deferred
sales charge will apply.
o Special Arrangements With Dealers. The Distributor may advance up to
13 months' commissions to dealers that have established special arrangements
with the Distributor for Asset Builder Plans for their clients. [Until January
1, 1997, 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:
o Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual accounts,
or jointly, or for trust or custodial accounts on behalf of your children who
are minors. A fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can also
include Class A and Class B shares of Oppenheimer funds you previously purchased
subject to an initial or contingent deferred sales charge to reduce the sales
charge rate for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The 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.
o 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.
o Waivers of Class A Sales Charges. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of this
policy in "Reduced Sales Charges" in the Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not subject
to any Class A sales charges:
o the Manager or its affiliates; o present or former officers, directors,
trustees and employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the Fund, the
Manager and its affiliates, and retirement plans established by them for their
employees;
o registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
o dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans for their
employees;
o employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have entered into
sales arrangements with such dealers or brokers (and are identified to the
Distributor) or with the Distributor; the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children);
o dealers, brokers or registered investment advisers that have entered into
an agreement with the Distributor providing specifically for the use of shares
of the Fund in particular investment products made available to their clients
(those clients may be charged a transaction fee by their dealer, broker or
adviser for the purchase or sale of [shares of the Fund;
o employee benefit plans purchasing shares through a shareholder agent
which the Distributor has appointed as its agent to accept those purchase
orders;
o (1) investment advisors and financial planners who charge an advisory,
consulting or other fee for their services and buy shares for their own accounts
or the accounts of their clients, (2) Retirement Plans and deferred compensation
plans and trusts used to fund those Plans (including, for example, plans
qualified or created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own accounts, in
each case if those purchases are made through a broker or agent or other
financial intermediary that has made special arrangements with the Distributor
for those purchases; and (3) clients of such investment advisors or financial
planners who buy shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master account of their
investment advisor or financial planner on the books and records of the broker,
agent or financial intermediary with which the Distributor has made such special
arrangements (each of these investors may be charged a fee by the broker, agent
or financial intermediary for purchasing shares);]
o directors, trustees, officers or full-time employees of OpCap Advisors or
its affiliates, their relatives or any trust, pension, profit sharing or other
benefit plan which beneficially owns shares for those persons;
o accounts for which Oppenheimer Capital is the investment adviser (the
Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such
accounts;
o any unit investment trust that has entered into an appropriate agreement
with the Distributor;
o a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund were
exchanged for Class A shares of that Fund due to the termination of the Class B
and C TRAC-2000 program on November 24, 1995; or
o qualified retirement plans that had agreed with the former Quest for
Value Advisors to purchase shares of any of the Former Quest for Value Funds at
net asset value, with such shares to be held through DCXchange, a sub-transfer
agency mutual fund clearinghouse, provided that such arrangements 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:
o shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
o shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates acts as
sponsor;
o shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor;
o shares purchased and paid for with the proceeds of shares redeemed in
the past 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[; or] [o Units] of any
Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge is also waived if
shares that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
o to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value;
o involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below);
o if, at the time 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);
o for distributions from [a TRAC-2000 401(k) plan sponsored by the
Distributor due to the termination of the TRAC-2000 program; or
o for distributions from Retirement Plans, deferred compensation plans
or other employee benefit] plans for any of the following purposes: (1)
following the death or disability (as defined in the Internal Revenue Code) of
the participant or beneficiary (the death or disability must occur after the
participant's account was established); (2) [to return excess contributions; (3)
to return contributions made due to a mistake of fact; (4)] hardship
withdrawals, as defined in the plan; [(5)] under a Qualified Domestic Relations
Order, as defined in the Internal Revenue Code; [(6)] to meet the minimum
distribution requirements of the Internal Revenue Code; [(7)] to establish
"substantially equal periodic payments" as described in Section 72(t) of the
Internal Revenue Code[; (8) for retirement distributions or loans to
participants or beneficiaries; (9)] separation from service[; (10)
participant-directed redemptions to purchase shares of a mutual fund (other than
a fund managed by the Manager or its subsidiary) offered as an investment option
in a Retirement Plan in which Oppenheimer funds are also offered as investment
options under a special arrangement with the Distributor; or (11) plan
termination or "in-service distributions", if the redemption proceeds are rolled
over directly to an OppenheimerFunds IRA].
o 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 Fund's Board of Trustees has set the annual rate for
assets representing shares of the Fund sold on or after April 1, 1991, at 0.25%,
and has set the annual rate for assets representing shares sold before April 1,
1991, at 0.15% (the Board has the authority to increase that rate to no more
than 0.25%).] The Distributor uses all of those fees to compensate dealers,
brokers, banks and other financial institutions quarterly for providing personal
service and maintenance of accounts of their customers that hold Class A shares
and to reimburse itself (if the Fund's Board of Trustees authorizes such
reimbursements, which it has not yet done) for its other expenditures under the
Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining accounts in
the Fund, making the Fund's investment plans available and providing other
services at the request of the Fund or the Distributor. Payments are made by the
Distributor quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the [service provider]
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
[contingent deferred sales] charge will be [based] on the lesser of the net
asset value of the [redeemed] shares at the time of redemption or the original
purchase price [(which is the original net asset value)]. The contingent
deferred sales charge is not imposed on the amount of your account value
represented by 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.
o Automatic Conversion of Class B Shares. 72 months after you purchase
Class B shares, those shares will automatically convert to Class A shares. This
conversion feature relieves Class B shareholders of the asset-based sales charge
that applies to Class B shares under the Class B Distribution and Service Plan,
described below. The conversion is based on the relative net asset value of the
two classes, and no sales load or other charge is imposed. When Class B shares
convert, any other Class B shares that were acquired by the reinvestment of
dividends and distributions on the converted shares will also convert to Class A
shares. The conversion feature is subject to the continued availability of a tax
ruling described in "Alternative Sales Arrangements - Class A, Class B and Class
C Shares" in the Statement of Additional Information.
o Distribution and Service Plan for Class B [Shares]. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate the
Distributor for distributing Class B shares and servicing accounts. This Plan is
described below under "Buying Class C Shares - Distribution and Service Plans
for Class B and Class C shares."
o Waivers of Class B Sales Charges. The Class B contingent deferred
sales charge will [be waived under the circumstances ]described below under
"Waivers of Class B and Class C Sales [Charge.]"
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 [contingent deferred sales] charge will be [based] on the
lesser of the net asset value of the [redeemed] shares at the time of redemption
or the original [offering price (which is the original net asset value)]. The
contingent deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial purchase
price. The Class C contingent deferred sales charge is paid to 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 [, in the case of Class B shares, and to reimburse
the Distributor, in the case of Class C shares, for distributing] 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 asset-based sales charge allows investors to buy Class B or Class
C shares without a front-end sales charge while allowing the Distributor to
compensate dealers that sell those shares. The Fund pays the asset-based sales
charges to the Distributor for its services rendered in distributing Class B and
Class C shares. Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor include paying
and financing the payment of sales commissions, service fees and other costs of
distributing and selling Class B and Class C shares.]
The Distributor currently pays sales commissions of 3.75% of the
purchase price of Class B shares to dealers from its own resources at the
time of sale.
Including the advance of the service fee, the total amount paid by the
Distributor to the dealer at the time of [sales] of Class [B] shares is
[therefore 4.00%] of the purchase price. The Distributor retains the [Class B]
asset-based sales charge [.
The Distributor currently pays sales commissions of 0.75% of the
purchase price of Class C 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 C shares is therefore
1.00% of the purchase price]. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
[The] Distributor's actual expenses in selling Class [B and Class] C
shares may be more than the payments it receives from contingent deferred sales
charges collected on redeemed shares and from the Fund under the Distribution
and Service [Plans] for Class [B and] C shares[. Therefore], those expenses may
be carried over and paid in future years. [At August 31, 1996, the end of the
Class B and Class C Plan year, the Distributor had incurred unreimbursed
expenses under the Plan of $140,499 for Class B shares and $125,540 for Class C
shares, equal to 2.58% of the Fund's net assets represented by Class B shares on
that date, and 1.21% of the Fund's net assets represented by Class C shares on
that date, which have been carried over into the present Plan year.
If either] 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.
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:
o distributions to participants or beneficiaries from Retirement Plans,
if the distributions are made (a) under an Automatic Withdrawal Plan after the
participant reaches age 59-1/2, as long as the payments are no more than 10% of
the account value annually (measured from the date the Transfer Agent receives
the request), or (b) following the death or disability (as defined in the
Internal Revenue Code) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
o redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder including a trustee of a
"grantor" trust or revocable living trust for which the trustee is also 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);
o returns of excess contributions to Retirement Plans;
o 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[;] or
o distributions from OppenheimerFunds prototype 401(k) plans (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as defined
in the Internal Revenue Code; (3) to meet minimum distribution requirements as
defined in the Internal Revenue Code; (4) to make "substantially equal periodic
payments" as described in Section 72(t) of the Internal Revenue Code; or (5) for
separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C shares
[sold or issued] in the following cases:
o shares sold to the Manager or its affiliates;
o shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the Manager or
the Distributor for that purpose; [o shares issued in plans of
reorganization to which the Fund is a party; or]
o 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
signatureguaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.
o Using AccountLink to Buy Shares. Purchases may be made by telephone
only after your account has been established. To purchase shares in amounts up
to $250,000 through a telephone representative, call the Distributor at
1-800-852-8457. The purchase payment will be debited from your bank account.
o PhoneLink. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the special PhoneLink number: 1-800-533-3310.
o Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these purchases.
o Exchanging Shares. With the OppenheimerFunds Exchange Privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another Oppenheimer funds account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares,"
below, for details.
o Selling Shares. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below, for
details.
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:
o Automatic Withdrawal Plans. If your Fund account is $5,000 or more,
you can establish an Automatic Withdrawal Plan to receive payments of at least
$50 on a monthly, quarterly, semi-annual or annual basis. The checks may be sent
to you or sent automatically to your bank account on AccountLink. You may even
set up certain types of withdrawals of up to $1,500 per month by telephone. You
should consult the Application and Statement of Additional Information for more
details.
o Automatic Exchange Plans. You can authorize the Transfer Agent to
automatically [exchange] an amount you establish in advance for shares of up to
five other Oppenheimer funds on a monthly, quarterly, semi-annual or annual
basis under an Automatic Exchange Plan. The minimum purchase for each
Oppenheimer [fund] 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:
o Individual Retirement Accounts including rollover IRAs, for individuals
and their spouses o 403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable organizations
o SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment; including SAR/SEP-IRAs
o Pension and Profit-Sharing Plans for self-employed persons and other
employers o 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
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 net asset value [next] 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. -----
o Retirement Accounts. To sell shares in an OppenheimerFunds retirement
account in your name, call the Transfer Agent for a distribution request form.
There are special income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer,
you must arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement of
Additional Information.
o Certain Requests Require a Signature Guarantee. To protect you and
the Fund from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
o You wish to redeem more than $50,000 worth of shares and
receive a check
o [The] redemption check is not payable to all shareholders
listed on the account statement
o [The] redemption check is not sent to the address of record on
your account statement
o Shares are being transferred to a Fund account with a
different owner or name
o Shares are redeemed by someone other than the owners (such
as an Executor)
o Where Can I Have My Signature Guaranteed? The Transfer Agent will accept
a guarantee of your signature by a number of financial institutions, including:
a U.S. bank, trust company, credit union or savings association, or by a foreign
bank that has a U.S. correspondent bank, or by a U.S. registered dealer or
broker in securities, municipal securities or government securities, or by a
U.S. national securities exchange, a registered securities association or a
clearing agency. If you are signing 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:
o Your name
o The Fund's name
o Your Fund account number (from your account statement)
o The dollar amount or number of shares to be redeemed o Any special
payment instructions
o Any share certificates for the shares you are selling,
o The signatures of all registered owners exactly as the account is
registered, and
o Any special requirements or documents requested by the Transfer Agent to
assure proper authorization of the person asking to sell shares.
Use the following address for 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.
o To redeem shares through a service representative, call 1-
800-852-8457
o To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds wired to that bank account.
o Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed by
telephone in any 7-day period. The check must be payable to all owners of record
of the shares and must be sent to the address on the account statement. This
service is not available within 30 days of changing the address on an account.
o Telephone Redemptions Through AccountLink [or Wire]. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated when
you establish AccountLink. Normally the ACH transfer to your bank is
initiated on the business day after the redemption. You do not receive dividends
on the proceeds of the shares you redeemed while they are waiting to be
transferred.
[Shareholders may also have the Transfer Agent send redemption proceeds
of $2,500 or more by Federal Funds wire to a designated commercial bank account
if the bank is a member of the Federal Reserve wire system. There is a $10 fee
for each Federal Funds wire. To place a wire redemption request, call the
Transfer Agent at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a possibility
that the wire may be delayed up to seven days to enable the Fund to sell
securities to pay the redemption proceeds. No dividends are accrued or paid on
the proceeds of shares that have been redeemed and are awaiting transmittal by
wire. To establish wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.]
Selling Shares Through Your Dealer. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
[Please call your dealer for more information about this procedure.] 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:
o Shares of the fund selected for exchange must be available for sale in
your state of residence
o The prospectuses of this Fund and the fund whose shares you want to buy
must offer the exchange privilege
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them; after the account is open 7 days, you
can exchange shares every regular business day
o You must meet the minimum purchase requirements for the fund you purchase
by exchange o Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class of the Fund may be exchanged only for
shares of the same class in the other Oppenheimer funds. For example, you can
exchange Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc., offers only one class of shares,
which are considered [to be] Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please refer to "How to
Exchange Shares" in the Statement of Additional Information for more details.
Exchanges may be requested in writing or by telephone:
o Written Exchange Requests. Submit an OppenheimerFunds Exchange Request
form, signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."
o Telephone Exchange Requests. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
name(s) and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of Oppenheimer funds currently available for
exchanges in the Statement of Additional Information or obtain one by calling a
service representative at 1-800-525-7048. That list can change from time to
time. [Exchanges of shares involve a redemption of the shares of the fund you
own and a purchase of shares of the other fund.]
There are certain exchange policies you should be aware of:
o Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day on which
the Transfer Agent receives an exchange request that is in proper form by the
close of The New York Stock Exchange that day, which is normally 4:00 P.M., but
may be earlier on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 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.
o Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
will disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
o The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
o For tax purposes, exchanges of shares involve a redemption of the
shares of the Fund you own and a purchase of the shares of the other fund, which
may result in a capital gain or loss. For more information about taxes affecting
exchanges, please refer to "How to Exchange Shares" in the Statement of
Additional Information.
o If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange will
be exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a result,
those exchanges may be subject to notice requirements, delays and other
limitations that do not apply to shareholders who exchange their shares directly
by calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
o Net Asset Value Per Share is determined for each class of shares as
of the close of The New York Stock Exchange, [which is normally 4:00 P.M. but
may be earlier on some days,] on each day the Exchange is open by dividing the
value of the Fund's net assets attributable to a class by the number of shares
of that class that are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities and obligations for
which market values cannot be readily obtained. These procedures are described
more completely in the Statement of Additional Information.
o The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may be
suspended by the Board of Trustees at any time the Board believes it is in the
Fund's best interest to do so.
o Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Fund at any time. If
an account has more than one owner, the Fund and the Transfer Agent may rely on
the instructions of any one owner. Telephone [exchange and redemption]
privileges [automatically] apply to each owner of the account and the dealer
representative of record for the account unless [refused on the new account
Application or, if not refused, will apply] until the Transfer Agent receives
cancellation instructions from an owner of the account.
o The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither the Transfer Agent nor the Fund will be
liable for losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent during
periods of unusual market activity, you may not be able to complete a telephone
transaction and should consider placing your order by mail.
o Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time to
time, the Transfer Agent in its discretion may waive certain of the requirements
for redemptions stated in this Prospectus.
o Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing Corporation
are responsible for obtaining their clients' permission to perform those
transactions and are responsible to their clients who are shareholders of the
Fund if the dealer performs any transaction erroneously or improperly.
o The redemption price for shares will vary from day to day because the
values of the securities in the Fund's portfolio fluctuate, and the redemption
price, which is the net asset value per share, will normally be different for
Class A, Class B and Class C shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
o Payment for redeemed shares is made ordinarily in cash and forwarded
by check or through AccountLink (as elected by the shareholder under the
redemption procedures described above) within 7 days after the Transfer Agent
receives redemption instructions in proper form, except under unusual
circumstances determined by the Securities and Exchange Commission delaying or
suspending such payments. For accounts registered in the name of a
broker-dealer, payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via AccountLink for
recently purchased shares, but only until the purchase payment has cleared. That
delay may be as much as 10 days from the date the shares were purchased. That
delay may be avoided if you purchase shares by certified check or arrange with
your bank to provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
o Involuntary redemptions of small accounts may be made by the Fund if
the account value has fallen below $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.
o Under unusual circumstances, shares of the Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with securities
from the Fund's portfolio. Please refer to "How to Sell Shares" in the Statement
of Additional Information for more details.
o "Backup Withholding" of Federal income tax may be applied at the rate
of 31% from taxable dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a 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.
o The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be avoided
by redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How to Buy Shares," you may be subject to a
contingent deferred sales charges when redeeming certain Class A, Class B and
Class C shares.
o To avoid sending duplicate copies of materials to households, the
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048 to ask
that copies of those materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class B 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 [August] 31st). Because the Fund
does not have an objective of seeking current income, the amounts of dividends
it pays, if any, will likely be small. [Dividends] paid on Class A shares [will]
generally be higher than for Class B and Class C shares because expenses
allocable to Class B and Class C shares will generally be higher .
Capital Gains. The Fund may make distributions annually in December out of any
net short-term or long-term capital gains, and the Fund may make supplemental
distributions of 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:
o Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares of the
Fund.
o Reinvest Long-Term Capital Gains Only. You can elect to reinvest
long-term capital gains in the Fund while receiving dividends by check or sent
to your bank account on AccountLink.
o Receive All Distributions in Cash. You can elect to receive a check for
all dividends and long-term capital gains distributions or have them sent to
your bank on AccountLink.
o Reinvest Your Distributions in Another Oppenheimer Fund Account. You can
reinvest all distributions in 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.
o "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.
o Taxes on Transactions: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. [A] capital gain or loss is the
difference between the price you paid for the shares and the price you received
when you sold them.
o Returns of Capital: In certain cases distributions made by the Fund
may be considered a non-taxable return of capital to shareholders. If that
occurs, it will be identified in notices to shareholders. A non-taxable return
of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain Federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax adviser
about the effect of an investment in the Fund on your particular tax situation.
4
<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
o Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
o Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for Class A
shares purchased by a "Qualified Retirement Plan" through a single broker,
dealer or financial institution, or by members of "Associations" formed for any
purpose other than the purchase of securities if that Qualified Retirement Plan
or that Association purchased shares of any of the Former Quest for Value Funds
or received a proposal to purchase such shares from OCC Distributors prior to
November 24, 1995. For this purpose only, a "Qualified Retirement Plan" includes
any 401(k) plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a single
employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement [plans] and Associations having
50 or more eligible employees or members, there is no initial sales charge on
purchases of Class A shares, but those shares are subject to the Class A
contingent deferred sales charge described on pages [28] to [29] of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees in a
Qualified Retirement Plan or members of an Association or the sales charge rate
that applies under the Rights of Accumulation described above in the Prospectus.
In addition, purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they qualified to
purchase shares of any of the Former Quest For Value Funds by virtue of
projected contributions or investments of $1 [million] or more each year.
Individuals who qualify under this arrangement for reduced sales charge rates as
members of Associations, or as eligible employees in Qualified Retirement Plans
also may purchase shares for their individual or custodial accounts at these
reduced sales charge rates, upon request to the Fund's Distributor.
o 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.
o Waiver of Class A Sales Charges for Certain Shareholders[.] Class A shares of
the Fund purchased by the following investors are not subject to any Class A
initial or contingent deferred sales charges:
o Shareholders of the Fund who were shareholders of the AMA Family of
Funds on February 28, 1991 and who acquired shares of any of the Former Quest
for Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders of the Fund who acquired shares of any Former Quest for
Value Fund by merger of any of the portfolios of the Unified Funds.
o Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions[.] The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the following investors
who were shareholders of any Former Quest for Value Fund:
o Investors who purchased Class A shares from a dealer that is [not] or
was not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted under
that law.
o Participants in Qualified Retirement Plans that purchased shares of
any of the Former Quest [for] Value Funds pursuant to a special "strategic
alliance" with the distributor of those funds. The Fund's Distributor will pay a
commission to the dealer for purchases of Fund shares as described above in
"Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge Waivers
o Waivers for Redemptions of Shares Purchased Prior to March 6, 1995[.]
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, 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.
o Waivers for Redemptions of Shares Purchased on or After March 6, 1995 but
Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, 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.
A-1
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER [CAPITAL APPRECIATION FUND
(formerly named "Oppenheimer Target Fund")]
Graphic material included in Prospectus of Oppenheimer [Capital
Appreciation] 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
[Capital Appreciation] 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 [12/31/85] through [8/31/96;] 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 [8/31/96;] 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 [8/31/96.
The graphs assume that all dividends and capital gains were reinvested
in additional shares. In each graph, the respective class of shares will be
compared over the same time period with the same investment] 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
[12/31/85 $ 9,425 $10,000]
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
[8/31/96 $31,619 $42,933]
Fiscal Oppenheimer S&P [500]
Period Ended Target Fund B Index
[11/01/95(1)] $10,000 $10,000
12/31/95 [$10,167 $10,640
8/31/96 $10,852 $11,432]
Fiscal Oppenheimer S&P [500]
Period Ended Target Fund C Index
[11/30/93(2)] $10,000 $10,000
12/31/93 $10,117 $10,121
12/31/94 $10,066 $10,254
12/31/95 $13,443 [$14,103]
[8/31/96 $15,010 $15,154]
- ------------------
{* 3 moved from here; text not shown}
[(1)]Class B shares of the Fund were first publicly offered on November 1, 1995.
[** 3] [(2)]Class C shares of the Fund were first publicly offered on December
1, 1993.
<PAGE>
Oppenheimer [Capital Appreciation] 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.
[PR0320.001.1296] Printed on Recycled Paper
<PAGE>
Oppenheimer [Capital Appreciation Fund
(formerly named "Oppenheimer Target Fund")]
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated [December 18], 1996
This Statement of Additional Information of Oppenheimer [Capital
Appreciation] Fund is not a Prospectus. This document contains additional
information about the Fund and supplements information in the Prospectus dated
[December 18], 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.
<TABLE>
<CAPTION>
<S> <C>
Contents
Page
About the Fund
Investment Objective and Policies....................................................................... 2
Investment Policies and Strategies................................................................. 2
Other Investment Techniques and Strategies......................................................... 3
Other Investment Restrictions...................................................................... 14
How the Fund is Managed ................................................................................ 15
Organization and History........................................................................... 15
Trustees and Officers of the Fund.................................................................. [16]
The Manager and Its Affiliates..................................................................... [21]
Brokerage Policies of the Fund.......................................................................... [23]
Performance of the Fund................................................................................. [24]
Distribution and Service Plans.......................................................................... [27]
About Your Account
How to Buy Shares....................................................................................... [29]
How to Sell Shares...................................................................................... [36]
How to Exchange Shares.................................................................................. [41]
Dividends, Capital Gains and Taxes...................................................................... [43]
Additional Information About the Fund................................................................... [44]
Financial Information About the Fund
Independent Auditors' Report............................................................................ [45]
Financial Statements.................................................................................... [46]
Appendix A: Industry Classifications.................................................................... A-1
</TABLE>
-1-
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and policies of the
Fund are described in the Prospectus. Set forth below is supplemental
information about those policies and the types of securities in which the Fund
invests, as well as the strategies the Fund may use to try to achieve its
objective. [Capitalized] terms used in this Statement of Additional Information
have the same meaning as those terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's investment
advisor, [OppenheimerFunds, Inc. (]the "Manager"), evaluates the merits of
securities primarily through the exercise of its own investment analysis. This
may include, among other things, evaluation of the history of the issuer's
operations, prospects for the industry of which the issuer is part, the issuer's
financial condition, the issuer's pending product developments and developments
by competitors, the effect of general market and economic conditions on the
issuer's business, and legislative proposals or new laws that might affect the
issuer. Current income is not a consideration in the selection of portfolio
securities for the Fund, whether for appreciation, defensive or liquidity
purposes. The fact that a security has a low yield or does not pay current
income will not be an adverse factor in selecting securities to try to achieve
the Fund's investment objective of capital appreciation unless the Manager
believes that the lack of yield might adversely affect appreciation
possibilities.
The portion of the Fund's assets allocated to securities and methods
selected for capital appreciation will depend upon the judgment of the Manager
as to the future movement of the equity securities markets. [For example, when
the economy is expanding, companies in the consumer durable and technology
sectors may be in a position to benefit from changes in the business cycle and
may present long-term growth opportunities]. If the Manager believes that a
market decline is likely, defensive securities and investment methods will be
emphasized (See "Temporary Defensive Investments," below).
o 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 [commercial] applications for
new scientific knowledge having potential for technological innovation, such as
[computer software, telecommunications equipment and services, ]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.
o Warrants and Rights. Warrants 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 prices of warrants do not necessarily move 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
o 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: [(1)] protect against possible
declines in the market value of the Fund's portfolio resulting from downward
trends in the securities markets, [(2)] protect unrealized gains in the value of
the Fund's securities which have appreciated, [(3)] facilitate selling
securities for investment reasons, [(4)] establish a position in the securities
markets as a temporary substitute for purchasing particular debt securities, or
[(5)] 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, [or] to permit the Fund to retain
unrealized gains in the value of portfolio securities which have appreciated, or
to facilitate selling securities for investment reasons. To do, the Fund may:
[(1)] purchase Futures or [(2)] 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: [(1)] purchase puts on
that foreign currency or on foreign currency Futures, [(2)] write calls on that
currency or on such Futures, or [(3)] 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
o 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 [a security] 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 [identifying to its custodian bank] an
equivalent dollar amount of deliverable securities or liquid assets [that are to
be segregated]. 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.
o Purchasing Calls and Puts. 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. 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 [exercise] price [,] 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.
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 [(a
"protective put")] enables the Fund [to attempt] to protect itself during the
put period against a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise price to a
seller of a corresponding put. If the market price of the underlying investment
is equal to or above the exercise price and as a result the put is not exercised
or resold, the put will become worthless at its expiration date, and the Fund
will lose its premium payment and the right to sell the underlying investment.
[However, the] put may 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.
[o Options on Indices and Futures.] 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.
o 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.
o 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 [identify and segregate liquid securities ]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
[segregated] securities declines, additional cash or securities will be
[segregated] on a daily basis so that the value of the [segregated assets] 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.
o 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.
o Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use of
Futures and options on Futures established by the Commodity Futures Trading
Commission ("CFTC"). In particular the Fund is exempted from registration with
the CFTC as a "commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not limit the
percentage of the Fund's assets that may be used for Futures margin and related
options premiums for a bona fide hedging position. However, under the Rule the
Fund must limit its aggregate initial futures margin and related option premiums
to no more than 5% of the Fund's [total] assets for hedging strategies that are
not considered bona fide hedging strategies under the Rule. Under the Rule, the
Fund also must use short Futures and Futures options positions solely for "bona
fide hedging purposes" within the meaning and intent of the applicable
provisions of the Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by each of the 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 [of 1940 (the "Investment
Company Act")], when the Fund purchases a Future, the Fund will maintain, in a
segregated account or accounts with its [Custodian] in an amount equal to the
market value of the securities underlying such Future, less the margin deposit
applicable to it.
o Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code (although it reserves the right not to qualify). That qualification
enables the Fund to "pass through" its income and realized capital gains to
shareholders without 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: [(1)] 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;
[(2)] purchasing options which expire in less than three months; [(3)] effecting
closing transactions with respect to calls or puts written or purchased less
than three months previously; [(4)] exercising puts or calls held by the Fund
for less than three months; or [(5)] 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
[timing and] character of gains (or losses) [recognized] 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, [generally] 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.
o 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.
[The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable index.
To compensate for the imperfect correlation of movements in the price of the
securities being hedged and movements in the price of the Hedging Instruments,
the Fund may use Hedging Instruments in a greater dollar amount than the dollar
amount of securities being hedged if the historical volatility of the prices of
such securities being hedged is more than the historical volatility of the
applicable index. It is also possible that where the Fund has used Hedging
Instruments in a short hedge, the market may advance and the value of securities
held in the Fund's portfolio may decline. If this occurred, the Fund would lose
money on the Hedging Instruments and also experience a decline in value in its
securities. However, while this could occur for a very brief period or to a very
small degree, over time the value of a diversified portfolio of securities will
tend to move in the same direction as the indices upon which the Hedging
Instruments are based.]
If the Fund uses Hedging Instruments to establish a position in the
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.
o Borrowing for Leverage. From time to time, the Fund may increase its
ownership of securities by borrowing from banks on an unsecured basis and
investing the borrowed funds, subject to the restrictions stated in the
Prospectus. Any such borrowing will be made only from banks, and, pursuant to
the requirements of the Investment Company Act of 1940 (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.
o 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.
o 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.
o Illiquid and Restricted Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the Fund
may have to cause those securities to be registered. The expenses of
registration of restricted securities may be negotiated by the Fund with the
issuer at the time such securities are purchased by the Fund, if such
registration is required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the security, a
considerable period may elapse between the time the decision is made to sell the
securities and the time the Fund would be permitted to sell them. The Fund would
bear the risks of any downward price fluctuation during that period. The Fund
may also acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability to dispose of
such securities and might lower the amount realizable upon the sale of such
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.
o Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. [Repurchase
transactions are not considered "loans" for the purpose of the Fund's limit on
the percentage of its assets that can be loaned.] Under applicable regulatory
requirements (which are subject to change), the loan collateral on each business
day must at least equal the value of the loaned securities and must consist of
cash, bank letters of credit or securities of the U.S. Government (or its
agencies or instrumentalities). To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by the Fund if the demand
meets the terms of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. [In a portfolio securities lending transaction, the
Fund receives from the borrower an amount equal to the interest paid or the
dividends declared on the loaned securities during the term of the loan as well
as the interest on the collateral securities, less any finders', administrative
or other fees the Fund pays in connection with the loan]. The terms of the
Fund's loans must meet applicable tests under the Internal Revenue Code and must
permit the Fund to reacquire loaned securities on five days' notice or in time
to vote on any important matter.
o Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated redemptions, or
pending the investment of the proceeds from [the sale] of [fund] shares, or
pending 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.
o Short Sales "Against-the-Box". In this type of short sale, while the
short position is open, the Fund must own an equal amount of the securities sold
short, or by virtue of ownership of other securities have the right, without
payment of further consideration, to obtain an equal amount of the securities
sold short. 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.
o 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. [The following are fundamental policies, and together with the
Fund's] fundamental policies [described in the Prospectus,] cannot be changed
without the vote of a "majority" of the Fund's outstanding voting securities.
[Such] a "majority" vote is defined[, under the Investment Company Act,] 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:
o Invest in companies for the purpose of acquiring control or management
thereof; o 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;
o 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; o Purchase securities on margin; however, the Fund may make
margin deposits in connection with any of the hedging instruments permitted by
any of its other fundamental policies; o 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"; o 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; o 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; o 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 o Invest in interests in oil, gas or mineral
exploration leases or development programs.
[o Non-Fundamental Investment Restrictions.] For purposes of [the]
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.
[Ms. Macaskill is not a director of Oppenheimer Money Market Fund, Inc.
Otherwise, 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 [Municipal] Bond Fund, Oppenheimer Money Market Fund, Inc.,
Oppenheimer [Capital Appreciation] Fund, Oppenheimer New York [Municipal] Fund,
Oppenheimer California [Municipal] Fund, Oppenheimer Multi-State [Municipal]
Trust, Oppenheimer Asset Allocation Fund, Oppenheimer U.S. Government Trust,
[Oppenheimer Developing Markets Fund,] Oppenheimer Multi-Sector Income Trust and
Oppenheimer [World Bond Fund] (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 [November 22], 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: [71]
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: 63]
[Vice Chairman of OppenheimerFunds, Inc. (the "Manager"); formerly he held
the following positions:] Vice President and Counsel of Oppenheimer Acquisition
Corp. ("OAC"), the Manager's parent holding company; Executive Vice President
[,] General Counsel [and a director] of the Manager and OppenheimerFunds
Distributor, Inc. (the "Distributor"), Vice President and a director of
HarbourView Asset Management Corporation ("HarbourView") and Centennial Asset
Management Corporation ("Centennial"), investment 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: [73]
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: [48]
President, Chief Executive Officer and a Director of the Manager;
Chairman and a [director] of SSI [and SFSI,] President and a [director]
of OAC[,] HarbourView and Oppenheimer Partnership Holdings, Inc., a
holding company subsidiary of the Manager; [a director of Oppenheimer
Real Asset Management, Inc.;] formerly an Executive Vice President of
the Manager.
Elizabeth B. Moynihan, Trustee; Age: [67]
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer Gallery of
Art (Smithsonian Institution), the Institute of Fine Arts (New York
University), National Building Museum; a member of the Trustees
Council, Preservation League of New York State; a member of the
Indo-U.S. Sub-Commission on Education and Culture.
Kenneth A. Randall, Trustee; Age: [69]
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
President and Chief Executive Officer of The Conference Board, Inc.
(international economic and business research) [and a director of
Lumbermen's Mutual Casualty Company, American Motorists Insurance
Company and American Manufacturers Mutual Insurance Company].
Edward V. Regan, Trustee; Age: [66]
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of New York;
[Senior Fellow] of Jerome Levy Economics Institute [and Bard College];
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 director of XYAN Inc. (Printing), Professional Staff Limited and
American Scientific Resources, Inc.;] 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; [Emeritus Founding] 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), FMC Corp.
(chemicals and machinery)[, IMC Global, Inc. (Chemicals and animal feed),] and
Texas Instruments, Inc. (electronics), formerly (in descending chronological
order) [Counselor] to the President (Bush) for Domestic Policy, Chairman of the
Republican National Committee, Secretary of the U.S. Department of Agriculture,
and U.S. Trade Representative.
Andrew J. Donohue, Secretary; Age: [46]
Executive Vice President and General Counsel of the Manager and the
Distributor; President and a director [of Centennial; Executive Vice
President General Counsel and a director of HarbourView, SSI, SFSI and
Oppenheimer Partnership Holdings, Inc.; President and director of
Oppenheimer Real Asset Management, Inc.; General Counsel of OAC;
Executive Vice President, Chief Legal Officer and a director of
MultiSource Services, Inc. (a broker-dealer)] 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: [35]
Assistant Vice President of the Manager; previously a portfolio manager
and equity research analyst for Chemical Bank.
[Robert C. Doll, Jr., Vice President and Portfolio Manager; Age: 42
Executive Vice President and Director of the Manager; Executive Vice
President of HarbourView; Vice President and a director of OAC; an officer of
other Oppenheimer funds.]
George C. Bowen, Treasurer; Age: [60]
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; [Senior
Vice President, Treasurer and Secretary of SSI;] Vice President,
Treasurer and Secretary of [SFSI; Treasurer of OAC; Vice President and
Treasurer of Oppenheimer Real Asset Management, Inc.; Chief Executive
Officer, Treasurer and a director of MultiSource Services, Inc. (A
broker-dealer);] an officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: [48]
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert [J.] Bishop, Assistant Treasurer; Age: [38]
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; [formerly] a Fund Controller for the Manager,
prior to which he was an Accountant for Yale & Seffinger, P.C., an
accounting firm, and an Accountant and Commissions Supervisor for
Stuart James Company Inc., a broker-dealer.
Scott [T.] Farrar, Assistant Treasurer; Age: [31]
3410 South Galena Street, Denver, Colorado 80231
Vice President of the Manager/Mutual Fund Accounting; an officer of
other Oppenheimer funds; previously a Fund Controller for the Manager.
- -----------------------------
*A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act.
o 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 and Messrs. Galli and Spiro [are also officers) receive
no salary or fee from the Fund. The remaining Trustees of the Fund received the
compensation shown below ]from the Fund, during [the period] ended [August] 31,
[1996,] and from all of the New York-based Oppenheimer funds (including the
Fund) [for which they served as Trustee or Director. Compensation is paid] for
services in the positions [below their names:] Retirement
<TABLE>
<CAPTION>
Benefits Total Compensation
[Aggregate] Accrued as From All
[Compensation] Part of New York[-]based
[Name and] Position [From the Fund(1) Fund Expenses(1)] Oppenheimer [Funds(2)]
- ------------------- ------------------ ---------------- ---------------------
<S> <C> <C> <C>
Leon Levy [$10,291 $4,399 $141,000]
Chairman and Trustee
Benjamin Lipstein [$6,292 $2,690 $86,200]
Study Committee Chairman,
Audit Committee [Member ]
[and Trustee]
[Elizabeth B. Moynihan $6,292 $2,690 $86,200]
[Study Committee Member
and Trustee
Kenneth A. Randall $5,722 $2,446 $78,400
Audit Committee Chairman
and Trustee
Edward V. Regan $5,022 $2,147 $68,800
Proxy Committee Chairman,(3)
Audit Committee Member
and Trustee
Russell S. Reynolds, Jr. $3,803 $1,626 $52,100
Proxy Committee Member(3)
and Trustee
Sidney M. Robbins $8,912 $3,810 $122,100
Study Committee Advisory
Member, Audit Committee
Advisory Member and Trustee
Pauline Trigere, Trustee $3,803 $1,626 $52,100]
Clayton K. Yeutter [$3,803 $1,626 $52,1000
Proxy Committee Member(3)
and] Trustee
- ----------------------
</TABLE>
[(1)For the fiscal period ended August 31, 1996.
(2)] For the 1995 calendar year [(prior to the inception of the Proxy
Committee) during which the New York- based Oppenheimer funds listed in the
first paragraph of this section, including Oppenheimer Mortgage Income Fund and
Oppenheimer Time Fund (which ceased operation following the acquisition of their
assets by certain other Oppenheimer funds) but excluding Oppenheimer
International Growth Fund, which had not yet commenced operations.
(3)] Committee position held during a portion of the period shown. The
Study [,] Audit [and Proxy] Committees meet for all New York-based Oppenheimer
funds and all fees are allocated among the funds by the Board.
The Fund has adopted a retirement plan that provides for payment to a
retired Trustee of up to 80% of the average compensation paid during that
Trustee's five years of service in which the highest compensation was received.
A Trustee must serve in that capacity for any of the New York-based Oppenheimer
funds for at least 15 years to be eligible for the maximum payment. Because each
Trustee's retirement benefits will depend on the amount of the Trustee's future
compensation and length of service, the amount of those benefits cannot be
determined at this time, nor can the Fund estimate the number of years of
credited service that will be used to determine those benefits. [During] the
fiscal year ended [August 31, 1996, $26,931 was accrued] for the Fund's
projected retirement benefit obligations[)].
o Major Shareholders. As of [November 22], 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.
o The Investment Advisory Agreement. The investment advisory agreement
between the Manager and the Fund requires the Manager, at its expense, to
provide the Fund with adequate office space, facilities and equipment, and to
provide and supervise the activities of all administrative and clerical
personnel required to provide effective corporate administration for the Fund,
including the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale of shares
of the Fund.
Expenses not expressly assumed by the Manager under the [Investment
Advisory Agreement] or by the Distributor under the General [Distributor's]
Agreement are paid by the Fund. The [Investment 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, [1994, 1995 and for the
fiscal period ended August 31, 1996], the management fees paid by the Fund to
the Manager were [$2,475,491,] $3,882,505 [and $3,767,997,] respectively.
The [Investment Advisory Agreement] contains no provision limiting the
Fund's expenses. However, independently of the [Investment 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 [would] be reduced at the end of a month so that
there will not be any accrued but unpaid liability under this undertaking. [No
expense assumption was made by the Manager during the fiscal period ended August
31, 1996 under this voluntary expense assumption]. Any assumption of the Fund's
expenses under this limitation would [have lowered] the Fund's overall expense
ratio and increase its total return during any period in which expenses are
limited. [Due to changes in federal securities laws, such state regulatory
limitations no longer apply, and the Manager hereby withdraws this voluntary
undertaking.
The Investment 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
[Investment 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 [Investment Advisory Agreement] permits the Manager
to act as investment adviser for any other person, firm or corporation and to
use the name "Oppenheimer" in connection with other investment companies for
which it may act as investment adviser or general distributor. If the Manager
shall no longer act as investment adviser to the Fund, the right of the Fund to
use the name "Oppenheimer" as part of its name may be withdrawn.
o The Distributor. Under its General Distributor's Agreement with the
Fund, the Distributor acts as the Fund's principal underwriter in the continuous
public offering of the Fund's Class A, Class B 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, [1994, 1995 and for the fiscal period ended August 31, 1996], the
aggregate sales charges on sales of the Fund's Class A shares were $351,806,
$594,161 [and $609,225,] respectively, of which the Distributor and an
affiliated broker-dealer retained in the aggregate $141,646 [,] $190,816 [and
$193,794] in those respective years. During the Fund's fiscal [period] ended
[August] 31, [1996], the contingent deferred sales charges collected on the
Fund's Class B shares [totaled $1,559, all of which the Distributor retained.
During the Fund's fiscal period ended August 31, 1996, contingent deferred sales
charges collected on the Fund's Class C shares totalled $2,184], 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.
o The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent,
is responsible for maintaining the Fund's shareholder registry and shareholder
accounting records, and for shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of the
duties of the Manager under the [Investment Advisory Agreement] is to arrange
the portfolio transactions for the Fund. The [Investment 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 [Investment 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 [Investment 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 [Investment
Advisory Agreement] or the Distribution [and Service] Plans described below)
annually reviews information furnished by the Manager as to the commissions paid
to brokers furnishing such services so that the Board may ascertain whether the
amount of such commissions was reasonably related to the value or benefit of
such services.
During the Fund's fiscal years ended December 31, [1994, 1995 and for
the fiscal period ended August 31, 1996], total brokerage commissions paid by
the Fund (not including spreads or concessions on principal transactions on a
net trade basis) were $564,504, $923,800 [and $622,523], respectively. During
the fiscal [period] ended [August] 31, [1996, $324,908] 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 [$198,143,725]. 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.
o Average Annual Total Returns. The "average annual total return" of each
class is an average annual compounded rate of return for each year in a
specified number of years. It is the rate of return based on the change in value
of a hypothetical initial investment of $1,000 ("P" in the formula below) held
for a number of years ("n") to achieve an Ending Redeemable Value ("ERV") of
that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
o Cumulative Total Returns. The "cumulative total return" calculation
measures the change in value of a hypothetical investment of $1,000 over an
entire period of years. Its calculation 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 [August] 31, [1996,]
were [11.51%, 12.20%] and [10.09%], respectively. The "cumulative total return"
on Class A shares for the ten year period ended [August] 31, [1996,] was
[161.40%]. 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 [(the commencement of the offering
of Class B shares) through August 31, 1996 was 8.52%]. The average annual total
returns on Class C shares for the period from December 1, 1993, (the
commencement of the offering of [Class C] shares) through [August] 31, [1996]
and for the one-year period ended [August] 31, [1996] were [15.92%] and
[16.32%], respectively.
o Total Returns at Net Asset Value. From time to time the Fund may also
quote an average annual total return at net asset value or a cumulative total
return at net asset value for Class A, Class B 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 [August] 31, [1996] was [177.35%]. The average annual
total returns at net asset value for the one, five and ten-year periods ended
[August] 31, [1996], for Class A shares were [18.32%, 13.54%] and [10.74%],
respectively. The cumulative total return at net asset value for Class B shares
for the period from November 1, 1995 through [August] 31, [1996] was [13.52%].
The average annual total return at net asset value for Class C shares for the
period from December 1, 1993, [through August] 31, 1995 and for the one-year
period ended [August] 31, [1996] were [15.92%] and [17.32%] 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 [also include in
its advertisements and sales literature performance information about the Fund
or rankings of the Fund's performance cited in newspapers or periodicals, such
as The New York Times. These articles may include quotations of performance from
other sources, such as] Lipper Analytical Services, Inc. ("Lipper") [or
Morningstar, Inc. and Lipper is] a widely-recognized independent [mutual fund
monitoring] service. Lipper monitors the performance of regulated investment
companies, including the Fund, and ranks their performance for various periods
based on categories relating to investment objectives. The performance of the
Fund's classes [of shares is] ranked against (i) all other funds [and (ii) all
other gold-oriented funds]. 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.
[Morningstar is] an independent mutual fund monitoring service that ranks mutual
funds, including the Fund, monthly in broad investment categories [(domestic
stock, international stock], taxable bond, municipal bond and hybrid) based on
risk-adjusted investment return. Investment return measures a fund's three, five
and ten-year average annual total returns (when available) in excess of 90-day
U.S. Treasury bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly returns. Risk
and investment return are combined to produce star rankings reflecting
performance relative to the average fund in a fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next 22.5%), three
stars is "average" (next 35%), two stars is "below average" (next 22.5%) and one
star is "lowest" (bottom 10%). Morningstar ranks the [Fund's Class A, Class B
and Class C shares] in relation to other equity funds. Rankings are subject to
change.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by them to
shareholders of the Oppenheimer funds, other than performance rankings of the
Oppenheimer funds themselves. Those ratings or rankings of shareholder/investor
services by third parties may compare the Oppenheimer [funds] services to those
of other mutual fund families selected by the rating or ranking services[,] and
may be based upon the opinions of the rating or ranking service itself, [using]
its [own] research or judgment, or based upon surveys of investors, brokers,
shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares of the Fund under Rule 12b-1 of
the Investment Company Act pursuant to which the Fund makes payments to the
Distributor 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 [Plans] for 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. [None of the Plans] may be amended to increase materially the amount of
payments to be made unless such amendment is approved by shareholders of the
[Class] affected by the amendment. In addition, because Class B shares of the
Fund automatically convert into Class A shares after six years, the Fund is
required [by a Securities and Exchange Commission rule] 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.
[The Fund's Board of Trustees has set the annual rate for assets representing
Class A shares of the Fund sold on or after April 1, 1991, at 0.25%, and has set
the annual rate for assets representing Class A shares sold before April 1,
1991, at 0.15% (the Board has authority to increase that rate to no more than
0.25%).]
For the fiscal year ended [August] 31, [1996], payments under the Class
A Plan [totaled $861,250], all of which was paid by the Distributor to
Recipients, including [$38,347] 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 [August 31, 1996 totaled $28,544,] of which
[$25,624] was [retained] by the Distributor. Payments made under the Class C
Plan during that fiscal period [totaled $60,358,] including [$0] paid to MML
Investor Services, Inc. and [$31,545] 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 [Conduct Rules
of the National Association of Securities Dealers], Inc. on payments of
asset-based sales charges and service fees.
The Class C Plan allows for the carry-forward of distribution expenses,
to be recovered from asset-based sales charges in subsequent fiscal periods, as
described in the Prospectus. The asset-based sales charge paid to the
Distributor by the Fund under the Class C Plan is intended to allow the
Distributor to recoup the cost of sales commissions paid to authorized brokers
and dealers at the time of sale, plus financing costs, as described in the
Prospectus. Such payments may also be used to pay for the following expenses in
connection with the distribution of Class C shares: (i) financing the advance of
the service fee payment to Recipients under the Class C Plan, (ii) compensation
and expenses of personnel employed by the Distributor to support distribution of
Class C shares, and (iii) costs of sales literature, advertising and
prospectuses (other than those furnished to current shareholders) and state
"blue sky" registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, 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 [the Automated Quotation System ("NASDAQ") of the
Nasdaq Stock Market, Inc.] for which last sale information is regularly reported
are valued at the last reported sale price on their primary exchange or NASDAQ
that day (or, in the absence of sales that day, at values based on the last
[sale price] of the preceding trading day, or closing bid and asked prices [that
day);] (ii) securities traded on a foreign securities exchange are valued
[generally] at the last sales price available to the pricing service approved by
the Fund's Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded [at its last trading session on or
immediately preceding the valuation date], or at the mean between "bid" and
"asked" prices obtained from [the principal exchange or two] active market
makers in the security on the basis of reasonable inquiry; [(iii)] long-term
debt securities having a remaining maturity in excess of 60 days are valued
[based on] the mean between the "bid" and "asked" prices determined by a
portfolio pricing service approved by the Fund's Board of Trustees or obtained
[by the Manager] from [two] active market makers in the security on the basis of
reasonable inquiry; [(iv)] debt instruments having a maturity of more than [397
days] when issued, and non-money market type instruments having a maturity of
[397 days] or less when issued, which have a remaining maturity of 60 days or
less are valued at the mean between "bid" and "asked" prices determined by a
pricing service approved by the Fund's Board of Trustees or obtained [by the
Manager] from [two] active market makers in the security on the basis of
reasonable inquiry; [(v)] money market-type debt securities [that had] a
maturity of less than [397 days] when issued that [have] a remaining maturity of
60 days or less are valued at cost, adjusted for amortization of premiums and
accretion of discounts; [and (vi)] securities (including restricted securities)
not having readily- available market quotations are valued at fair value
[determined] under the Board's procedures [. If the Manager is unable to locate
two market makers willing to give quotes (see (ii), (iii) and (iv) above), the
security may be priced] at the mean between
[the "bid" and "asked" prices provided by a single
active market maker.
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available, such pricing
procedures may include "matrix" comparisons to the prices for comparable
instruments on the basis of quality, yield, maturity and other special factors
involved. The Manager may use pricing services approved by the Board of Trustees
to price any of the types of securities described above to price U.S. Government
Securities, mortgage-backed securities, foreign government securities and
corporate bonds. The Manager will monitor the accuracy of such pricing services,
which may include comparing prices used for portfolio evaluation to actual sales
prices of selected securities.]
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of the [New York
Stock] Exchange. Events affecting the values of foreign securities traded in
[securities] markets that occur between the time their prices are determined and
the close of the [New York Stock] Exchange will not be reflected in the Fund's
calculation of net asset value unless the Board of Trustees or the Manager,
under procedures established by the Board of Trustees, determines that the
particular event [is likely to effect a material change in the value of such
security]. Foreign currency, including forward contracts, will be valued at the
closing price in the London foreign exchange market that day as provided by a
reliable bank, dealer or pricing service. The values of securities denominated
in foreign currency will be converted to U.S. dollars at the closing price in
the London foreign exchange market that day as provided by a reliable bank,
dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on the
principal exchange on which they are traded, or on NASDAQ, as applicable, [as
determined by a pricing service approved by the Board of Trustees or by the
Manager. If there were no sales that day, value shall be the last sale price on
the preceding trading day if it is within the spread of the closing bid and
asked prices on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal exchange or on
NASDAQ on the valuation date. If the put, call or future is not traded on an
exchange or on NASDAQ, it shall be valued at the mean between bid and asked
prices obtained by the Manager from two active market makers (which in certain
cases may be the bid price if no asked price is available)].
AccountLink. When shares are purchased through AccountLink, each purchase must
be at least $25.00. Shares will be purchased on the regular business day the
Distributor is instructed to initiate the Automated Clearing House transfer to
buy 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 [,] a spouse's siblings[, aunts, uncles,
nieces and nephews].
o The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for
which the Distributor acts as the distributor or the sub-distributor and include
the following:
Oppenheimer [Municipal] Bond Fund
Oppenheimer New York [Municipal] Fund
Oppenheimer California [Municipal] Fund
Oppenheimer Intermediate [Municipal] Fund
Oppenheimer Insured [Municipal] Fund
Oppenheimer Main Street California
[Municipal] Fund
Oppenheimer Florida [Municipal] Fund
Oppenheimer Pennsylvania [Municipal] Fund
Oppenheimer New Jersey [Municipal] Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer [Capital Appreciation Fund
(formerly named "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
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 Developing Markets 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).
o Letters of Intent. A Letter of Intent (referred to as a "Letter") is
an investor's statement in writing to the Distributor of the intention to
purchase Class A shares of the Fund (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.
o Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value up to 5% of the
intended purchase amount specified in the Letter shall be held in escrow by the
Transfer Agent. For example, if the intended purchase amount is $50,000, the
escrow shall be shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and capital gains
distributions on the escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is completed
within the thirteen-month Letter of Intent period, the escrowed shares will be
promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor an
amount equal to the difference between the dollar amount of sales charges
actually paid and the amount of sales charges which would have been paid if the
total amount purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the completion of the
Letter. If such difference in sales charges is not paid within twenty days after
a request from the Distributor or the dealer, the Distributor will, within sixty
days of the expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and fractional
shares remaining after such redemption will be released from escrow. If a
request is received to redeem escrowed shares prior to the payment of such
additional sales charge, the sales charge will be withheld from the redemption
proceeds.
4. By signing the Letter, the investor irrevocably constitutes and appoints
the Transfer Agent as attorney-in-fact to surrender for redemption any or all
escrowed shares.
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.
[Retirement Plans. In describing certain types of employee benefit
plans that may purchase Class A shares without being subject to the Class A
contingent deferred sales charge, the term "employee benefit plan" means any
plan or arrangement, whether or not "qualified" under the Internal Revenue Code,
including, medical savings accounts, payroll deduction plans or similar plans in
which Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or of affiliated
employers, if the Fund account is registered in the name of the fiduciary or
other person for the benefit of participants in the plan.
The term "group retirement plan" means any qualified or non-qualified
retirement plan (including 457 plans, SEPs, SARSEPs, 403(b) plans, and SIMPLE
plans) for employees of a corporation or a sole proprietorship, members and
employees of a partnership or association or other organized group of persons
(the members of which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group participating in
the plan purchase Class A shares of the Fund through a single investment dealer,
broker or other financial institution designated by the group.]
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
o 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.
o Involuntary Redemptions. The Fund's Board of Trustees has the right
to cause the involuntary redemption of the shares held in any account if the
aggregate net asset value of those shares is less than $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 [(i)] Class A shares [or (ii)
Class B shares] subject to the Class [B] contingent deferred sales charge when
you redeemed them . 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 [Contingent Deferred] Sales
Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the shareholder
agrees to the terms and conditions applicable to such plans, as stated below and
in the provisions of the OppenheimerFunds Application relating to such Plans, as
well as the Prospectus. These provisions may be amended from time to time by the
Fund and/or the Distributor. When adopted, such amendments will automatically
apply to existing Plans.
o Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the OppenheimerFunds Application or signature-guaranteed instructions)
to exchange a pre-determined amount of shares of the Fund for shares (of the
same class) of other Oppenheimer funds automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Exchange Plan. The minimum amount
that may be exchanged to each other fund account is $25. Exchanges made under
these plans are subject to the restrictions that apply to exchanges as set forth
in "How to Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
o Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to
meet withdrawal payments. Shares acquired without a sales charge will be
redeemed first and shares acquired with reinvested dividends and capital gains
distributions will be redeemed next, followed by shares acquired with a sales
charge, to the extent necessary to make withdrawal payments. Depending upon the
amount withdrawn, the investor's principal may be depleted. Payments made under
withdrawal plans should not be considered as a yield or income on your
investment. 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 [Municipal]
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 [offered] 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).
[Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except Oppenheimer Cash
Reserves) or from any unit investment trust for which reinvestment arrangements
have been made with the Distributor may be exchanged at net asset value for
shares of any of the Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of shares
of either class purchased subject to a contingent deferred sales charge.]
However, shares of Oppenheimer Money Market Fund, Inc. purchased with the
redemption proceeds of shares of other mutual funds (other than funds managed by
the Manager or its subsidiaries) redeemed within the 12 months prior to that
purchase may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or the
investor's dealer must notify the Distributor of eligibility for this privilege
at the time the shares of Oppenheimer Money Market Fund, Inc. are purchased,
and, if requested, must supply proof of entitlement to this privilege. [The
Class C] contingent deferred sales charge is imposed on [Class C] shares
acquired by exchange [if they] are redeemed within [12 months ]of the initial
purchase of the exchanged Class [C ]shares.
When Class B or Class C shares are redeemed to effect an exchange, the
priorities described in "How to Buy Shares" in the Prospectus for the imposition
of the Class B 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.
-2-
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 August 31, 1996, and the related
statements of operations for the eight month period then ended and the year
ended December 31, 1995, the statements of changes in net assets for the eight
month period ended August 31, 1996 and the years ended December 31, 1995 and
1994, and the financial highlights for the eight month period ended August 31,
1996 and for each of the years in the five year period ended December 31, 1995.
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
August 31, 1996 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 August 31, 1996, the results of its operations for
the eight month period then ended and the year ended December 31, 1995, the
changes in its net assets for the eight month period ended August 31, 1996 and
the years ended December 31, 1995 and 1994, and the financial highlights for the
eight month period ended August 31, 1996 and each of the years in the five year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
September 23, 1996
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments August 31, 1996
Face Market Value
Amount See Note 1
==================================================================================================================================
<PAGE>
<S> <C> <C> <C>
Convertible Corporate Bonds and Notes--0.3%
- -----------------------------------------------------------------------------------------------------------------------------------
Danka Business Systems PLC, 6.75% Cv. Sub. Nts., 4/1/02 (Cost $1,723,750) $1,700,000 $ 1,980,500
Shares
==================================================================================================================================
Common Stocks--87.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Basic Materials--3.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Chemicals--3.2%
FMC Corp.(1) 13,600 870,400
---------------------------------------------------------------------------------------------------------------
IMC Global, Inc. 115,000 4,945,000
---------------------------------------------------------------------------------------------------------------
Morton International, Inc. 80,000 2,970,000
---------------------------------------------------------------------------------------------------------------
Praxair, Inc. 210,400 8,652,700
---------------------------------------------------------------------------------------------------------------
Terra Industries, Inc. 270,100 3,578,825
---------------------------------------------------------------------------------------------------------------
Union Carbide Corp. 110,000 4,757,500
-----------
25,774,425
- -----------------------------------------------------------------------------------------------------------------------------------
Paper--0.7%
Boise Cascade Corp. 55,000 1,856,250
---------------------------------------------------------------------------------------------------------------
Bowater, Inc. 110,000 3,960,000
-----------
5,816,250
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Cyclicals--14.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Autos & Housing--1.4%
AutoZone, Inc.(1) 120,000 3,270,000
---------------------------------------------------------------------------------------------------------------
Pulte Corp. 150,000 3,731,250
---------------------------------------------------------------------------------------------------------------
Toll Brothers, Inc.(1) 240,000 4,170,000
-----------
11,171,250
- -----------------------------------------------------------------------------------------------------------------------------------
Leisure & Entertainment--2.5%
Alaska Air Group, Inc.(1) 150,000 3,168,750
---------------------------------------------------------------------------------------------------------------
AMR Corp.(1) 30,000 2,460,000
---------------------------------------------------------------------------------------------------------------
Callaway Golf Co. 31,800 1,049,400
---------------------------------------------------------------------------------------------------------------
Disney (Walt) Co. 125,000 7,125,000
---------------------------------------------------------------------------------------------------------------
Outback Steakhouse, Inc.(1) 45,000 1,271,250
---------------------------------------------------------------------------------------------------------------
Wendy's International, Inc. 252,800 5,119,200
-----------
20,193,600
- -----------------------------------------------------------------------------------------------------------------------------------
Media--0.7%
Evergreen Media Corp., Cl. A(1) 105,000 3,307,500
---------------------------------------------------------------------------------------------------------------
Viacom, Inc., Cl. B(1) 75,768 2,386,692
-----------
5,694,192
- -----------------------------------------------------------------------------------------------------------------------------------
Retail: General--5.1%
Donna Karan International, Inc.(1) 269,600 6,605,200
---------------------------------------------------------------------------------------------------------------
Eckerd Corp.(1) 271,500 6,651,750
---------------------------------------------------------------------------------------------------------------
Jones Apparel Group, Inc.(1) 100,600 5,570,725
---------------------------------------------------------------------------------------------------------------
Liz Claiborne, Inc. 65,000 2,258,750
---------------------------------------------------------------------------------------------------------------
Nautica Enterprises, Inc.(1) 100,000 2,650,000
---------------------------------------------------------------------------------------------------------------
Tommy Hilfiger Corp.(1) 199,000 9,974,875
---------------------------------------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 265,000 7,022,500
-----------
40,733,800
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail: Specialty--4.5%
American Pad & Paper Co.(1) 221,000 $ 3,674,125
---------------------------------------------------------------------------------------------------------------
Bed Bath & Beyond, Inc.(1) 200,000 4,525,000
---------------------------------------------------------------------------------------------------------------
CUC International, Inc.(1) 75,000 2,578,125
---------------------------------------------------------------------------------------------------------------
Gap, Inc. (The) 180,000 6,300,000
---------------------------------------------------------------------------------------------------------------
General Nutrition Cos., Inc.(1) 180,100 2,656,475
---------------------------------------------------------------------------------------------------------------
Home Depot, Inc. 65,000 3,453,125
---------------------------------------------------------------------------------------------------------------
Lands' End, Inc.(1) 95,000 1,995,000
---------------------------------------------------------------------------------------------------------------
Nike, Inc., Cl. B 100,000 10,800,000
-----------
35,981,850
- -----------------------------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclicals--16.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Beverages--1.1%
Coca-Cola Co. (The) 140,000 7,000,000
---------------------------------------------------------------------------------------------------------------
Cott Corp. 200,000 1,562,500
-----------
8,562,500
- -----------------------------------------------------------------------------------------------------------------------------------
Food--3.1%
American Stores Co. 100,000 4,112,500
---------------------------------------------------------------------------------------------------------------
JP Foodservice, Inc.(1) 94,900 2,230,150
---------------------------------------------------------------------------------------------------------------
Kroger Co.(1) 125,000 5,296,875
---------------------------------------------------------------------------------------------------------------
Richfood Holdings, Inc. 125,000 4,750,000
---------------------------------------------------------------------------------------------------------------
Safeway, Inc.(1) 240,000 8,700,000
-----------
25,089,525
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Drugs--4.4%
Amgen, Inc.(1) 50,000 2,912,500
---------------------------------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 60,000 5,265,000
---------------------------------------------------------------------------------------------------------------
Johnson & Johnson 74,526 3,670,405
---------------------------------------------------------------------------------------------------------------
Pfizer, Inc. 150,000 10,650,000
---------------------------------------------------------------------------------------------------------------
Schering-Plough Corp. 150,000 8,381,250
---------------------------------------------------------------------------------------------------------------
Warner-Lambert Co. 80,000 4,760,000
-----------
35,639,155
- -----------------------------------------------------------------------------------------------------------------------------------
Healthcare/Supplies &
Services--6.0%
Apache Medical Systems, Inc.(1) 80,000 1,030,000
---------------------------------------------------------------------------------------------------------------
Boston Scientific Corp.(1) 120,000 5,505,000
---------------------------------------------------------------------------------------------------------------
Gulf South Medical Supply, Inc.(1) 140,000 3,045,000
---------------------------------------------------------------------------------------------------------------
HealthCare COMPARE Corp.(1) 139,100 5,946,525
---------------------------------------------------------------------------------------------------------------
HEALTHSOUTH Corp.(1) 100,000 3,237,500
---------------------------------------------------------------------------------------------------------------
Henry Schein, Inc.(1) 99,500 3,308,375
---------------------------------------------------------------------------------------------------------------
Lincare Holdings, Inc.(1) 105,000 3,917,812
---------------------------------------------------------------------------------------------------------------
Medtronic, Inc. 95,000 4,940,000
<PAGE>
---------------------------------------------------------------------------------------------------------------
Nellcor Puritan Bennett, Inc.(1) 180,000 4,635,000
---------------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc.(1) 125,000 5,718,750
---------------------------------------------------------------------------------------------------------------
Sofamor Danek Group, Inc.(1) 70,000 2,012,500
---------------------------------------------------------------------------------------------------------------
Ventana Medical Systems, Inc.(1) 50,000 750,000
---------------------------------------------------------------------------------------------------------------
Ventritex, Inc.(1) 130,000 1,771,250
---------------------------------------------------------------------------------------------------------------
VISX, Inc.(1) 125,200 2,425,750
-----------
48,243,462
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Household Goods--0.4%
Procter & Gamble Co. 35,000 $ 3,110,625
- -----------------------------------------------------------------------------------------------------------------------------------
Tobacco--1.0%
Philip Morris Cos., Inc. 30,000 2,692,500
---------------------------------------------------------------------------------------------------------------
UST, Inc. 185,000 5,550,000
-----------
8,242,500
- -----------------------------------------------------------------------------------------------------------------------------------
Energy--3.2%
- -----------------------------------------------------------------------------------------------------------------------------------
Energy Services &
Producers--1.7%
Global Marine, Inc.(1) 140,000 2,012,500
---------------------------------------------------------------------------------------------------------------
Sonat Offshore Drilling, Inc. 105,000 5,735,625
---------------------------------------------------------------------------------------------------------------
Tidewater, Inc. 145,000 5,564,375
-----------
13,312,500
- -----------------------------------------------------------------------------------------------------------------------------------
Oil-Integrated--1.5%
Mobil Corp. 60,000 6,765,000
---------------------------------------------------------------------------------------------------------------
Phillips Petroleum Co. 130,000 5,265,000
-----------
12,030,000
- -----------------------------------------------------------------------------------------------------------------------------------
Financial--16.4%
- -----------------------------------------------------------------------------------------------------------------------------------
Banks--3.2%
Bank of Boston Corp. 125,000 6,593,750
---------------------------------------------------------------------------------------------------------------
BankAmerica Corp. 42,000 3,255,000
---------------------------------------------------------------------------------------------------------------
Chase Manhattan Corp. (New) 14,000 1,041,250
---------------------------------------------------------------------------------------------------------------
NationsBank Corp. 90,000 7,661,250
---------------------------------------------------------------------------------------------------------------
SouthTrust Corp. 50,000 1,475,000
---------------------------------------------------------------------------------------------------------------
State Street Boston Corp. 87,400 4,730,525
---------------------------------------------------------------------------------------------------------------
Wells Fargo & Co. 5,000 1,243,750
-----------
26,000,525
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Financial--10.7%
Advanta Corp., Cl. A 175,000 8,553,125
---------------------------------------------------------------------------------------------------------------
Associates First Capital Corp., Cl. A 124,000 4,898,000
---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. 60,000 5,302,500
---------------------------------------------------------------------------------------------------------------
<PAGE>
Federal National Mortgage Assn. 100,000 3,100,000
---------------------------------------------------------------------------------------------------------------
Finova Group, Inc. 75,000 4,125,000
---------------------------------------------------------------------------------------------------------------
First USA, Inc. 190,000 10,070,000
---------------------------------------------------------------------------------------------------------------
Franklin Resources, Inc. 120,000 7,140,000
---------------------------------------------------------------------------------------------------------------
Green Tree Financial Corp. 430,000 14,942,500
---------------------------------------------------------------------------------------------------------------
Morgan Stanley Group, Inc. 30,000 1,432,500
---------------------------------------------------------------------------------------------------------------
Price (T. Rowe) Associates 196,200 5,689,800
---------------------------------------------------------------------------------------------------------------
Salomon, Inc. 125,000 5,625,000
---------------------------------------------------------------------------------------------------------------
Schwab (Charles) Corp. (New) 150,000 3,750,000
---------------------------------------------------------------------------------------------------------------
Travelers Group, Inc. 262,500 11,385,937
-----------
86,014,362
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance--2.5%
Allstate Corp. 120,000 5,355,000
---------------------------------------------------------------------------------------------------------------
Amerin Corp.(1) 15,000 341,250
---------------------------------------------------------------------------------------------------------------
MGIC Investment Corp. 70,900 4,493,287
---------------------------------------------------------------------------------------------------------------
SunAmerica, Inc. 150,000 10,218,750
-----------
20,408,287
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial--7.1%
- -----------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment--2.2%
Emerson Electric Co. 105,000 $ 8,793,750
---------------------------------------------------------------------------------------------------------------
General Electric Co. 40,000 3,325,000
---------------------------------------------------------------------------------------------------------------
Honeywell, Inc. 73,700 4,283,813
---------------------------------------------------------------------------------------------------------------
Kemet Corp.(1) 75,000 1,275,000
-----------
17,677,563
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Materials--1.2%
Centex Corp. 141,000 4,529,625
---------------------------------------------------------------------------------------------------------------
Rayonier, Inc. 132,700 5,258,238
-----------
9,787,863
- -----------------------------------------------------------------------------------------------------------------------------------
Industrial Services--1.0%
Danka Business Systems PLC, Sponsored ADR 40,000 1,165,000
---------------------------------------------------------------------------------------------------------------
DecisionOne Holdings Corp.(1) 151,200 2,532,600
---------------------------------------------------------------------------------------------------------------
Manpower, Inc. 125,000 4,453,125
-----------
8,150,725
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing--0.7%
AGCO Corp. 135,300 3,196,463
---------------------------------------------------------------------------------------------------------------
Kulicke & Soffa Industries, Inc.(1) 120,000 1,185,000
---------------------------------------------------------------------------------------------------------------
U.S. Filter Corp.(1) 60,000 1,567,500
-----------
5,948,963
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Transportation--2.0%
Burlington Northern Santa Fe Corp. 42,000 3,360,000
---------------------------------------------------------------------------------------------------------------
Canadian Pacific Ltd. (New) 370,000 8,325,000
---------------------------------------------------------------------------------------------------------------
Illinois Central Corp. 132,150 3,997,538
-----------
15,682,538
- -----------------------------------------------------------------------------------------------------------------------------------
Technology--25.6%
- -----------------------------------------------------------------------------------------------------------------------------------
Aerospace/Defense--0.5%
Goodrich (B.F.) Co. 114,000 4,275,000
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Hardware--4.0%
Adaptec, Inc.(1) 140,000 6,982,500
---------------------------------------------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 100,000 6,100,000
---------------------------------------------------------------------------------------------------------------
EMC Corp.(1) 345,000 6,641,250
---------------------------------------------------------------------------------------------------------------
Gateway 2000, Inc.(1) 170,800 7,611,275
---------------------------------------------------------------------------------------------------------------
Seagate Technology, Inc.(1) 95,000 4,560,000
-----------
31,895,025
- -----------------------------------------------------------------------------------------------------------------------------------
Computer Software--10.4%
BMC Software, Inc.(1) 121,000 9,014,500
---------------------------------------------------------------------------------------------------------------
Business Objects SA, Sponsored ADR(1) 68,700 1,219,425
---------------------------------------------------------------------------------------------------------------
Computer Associates International, Inc. 75,000 3,937,500
---------------------------------------------------------------------------------------------------------------
First Data Corp. 217,577 16,971,006
---------------------------------------------------------------------------------------------------------------
HBO & Co. 60,000 3,277,500
---------------------------------------------------------------------------------------------------------------
Informix Corp.(1) 83,700 1,883,250
---------------------------------------------------------------------------------------------------------------
Microsoft Corp.(1) 230,000 28,175,000
---------------------------------------------------------------------------------------------------------------
Oracle Corp.(1) 358,850 12,649,463
---------------------------------------------------------------------------------------------------------------
PLATINUM Technology, Inc.(1) 180,000 1,935,000
---------------------------------------------------------------------------------------------------------------
Shiva Corp.(1) 60,000 3,030,000
---------------------------------------------------------------------------------------------------------------
Structural Dynamics Research Corp.(1) 70,000 1,767,500
-----------
83,860,144
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Investments (Continued)
Market Value
Shares See Note 1
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Electronics--4.0%
Altera Corp.(1) 60,000 $ 2,640,000
---------------------------------------------------------------------------------------------------------------
Analog Devices, Inc.(1) 115,000 2,774,375
---------------------------------------------------------------------------------------------------------------
Applied Materials, Inc.(1) 160,000 3,880,000
---------------------------------------------------------------------------------------------------------------
Arrow Electronics, Inc.(1) 50,000 2,281,250
---------------------------------------------------------------------------------------------------------------
Intel Corp. 130,000 10,375,625
---------------------------------------------------------------------------------------------------------------
LSI Logic Corp.(1) 195,000 4,265,625
---------------------------------------------------------------------------------------------------------------
Motorola, Inc. 40,000 2,135,000
---------------------------------------------------------------------------------------------------------------
Novellus Systems, Inc.(1) 90,800 3,427,700
---------------------------------------------------------------------------------------------------------------
Teradyne, Inc.(1) 30,000 465,000
------------
32,244,575
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Telecommunications-
Technology--6.7%
3Com Corp.(1) 95,000 4,441,250
---------------------------------------------------------------------------------------------------------------
Andrew Corp.(1) 100,000 4,450,000
---------------------------------------------------------------------------------------------------------------
Ascend Communications, Inc.(1) 130,000 6,808,750
---------------------------------------------------------------------------------------------------------------
Cisco Systems, Inc.(1) 230,000 12,132,500
---------------------------------------------------------------------------------------------------------------
Hong Kong Telecommunications Ltd., Sponsored ADR 112,997 1,906,824
---------------------------------------------------------------------------------------------------------------
L.M. Ericsson Telephone Co., Cl. B, ADR 250,000 5,765,625
---------------------------------------------------------------------------------------------------------------
Newbridge Networks Corp.(1) 120,000 6,915,000
---------------------------------------------------------------------------------------------------------------
Telecom Corp. of New Zealand Ltd., Sponsored ADR 30,000 2,295,000
---------------------------------------------------------------------------------------------------------------
Tellabs, Inc.(1) 140,000 8,872,500
------------
53,587,449
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities--1.0%
- -----------------------------------------------------------------------------------------------------------------------------------
Electric Utilities--0.3%
Empresa Nacional de Electricidad SA, Sponsored ADR 45,000 2,643,750
- -----------------------------------------------------------------------------------------------------------------------------------
Telephone Utilities--0.7%
Cincinnati Bell, Inc. 70,000 3,342,500
---------------------------------------------------------------------------------------------------------------
Telefonica del Peru SA, ADR 90,000 2,103,750
------------
5,446,250
------------
Total Common Stocks (Cost $515,551,917) 703,218,653
Units
===================================================================================================================================
Rights, Warrants and Certificates--0.0%
Windmere-Durable Holdings, Inc. Wts., Exp. 1/98 (Cost $0) 7,094 --
Face
Amount
===================================================================================================================================
Repurchase Agreement--12.6%
Repurchase agreement with Zion First National Bank, 5.25%,
dated 8/30/96, to be repurchased at $101,559,208 on 9/3/96,
collateralized by U.S. Treasury Nts., 5.625%--7.375%,
8/31/97--8/15/03, with a value of $103,601,036 (Cost
$101,500,000) $101,500,000 101,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $618,775,667) 100.3% 806,699,153
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (0.3) (2,392,712)
----- ------------
Net Assets 100.0% $804,306,441
===== ============
</TABLE>
1. Non-income producing security.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Statement of Assets and Liabilities August 31, 1996
===================================================================================================================================
<S> <C> <C>
Assets Investments, at value (including repurchase agreement of $101,500,000)
(cost $618,775,667)--see accompanying statement $806,699,153
---------------------------------------------------------------------------------------------------------------
Cash 76,159
---------------------------------------------------------------------------------------------------------------
Receivables:
Investments sold 9,019,051
Interest and dividends 543,820
Shares of beneficial interest sold 340,531
---------------------------------------------------------------------------------------------------------------
Other 141,517
------------
<PAGE>
Total assets 816,820,231
============
===================================================================================================================================
Liabilities Payables and other liabilities:
Investments purchased 10,264,958
Shares of beneficial interest redeemed 1,541,681
Trustees' fees 248,886
Distribution and service plan fees 220,067
Dividends 32,466
Transfer and shareholder servicing agent fees 31,152
Other 174,580
------------
Total liabilities 12,513,790
===================================================================================================================================
Net Assets $804,306,441
============
===================================================================================================================================
Composition of Paid-in capital $533,332,192
Net Assets ---------------------------------------------------------------------------------------------------------------
Undistributed net investment income 2,693,760
---------------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investment transactions 80,357,003
---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments--Note 3 187,923,486
------------
Net assets $804,306,441
============
===================================================================================================================================
Net Asset Value Class A Shares:
Per Share Net asset value and redemption price per share (based on net assets of
$788,504,058 and 25,596,271 shares of beneficial interest outstanding) $30.81
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $32.69
----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $5,447,519 and 178,275 shares of beneficial interest outstanding) $30.56
----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $10,354,864 and 342,134 shares of beneficial interest outstanding) $30.27
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of Operations
Eight Months
Ended Year Ended
August 31, December 31
1996(1) 1995
===================================================================================================================================
<S> <C> <C> <C>
Investment Income Interest $ 4,345,256 $ 6,740,731
---------------------------------------------------------------------------------------------------------------
Dividends 4,506,648 4,701,943
Foreign withholding taxes (74,006) (22,014)
----------- ------------
Total income 8,777,898 11,420,660
===================================================================================================================================
Expenses Management fees--Note 4 3,767,997 3,882,505
---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 861,250 839,340
Class B 28,544 1,030
Class C 60,358 37,800
---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 659,037 568,898
---------------------------------------------------------------------------------------------------------------
Shareholder reports 204,395 132,075
---------------------------------------------------------------------------------------------------------------
Registration and filing fees:
Class A 93,600 318
<PAGE>
Class B 854 931
Class C 959 1,864
---------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses--Note 1 89,928 202
---------------------------------------------------------------------------------------------------------------
Legal and auditing fees 73,634 67,500
---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 28,604 41,449
---------------------------------------------------------------------------------------------------------------
Insurance expenses 3,367 23,612
---------------------------------------------------------------------------------------------------------------
Other 43,033 19,830
----------- ------------
Total expenses 5,915,560 5,617,354
===================================================================================================================================
Net Investment Income 2,862,338 5,803,306
===================================================================================================================================
Realized and Unrealized Gain
Net realized gain on investments 75,873,404 71,199,990
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments 11,279,147 58,150,018
----------- ------------
Net realized and unrealized gain 87,152,551 129,350,008
===================================================================================================================================
Net Increase in Net Assets Resulting From Operations $90,014,889 $135,153,314
=========== ============
</TABLE>
1. The Fund changed its fiscal year end from December 31 to
August 31.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Eight Months
Ended
August 31, Year Ended December 31,
1996(1) 1995 1994
===================================================================================================================================
<S> <C> <C> <C> <C>
Operations Net investment income $ 2,862,338 $ 5,803,306 $ 2,339,881
---------------------------------------------------------------------------------------------------------------
Net realized gain 75,873,404 71,199,990 38,815,275
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation 11,279,147 58,150,018 (40,560,449)
----------- ------------ -------------
Net increase in net assets resulting from operations 90,014,889 135,153,314 594,707
===================================================================================================================================
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 (58,800,845) 397,611,091 (30,283,681)
Class B 2,415,163 2,840,388 --
Class C 2,250,436 5,989,404 1,154,378
===================================================================================================================================
Net Assets Total increase (decrease) 35,879,643 465,662,574 (66,049,830)
---------------------------------------------------------------------------------------------------------------
Beginning of period 768,426,798 302,764,224 368,814,054
----------- ----------- ------------
<PAGE>
End of period [including undistributed (overdistributed)
net investment income of $2,693,760, $(168,578) and
$(69,749), respectively] $804,306,441 $768,426,798 $302,764,224
============ ============ ============
</TABLE>
1. The Fund changed its fiscal year end from December 31 to
August 31.
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
Class A
----------------------------------------------------------------------------------
Eight Months
Ended
August 31, Year Ended December 31,
1996(3) 1995 1994 1993 1992 1991(2)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $27.44 $22.63 $25.72 $25.25 $23.76 $17.47
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .11 .24 .20 .13 .16 .27
Net realized and unrealized gain (loss) 3.26 7.61 (.11) .86 2.28 6.87
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations 3.37 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 $30.81 $27.44 $22.63 $25.72 $25.25 $23.76
====== ====== ====== ====== ====== ======
====================================================================================================================================
Total Return, at Net Asset Value(6) 12.28% 34.85% 0.46% 3.93% 10.27% 41.33%
====================================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $788,504 $758,439 $301,698 $368,806 $401,256 $369,351
- ------------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $789,903 $538,210 $325,003 $383,875 $362,295 $209,596
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) 0.55%(7) 1.08% 0.72% 0.47% 0.69% 1.25%
Expenses 1.09%(7) 1.03% 1.16% 1.07% 1.09% 1.17%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 45.2% 71.9% 34.7% 22.9% 42.3% 65.6%
- ------------------------------------------------------------------------------------------------------------------------------------
Average brokerage commission rate(9) $0.0595 $0.0578 -- -- -- --
<CAPTION>
Class B Class C
------------------------- -------------------------------------------
Eight Months Period Eight Months
Ended Ended Ended
August 31, December 31, August 31, Year Ended December 31,
1996(3) 1995(4) 1996(3) 1995 1994(2) 1993(1)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value, beginning of period $27.37 $29.77 $27.11 $22.50 $25.72 $25.92
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) --(5) (.14) (.03) .09 -- (.01)
Net realized and unrealized gain (loss) 3.19 .78 3.19 7.43 (.15) .31
------ ------ ------ ------ ------ ------
Total income (loss) from investment
operations 3.19 .64 3.16 7.52 (.15) .30
<PAGE>
- -------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income -- (.24) -- (.11) (.09) (.10)
Distributions from net realized gain -- (2.80) -- (2.80) (2.98) (.40)
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders -- (3.04) -- (2.91) (3.07) (.50)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $30.56 $27.37 $30.27 $27.11 $22.50 $25.72
====== ====== ====== ====== ====== ======
=========================================================================================================================
Total Return, at Net Asset Value(6) 11.65% 1.67% 11.66% 33.56% (0.50)% 2.11%
=========================================================================================================================
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $5,448 $2,751 $10,355 $7,237 $1,066 $8
- -------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,285 $661 $9,053 $3,792 $467 $6
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) (0.25)%(7) (0.54)%(7) (0.30)%(7) 0.19% (0.02)% (0.07)%(7)
Expenses 1.94%(7) 2.62%(7) 1.93%(7) 1.90% 2.18% 2.18%(7)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(8) 45.2% 71.9% 45.2% 71.9% 34.7% 22.9%
- -------------------------------------------------------------------------------------------------------------------------
Average brokerage commission rate(9) $0.0595 $0.0578 $0.0595 $0.0578 -- --
</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. The Fund changed its fiscal year end from December 31 to August 31.
4. For the period from November 1, 1995 (inception of offering) to December 31,
1995.
5. Less than $0.005 per share.
6. Assumes a hypothetical initial investment on the business day before the
first day of the fiscal period (or inception of offering), with all dividends
and distributions reinvested in additional shares on the reinvestment date, and
redemption at the net asset value calculated on the last business day of the
fiscal period. Sales charges are not reflected in the total returns. Total
returns are not annualized for periods of less than one full year.
7. Annualized.
8. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended August 31, 1996 were $309,153,341 and $317,132,673, respectively.
9. Total brokerage commissions paid on applicable purchases and sales of
portfolio securities for the period divided by the total number of related
shares purchased and sold.
See accompanying Notes to Financial Statements.
<PAGE>
<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. On August 15, 1996, the Board of Trustees elected to change the fiscal
year end of the Fund from December 31 to August 31. Accordingly, these financial
statements include information for the eight month period from January 1, 1996
to August 31, 1996. The Fund's investment objective is to seek capital
appreciation, primarily through investment in equity securities. The Fund's
investment adviser 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. Class
B shares will automatically convert to Class A shares six years after the date
of purchase. The following is a summary of significant accounting policies
consistently followed by the Fund.
- --------------------------------------------------------------------------------
Investment Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the clo sing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by 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.
- --------------------------------------------------------------------------------
<PAGE>
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 eight months
ended August 31, 1996, a provision of $26,931 was made for the Fund's projected
benefit obligations, and payments of $9,705 were made to retired trustees,
resulting in an accumulated liability of $239,137 at August 31, 1996.
- --------------------------------------------------------------------------------
Distributions to Shareholders. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of the distributions made during the year from net
investment income or net realized gains may differ from the 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.
<PAGE>
================================================================================
1. Significant Accounting
Policies (continued)
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
<PAGE>
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>
Eight Months Ended Year Ended Year Ended
August 31, 1996(2) December 31, 1995(1) December 31, 1994
--------------------------- --------------------------- ---------------------------
Shares Amount Shares Amount Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A:
Sold 2,809,568 $ 83,949,691 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 (4,852,702) (142,750,536) (2,909,180) (80,154,348) (3,693,115) (93,884,370)
---------- ------------- ---------- ------------ ---------- ------------
Net increase (decrease) (2,043,134) $ (58,800,845) 14,308,528 $397,611,091 (1,008,526) $(30,283,681)
========== ============= ========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------------------------
Class B:
Sold 358,325 $ 10,711,635 107,562 $ 3,071,314 -- $ --
Dividends and distributions
reinvested -- -- 3,988 107,888 -- --
Redeemed (280,568) (8,296,472) (11,032) (338,814) -- --
---------- ------------- ---------- ------------ ---------- ------------
Net increase 77,757 $ 2,415,163 100,518 $ 2,840,388 -- $ --
========== ============= ========== ============ ========== ============
- -----------------------------------------------------------------------------------------------------------------------------------
Class C:
Sold 152,465 $ 4,501,923 257,084 $ 7,022,376 65,435 $ 1,619,304
Dividends and distributions
reinvested -- -- 22,545 604,205 4,518 100,882
Redeemed (77,259) (2,251,487) (60,076) (1,637,177) (22,893) (565,808)
---------- ------------- ---------- ------------ ---------- -------------
Net increase 75,206 $ 2,250,436 219,553 $ 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.
2. The Fund changed its fiscal year end from December 31 to August 31.
================================================================================
3. Unrealized Gains and
Losses on Investments
At August 31, 1996, net unrealized appreciation on investments of $187,923,486
was composed of gross appreciation of $206,379,596, and gross depreciation of
$18,456,110.
<PAGE>
<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 0.75% on the first
$200 million of average annual net assets, 0.72% on the next $200 million, 0.69%
on the next $200 million, 0.66% on the next $200 million and 0.60% on net assets
in excess of $800 million. The Manager has voluntarily undertaken to waive a
portion of its management fee, whereby the Fund shall pay an annual management
fee of 0.58% of its net assets in excess of $1.5 billion. The Manager has agreed
to reimburse the Fund if aggregate expenses (with specified exceptions) exceed
the most stringent applicable regulatory limit on Fund expenses.
For the eight months ended August 31, 1996, commissions (sales charges paid
by investors) on sales of Class A shares totaled $609,225, of which $193,794 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 $126,984 and $29,748, of which $7,913 was paid to an
affiliated broker/dealer for Class B. During the eight months ended August 31,
1996, OFDI received contingent deferred sales charges of $1,559 and $2,184,
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.
The Fund has adopted a Service Plan for Class A shares to reimburse OFDI
for a portion of its costs incurred in connection with the personal service and
maintenance of accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate that may not exceed 0.25% of the average annual net
assets of Class A shares of the Fund. OFDI uses the service fee to reimburse
brokers, dealers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. During the eight months ended August 31, 1996, OFDI paid $38,347 to an
affiliated broker/dealer as reimbursement for Class A personal service and
maintenance expenses.
The Fund has adopted a compensation type Distribution and Service Plan for
Class B shares to compensate OFDI for its services and costs in distributing
Class B shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class B shares that are
outstanding for 6 years or less. OFDI also receives a service fee of 0.25% per
year to compensate dealers for providing personal services for accounts that
hold Class B shares. Both fees are computed on the average annual net assets of
Class B shares, determined as of the close of each regular business day. If the
Plan is terminated by the Fund, the Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to OFDI for certain expenses
it incurred before the Plan was terminated. During the eight months ended August
<PAGE>
31, 1996, OFDI retained $25,624 as compensation for Class B sales commissions
and service fee advances, as well as financing costs. As of August 31, 1996,
OFDI had incurred unreimbursed expenses of $140,499 for Class B.
The Fund has adopted a reimbursement type Distribution and Service Plan for
Class C shares to reimburse OFDI for its services and costs in distributing
Class C shares and servicing accounts. Under the Plan, the Fund pays OFDI an
annual asset-based sales charge of 0.75% per year on Class C shares. OFDI also
receives a service fee of 0.25% per year to reimburse dealers for providing
personal services for accounts that hold Class C shares. Both fees are computed
on the average annual net assets of Class C shares, determined as of the close
of each regular business day. If the Plan is terminated by the Fund, the Board
of Trustees may allow the Fund to continue payments of the asset-based sales
charge to OFDI for certain expenses it incurred before the Plan was terminated.
During the eight months ended August 31, 1996, OFDI retained $31,545 as
reimbursement for Class C sales commissions and service fee advances, as well as
financing costs. As of August 31, 1996, OFDI had incurred unreimbursed expenses
of $125,540 for Class C.
================================================================================
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: [Corporate] Industry Classifications
Aerospace/Defense Air Transportation Auto Parts Distribution Automotive Bank
Holding Companies Banks Beverages Broadcasting Broker-Dealers Building Materials
Cable Television Chemicals Commercial Finance Computer Hardware Computer
Software Conglomerates Consumer Finance Containers Convenience Stores Department
Stores Diversified Financial Diversified Media Drug Stores Drug Wholesalers
Durable Household Goods Education Electric Utilities Electrical Equipment
Electronics Energy Services & Producers Entertainment/Film Environmental
Food
Gas
Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services Homebuilders/Real Estate Hotel/Gaming Industrial
Services 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
A-1
<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
[320]
<PAGE>
OPPENHEIMER CAPITAL APPRECIATION 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 8/31/96 (audited) - See Part B: Filed
herewith.
4. Statement of Assets and Liabilities: at 8/31/96 (audited) - (See Part B)
- - See Part B: Filed herewith.
5. Statement of Operations: at 8/31/96 (audited) - See Part B: Filed
herewith.
6. Statements of Changes in Net Assets for the years ended 12/31/94 and
12/31/95 and the eight months ended 8/31/96 (audited) - 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 December 18, 1996:
Filed herewith.
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 herewith.
(ii) Specimen Share Certificate for Class B shares of Oppenheimer Target
Fund: Filed herewith.
(iii) Specimen Share Certificate for Class C shares of Oppenheimer Target
Fund: Filed herewith.
5. (i) 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.
(ii) Amendment dated December 18, 1996 to Investment Advisory Agreement:
Filed herewith.
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.
C-2
<PAGE>
(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
C-3
<PAGE>
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 8/31/96: Filed herewith.
C-4
<PAGE>
(ii) Class B shares at 8/31/96. Filed herewith.
(iii) Class C shares at 8/31/96: Filed herewith.
-- Powers of Attorney (including certified resolutions of Registrant's
Board of Trustees): Previously filed with Post-Effective Amendment No. 34,
4/17/96, and incorporated herein by reference (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 as of
Title of Class November 22, 1996
- -------------- -----------------
Class A Shares of Beneficial Interest 59,912
Class B Shares of Beneficial Interest 1,293
Class C Shares of Beneficial Interest 1,160
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
C-5
<PAGE>
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
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of the Registrant; it
and certain subsidiaries and affiliates act in the same capacity to other
registered investment companies as described in Parts A and B hereof and listed
in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each officer
and director of OppenheimerFunds, Inc. is, or at any time during the past two
fiscal years has been, engaged for his/her own account or in the capacity of
director, officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name & Current Position Other Business and Connections
with OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- ------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset Management, Inc. ("ORAMI");
formerly Vice President of Equity
Derivatives at Salomon Brothers,
Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio
manager of certain Oppenheimer funds; a
Chartered Financial Analyst;
Senior
C-6
<PAGE>
Vice President of HarbourView;
prior
to March, 1996 he was the senior
equity portfolio manager for the
Panorama Series Fund, Inc. (the
"Company") and other mutual funds
and pension funds managed by G.R.
Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance
Company; was also responsible for
managing the common stock
department
and common stock investments of
Connecticut Mutual Life Insurance
Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds;
formerly a Vice President and
Senior
Portfolio Manager at First of
America Investment Corp.
Ellen Batt,
Assistant Vice President None
Kathleen Beichert,
Assistant Vice President Formerly employed by Smith Barney,
Inc.
David Bernard,
Vice President Previously a Regional Sales
Director
for Retirement Plan Services at
Charles Schwab & Co., Inc.
Robert J. Bishop,
Vice President Assistant Treasurer of the
Oppenheimer funds (listed below);
previously a Fund Controller for
C-7
<PAGE>
OppenheimerFunds, Inc. (the
"Manager").
George Bowen, Senior Vice
President & Treasurer Treasurer of the New York-based
Oppenheimer funds; Vice President,
Assistant 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 agent
subsidiaries of the Manager;
Director, Treasurer and Chief
Executive Officer of MultiSource
Services, Inc.; Vice President and
Treasurer of Oppenheimer Real
Asset
Management, Inc.; President,
Treasurer and Director of
Centennial
Capital Corporation; Vice
President
and Treasurer of Main Street
Advisers.
Scott Brooks,
Assistant Vice President None.
Susan Burton,
Assistant Vice President Previously a Director of
Educational
Services for H.D. Vest Investment
Securities, Inc.
C-8
<PAGE>
Michael A. Carbuto,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds; Vice
President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
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
and Director An officer and/or portfolio
manager
of certain Oppenheimer funds.
John Doney, Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and
Director Secretary of the New York-based
Oppenheimer funds; Vice President
and Secretary of the Denver-based
Oppenheimer funds; Secretary of
the
Oppenheimer Quest and Oppenheimer
Rochester funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a Director of
Centennial; Chief Legal Officer
and
a Director of MultiSource
Services,
Inc.; President and a Director of
Oppenheimer Real Asset Management,
Inc.; Executive Vice President,
General Counsel and Director of
SFSI
and SSI; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
C-9
<PAGE>
Distributor.
George Evans,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Scott Farrar,
Vice President Assistant Treasurer of the New
York-
based and Denver-based Oppenheimer
funds.
Katherine P. Feld,
Vice President & Secretary Vice President and Secretary of
OppenheimerFunds Distributor,
Inc.;
Secretary of HarbourView Asset
Management Corporation,
MultiSource
Services, Inc. and Centennial
Asset
Management Corporation; Secretary,
Vice President and Director of
Centennial Capital Corporation;
Vice
President and Secretary of ORAMI.
Ronald H. Fielding, Senior
Vice President; Chairman:
Rochester Division An officer, Director and/or
portfolio manager of certain
Oppenheimer funds. Formerly
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"), Managing Partner of
Rochester Capital Advisors, L.P.,
President and Director of
Rochester
Fund Services, Inc. ("RFS"),
President and Director of
Rochester
Tax Managed Fund, Inc.
John Fortuna,
Vice President None.
C-10
<PAGE>
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of certain
Oppenheimer funds; Secretary and
General Counsel of Rochester
Capital
Advisors, L.P. and Secretary of
Rochester Tax Managed Fund, Inc.
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: Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer
of other Oppenheimer Funds.
Linda Gardner,
Assistant Vice President None.
Janelle Gellermann,
Assistant Vice President None.
Jill Glazerman, None.
Assistant Vice President
Ginger Gonzalez,
Vice President, Director of
Marketing Communications Formerly 1st Vice President /
Director of Graphic and Print
Communications for Shearson Lehman
Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Caryn Halbrecht,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
C-11
<PAGE>
Barbara Hennigar,
Executive Vice President
and President and Chief
Executive Officer of
OppenheimerFunds Services,
a division of the Manager President and Director of SFSI;
President and Chief Executive
Officer of SSI.
Dorothy Hirshman,
Assistant Vice President None.
Alan Hoden, Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Ronald Jamison,
Vice President Formerly Vice President and
Associate General Counsel at
Prudential Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Vice President Formerly Senior Managing Director
of
Van Eck Global.
C-12
<PAGE>
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Formerly a Securities Analyst for
Columbus Circle Investors.
Michael Levine,
Assistant Vice President None.
Stephen F. Libera,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a
Vice
President of HarbourView; prior to
March, 1996 he was the senior bond
portfolio manager for Panorama
Series Fund, Inc., other mutual
funds and pension accounts managed
by G.R. Phelps; was also
responsible
for managing the public
fixed-income
securities department at
Connecticut
Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Executive Vice President None.
Bridget Macaskill,
President, Chief
Executive Officer
and Director President, Director and Trustee of
the New York-based and the Denver-
based Oppenheimer funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of ORAMI;
Chairman and Director of SSI; a
Director of Oppenheimer Real Asset
Management, Inc.
C-13
<PAGE>
Timothy Martin,
Assistant Vice President Formerly Vice President, Mortgage
Trading, at S.N. Phelps & Co.,
Salomon Brothers, and Kidder
Peabody.
Sally Marzouk,
Vice President None.
Lisa Migan,
Assistant Vice President None.
Robert J. Milnamow,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Formerly a Portfolio Manager with
Phoenix Securities Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly a Vice President with
Cohane Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President Chairman and Director of the
Distributor.
C-14
<PAGE>
Jane Putnam,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Formerly Senior Investment Officer
and Portfolio Manager with
Chemical
Bank.
Russell Read,
Vice President Consultant for Prudential
Insurance
on behalf of the General Motors
Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Formerly a Securities Analyst for
the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen, Vice
President; President:
Rochester Division An officer and/or portfolio
manager
of certain Oppenheimer funds.
Formerly 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, an officer
and/or portfolio manager of
certain
Oppenheimer funds.
David Rosenberg,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds;
formerly Vice President and
C-15
<PAGE>
Portfolio Manager/Security Analyst
for Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly Vice President of
Citicorp
Investment Services.
Diane Sobin,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds;
formerly a Vice President and
Senior
Portfolio Manager for Dean Witter
InterCapital, Inc.
Richard A. Soper, None.
Assistant Vice President
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus Vice Chairman and Trustee of the
New
York-based Oppenheimer Funds;
formerly Chairman of the Manager
and
the Distributor.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
C-16
<PAGE>
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
John Stoma, Senior Vice
President, Director
Retirement Plans Formerly Vice President of U.S.
Group Pension Strategy and
Marketing
for Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a
Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension accounts managed
by G.R. Phelps.
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.
C-17
<PAGE>
Gary Tyc, Vice
President, Assistant
Secretary and
Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds.
Jerry A. Webman,
Senior Vice President Director of New York-based tax-
exempt fixed income Oppenheimer
funds; Formerly Managing Director
and Chief Fixed Income Strategist
at
Prudential Mutual Funds.
Christine Wells,
Vice President None.
Kenneth B. White,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Vice
President of HarbourView; prior to
March, 1996 he was an equity
portfolio manager for Panorama
Series Fund, Inc. and other mutual
funds and pension funds managed by
G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds; Vice
President of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds; Vice
President of Centennial; Vice
President, Finance and Accounting
C-18
<PAGE>
and member of the Board of
Directors
of the Junior League of Denver,
Inc.
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.
Arthur J. Zimmer,
Vice President An officer and/or portfolio
manager
of certain Oppenheimer funds; Vice
President of Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer Funds, the
Denver-based Oppenheimer Funds, and the Rochester-based Oppenheimer Funds, set
forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Municipal 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-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Series Fund, Inc.
Oppenheimer Capital Appreciation Fund (formerly
named "Oppenheimer Target Fund")
Oppenheimer Municipal Bond Fund
Oppenheimer U.S. Government Trust
C-19
<PAGE>
Oppenheimer World Bond Fund (formerly
named "Oppenheimer Multi-Government Trust")
Oppenheimer Developing Markets Fund
Denver-based Oppenheimer Funds
- ------------------------------
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.
Oppenheimer Cash Reserves
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 Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Rochester-based Oppenheimer Funds
- ---------------------------------
Bond Fund Series - Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
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., Oppenheimer
Real Asset Management, Inc.,
C-20
<PAGE>
MultiSource Services, Inc. and Oppenheimer Real Asset Management, 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:
<TABLE>
<CAPTION>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
<S> <C> <C>
George Clarence Bowen+ Vice President Vice President and
Treasurer of the New
York-based Oppenheimer
funds/Vice President,
Secretary and
Treasurer
of the Denver-based
Oppenheimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce* Senior Vice None
President -
Director, Financial
Institution Div.
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
C-21
<PAGE>
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
3425-1/2 Irving Avenue So.
Minneapolis, MN 55408
Mary Crooks+ Senior Vice None
President
E. Drew Devereaux ++ Assistant None
Vice President
Andrew John Donohue* Executive Vice Secretary of the New
President, General York-based Oppenheimer
Counsel and Director funds/Vice President
of
the Denver-based
Oppenheimer 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 None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President; None
Chairman: Rochester
Division
Reed F. Finley Vice President - None
320 E. Maple, Ste. 254 Financial
Birmingham, MI 48009 Institution Div.
Wendy Fishler* Vice President - None
Financial
Institution Div.
C-22
<PAGE>
Ronald R. Foster Senior Vice None
139 Avant Lane President
Cincinnati, OH 45249
Patricia Gadecki Vice President None
3906 Americana Drive
Tampa, FL 3334
Luiggino Galletto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial
Dallas, TX 75209 Institution Div.
Ralph Grant* Vice President/ None
National Sales
Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Ilene Kutno* Vice President - None
Director -
Regional Sales
Wayne A. LeBlang Senior Vice None
23 Fox Trail President - Director
Lincolnshire, IL 60069 Eastern Division
Dawn Lind Vice President - None
7 Maize Court Financial Institution
Melville, NY 11747 Division
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
C-23
<PAGE>
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Laura Mulhall* Senior Vice None
President - Director
of Key Accounts
Timothy G. Mulligan++ Vice President None
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Wendy Murray Vice President None
114-B Larchmont Acres W.
Larchmont, NY 10538
Joseph Norton Vice President None
2518 Fillmore Street
Apt. 1
San Francisco, CA 94115
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
Charlotte, NC 28226 Division
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
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III* Chairman Non
& Director
Elaine Puleo* Vice President - None
Financial Institution
C-24
<PAGE>
Div., Director -
Key Accounts
Minnie Ra Vice President - None
0895 Thirty-First Ave. Financial Institution
Apt. 4 Division
San Francisco, CA 94121
Michael Raso Vice President None
30 Hommocks Road
Apt. 30
Larchmont, NY 10538
John C. Reinhardt ++ Vice President None
Ian Robertson Vice President None
4204 Summit Way
Marietta, GA 30066
Michael S. Rosen++ Vice President, None
President: Rochester
Division
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. 3D
Indianapolis, IN 46240
James Ruff* President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 20007
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
3114 Hickory Run
Sugarland, TX 77479
Robert Shore Vice President - None
26 Baroness Lane Financial Institution
Laguna Niguel, CA 92677 Division
Peggy Spilker ++ Vice President None
C-25
<PAGE>
Michael Stenger Vice President None
8572 Saint Ives Place
Cincinnati, OH 45255
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
#304 Division
Aurora, CO 80112
Philip Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807 (the "Rochester
Division")
</TABLE>
(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 OppenheimerFunds, Inc. at
its offices at 3410 South Galena Street, Denver, Colorado 80231.
Item 31. Management Services
- -------- -------------------
Not applicable.
C-26
<PAGE>
Item 32. Undertakings
- -------- ------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and State of New York on the 17th day of
December, 1996.
OPPENHEIMER CAPITAL APPRECIATION 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:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Leon Levy* Chairman of the December 17, 996
- -------------- Board of Trustees
Leon Levy
/s/ Bridget A. Macaskill* President (Principal December 17, 996
- ------------------------ Executive Officer)
Bridget A. Macaskill and Trustee
/s/ Donald W. Spiro* Trustee December 17, 1996
- --------------------
Donald W. Spiro
/s/ George Bowen* Treasurer and December 17, 1996
- ----------------- Principal Financial
George Bowen and Accounting
Officer
/s/ Robert G. Galli* Trustee December 17, 1996
- --------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee December 17, 1996
- ----------------------
Benjamin Lipstein
/s/ Kenneth A. Randall* Trustee December 17, 1996
- -----------------------
Kenneth A. Randall
<PAGE>
/s/ Sidney M. Robbins* Trustee December 17, 1996
- ----------------------
Sidney M. Robbins
/s/ Russell S. Reynolds, Jr.* Trustee December 17, 1996
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee December 17, 1996
- --------------------
Pauline Trigere
/s/ Elizabeth B. Moynihan* Trustee December 17, 1996
- --------------------------
Elizabeth B. Moynihan
/s/ Clayton K. Yeutter* Trustee December 17, 1996
- -----------------------
Clayton K. Yeutter
/s/ Edward V. Regan* Trustee December 17, 1996
- --------------------
Edward V. Regan
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
</TABLE>
<PAGE>
OPPENHEIMER CAPITAL APPRECIATION FUND
Post-Effective Amendment No. 35
Registration No. 2-69719
EXHIBIT INDEX
Form N-1A
Item No. Description
- --------- -----------
24(b)(1) Amended and Restated Declaration of Trust dated
December 18, 1996
24(b)(4)(i) Specimen Share Certificate for Class A Shares
24(b)(4)(ii) Specimen Share Certificate for Class B Shares
24(b)(4)(iii) Specimen Share Certificate for Class C Shares
24(b)(5)(ii) Amendment dated December 18, 1996 to Investment
Advisory Agreement
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
8/31/96
24(b)(17)(ii) Financial Data Schedule for Class B Shares at
8/31/96
24(b)(17)(iii) Financial Data Schedule for Class C Shares at
8/31/96
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OPPENHEIMER CAPITAL APPRECIATION FUND
This AMENDED AND RESTATED DECLARATION OF TRUST, made as of December 18,
1996, by and among the individuals executing this Amended and Restated
Declaration of Trust as the Trustees.
WHEREAS, the Trustees established Oppenheimer Target Fund (the
"Trust"), a trust fund under the laws of the Commonwealth of Massachusetts for
the investment and reinvestment of funds contributed thereto under a Declaration
of Trust dated February 25, 1987, which was amended by a Restated Declaration of
Trust dated August 21, 1995;
WHEREAS, the Trustees desire to amend such Declaration of Trust, as
amended, without shareholder approval, to change the name of the Trust to
Oppenheimer Capital Appreciation Fund as permitted under paragraph (p) of
ARTICLE SEVENTH;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall henceforth be held and managed
under this Amended and Restated Declaration of Trust IN TRUST as herein set
forth below.
FIRST: Effective December 18, 1996, this Trust shall be known
as OPPENHEIMER CAPITAL APPRECIATION FUND. The address of the Trust
is Two World Trade Center, New York, New York 10048-0203. The
Registered Agent for Service in Massachusetts is Massachusetts
Mutual Life Insurance Company, 1295 State Street, Springfield,
Massachusetts 01111, Attention: Legal Department.
SECOND: Whenever used herein, unless otherwise required by
the context or specifically provided:
1. All terms used in this Declaration of Trust that are defined in the
1940 Act (defined /below) shall have the meanings given to them in the 1940 Act.
2. "Board" or "Board of Trustees" or the "Trustees" means the
Board of Trustees of the Trust.
3. "By-Laws" means the By-Laws of the Trust as amended from
-1-
<PAGE>
time to time.
4. "Class" means a class of a series of Shares (as defined
below) of the Trust established and designated under or in
accordance with the provisions of Article FOURTH.
5. "Commission" means the Securities and Exchange Commission.
6. "Declaration of Trust" means this Amended and Restated
Declaration of Trust as it may be amended or restated from time to
time.
7. The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations of the Commission thereunder, all as amended from time to
time.
8. "Series" refers to series of Shares of the Trust
established and designated under or in accordance with the
provisions of Article FOURTH.
9. "Shareholder" means a record owner of Shares of the Trust.
10. "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust or any Series or Class of the Trust (as the
context may require) shall be divided from time to time and includes fractions
of Shares as well as whole Shares.
11. The "Trust" refers to the Massachusetts business trust created by
this Declaration of Trust, as amended or restated from time to time.
12. "Trustees" refers to the individual trustees in their
capacity as trustees hereunder of the Trust and their successor or
successors for the time being in office as such trustees.
THIRD: The purpose or purposes for which the Trust is formed
and the business or objects to be transacted, carried on and
promoted by it are as follows:
1. To hold, invest or reinvest its funds, and in connection therewith
to hold part or all of its funds in cash, and to purchase or otherwise acquire,
hold for investment or otherwise, sell, sell short, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or realize upon, securities
(which term
-2-
<PAGE>
"securities" shall for the purposes of this Declaration of Trust, without
limitation of the generality thereof, be deemed to include any stocks, shares,
bonds, financial futures contracts, indexes, debentures, notes, mortgages or
other obligations, and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or in any
property or assets) created or issued by any issuer (which term "issuer" shall
for the purposes of this Declaration of Trust, without limitation of the
generality thereof be deemed to include any persons, firms, associations,
corporations, syndicates, combinations, organizations, governments, or
subdivisions thereof) and in financial instruments (whether they are considered
as securities or commodities); and to exercise, as owner or holder of any
securities or financial instruments, all rights, powers and privileges in
respect thereof; and to do any and all acts and things for the preservation,
protection, improvement and enhancement in value of any or all such securities
or financial instruments.
2. To borrow money and pledge assets in connection with any of the
objects or purposes of the Trust, and to issue notes or other obligations
evidencing such borrowings, to the extent permitted by the 1940 Act and by the
Trust's fundamental investment policies under the 1940 Act.
3. To issue and sell its Shares in such Series and Classes and amounts
and on such terms and conditions, for such purposes and for such amount or kind
of consideration (including without limitation thereto, securities) now or
hereafter permitted by the laws of the Commonwealth of Massachusetts and by this
Declaration of Trust, as the Trustees may determine.
4. To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel its Shares, or to classify or reclassify any
unissued Shares or any Shares previously issued and reacquired of any Series or
Class into one or more Series or Classes that may have been established and
designated from time to time, all without the vote or consent of the
Shareholders of the Trust, in any manner and to the extent now or hereafter
permitted by this Declaration of Trust.
5. To conduct its business in all its branches at one or more offices
in New York, Colorado and elsewhere in any part of the world, without
restriction or limit as to extent.
-3-
<PAGE>
6. To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or to the extent now or
hereafter permitted by the laws of Massachusetts, as a member of, or as the
owner or holder of any stock of, or share of interest in, any issuer, and in
connection therewith or make or enter into such deeds or contracts with any
issuers and to do such acts and things and to exercise such powers, as a natural
person could lawfully make, enter into, do or exercise.
7. To do any and all such further acts and things and to exercise any
and all such further powers as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to, or
inference from, the terms of any other clause of this or any other Article of
this Declaration of Trust, and shall each be regarded as independent and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of the
Trust now or hereafter conferred by the laws of the Commonwealth of
Massachusetts nor shall the expression of one thing be deemed to exclude
another, though it be of a similar or dissimilar nature, not expressed;
provided, however, that the Trust shall not carry on any business, or exercise
any powers, in any state, territory, district or country except to the extent
that the same may lawfully be carried on or exercised under the laws thereof.
FOURTH:
1. The beneficial interest in the Trust shall be divided into Shares,
all without par value, but the Trustees shall have the authority from time to
time, without obtaining shareholder approval, to create one or more Series of
Shares in addition to the Series specifically established and designated in part
3 of this Article FOURTH, and to divide the shares of any Series into two or
more Classes pursuant to Part 2 of this Article FOURTH, all as they deem
necessary or desirable, to establish and designate such Series and Classes, and
to fix and determine the relative rights and preferences as between the
different Series or Classes of Shares as to right of redemption and the price,
terms and manner of
-4-
<PAGE>
redemption, liabilities and expenses to be borne by any Series or Class, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion on liquidation, conversion
rights, and conditions under which the several or Classes of Shares shall have
individual voting rights or no voting rights. Except as aforesaid, all Shares of
the different Series shall be identical.
(a) The number of authorized Shares and the number of Shares of
each Series and each Class of a Series that may be issued is unlimited, and the
Trustees may issue Shares of any Series or Class of any Series for such
consideration and on such terms as they may determine (or for no consideration
if pursuant to a Share dividend or split-up), all without action or approval of
the Shareholders. All Shares when so issued on the terms determined by the
Trustees shall be fully paid and non-assessable. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series into one or more Series or Classes of Series that may be established
and designated from time to time. The Trustees may hold as treasury Shares (of
the same or some other Series), reissue for such consideration and on such terms
as they may determine, or cancel, at their discretion from time to time, any
Shares of any Series reacquired by the Trust.
(b) The establishment and designation of any Series or any Class
of any Series in addition to that established and designated in part 3 of this
Article FOURTH shall be effective upon the execution by a majority of the
Trustees of an instrument setting forth such establishment and designation and
the relative rights and preferences of such Series or such Class of such Series
or as otherwise provided in such instrument. At any time that there are no
Shares outstanding of any particular Series previously established and
designated, the Trustees may by an instrument executed by a majority of their
number abolish that Series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall be an amendment to this
Declaration of Trust, and the Trustees may make any such amendment without
shareholder approval.
(c) Any Trustee, officer or other agent of the Trust, and any
organization in which any such person is interested may acquire, own, hold and
dispose of Shares of any Series or Class of any Series of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust
-5-
<PAGE>
may issue and sell or cause to be issued and sold and may purchase Shares of any
Series or Class of any Series from any such person or any such organization
subject only to the general limitations, restrictions or other provisions
applicable to the sale or purchase of Shares of such Series or Class generally.
2. The Trustees shall have the authority from time to time, without
obtaining shareholder approval, to divide the Shares of any Series into two or
more Classes as they deem necessary or desirable, and to establish and designate
such Classes. In such event, each Class of a Series shall represent interests in
the designated Series of the Trust and have such voting, dividend, liquidation
and other rights as may be established and designated by the Trustees. Expenses
related directly or indirectly to the Shares of a Class of a Series may be borne
solely by such Class (as shall be determined by the Trustees) and, as provided
in Article FIFTH, a Class of a Series may have exclusive voting rights with
respect to matters relating solely to such Class. The bearing of expenses solely
by a Class of Shares of a Series shall be appropriately reflected (in the manner
determined by the Trustees) in the net asset value, dividend and liquidation
rights of the Shares of such Class of a Series. The division of the Shares of a
Series into Classes and the terms and conditions pursuant to which the Shares of
the Classes of a Series will be issued must be made in compliance with the 1940
Act. No division of Shares of a Series into Classes shall result in the creation
of a Class of Shares having a preference as to dividends or distributions or a
preference in the event of any liquidation, termination or winding up of the
Trust, to the extent such a preference is prohibited by Section 18 of the 1940
Act as to the Trust.
The relative rights and preferences of Shares of different
Classes shall be the same in all respects except that, unless and until the
Board of Trustees shall determine otherwise: (i) when a vote of Shareholders is
required under this Declaration of Trust or when a meeting of Shareholders is
called by the Board of Trustees, the Shares of a Class shall vote exclusively on
matters that affect that Class only, (ii) the expenses related to a Class shall
be borne solely by such Class (as determined and allocated to such Class by the
Trustees from time to time in a manner consistent with parts 2 and 3 of this
Article FOURTH); and (iii) pursuant to paragraph 10 of Article NINTH, the Shares
of each Class shall have such other rights and preferences as are set forth from
time to time in the then-effective Prospectus and/or Statement of Additional
Information relating to the Shares. Dividends and
-6-
<PAGE>
distributions on one class may differ from the dividends and distributions on
another Class, and the net asset value of the Shares of one Class may differ
from the net asset value of the Shares of another Class.
3. Without limiting the authority of the Trustees set forth in part 1
of this Article FOURTH to establish and designate any further Series, the
Trustees hereby establish one Series of Shares having the same name as the
Trust, said shares shall be divided into such number of classes as shall be set
forth from time to time in the then effective Prospectus and/or Statement of
Additional Information relating to the Fund. The Shares of that Series and any
Shares of any further Series or Classes that may from time to time be
established and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Series or Classes at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
Such consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items
allocated to that Series as provided in the following sentence, are herein
referred to as "assets belonging to" that Series. In the event that there are
any assets, income, earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any particular Series
(collectively "General Items"), the Trustees shall allocate such General Items
to and among any one or more of the Series established and designated from time
to time in such manner and on such basis as they, in their sole discretion, deem
fair and equitable; and any General Items so allocated to a particular Series
shall belong to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the shareholders of all Series for all purposes.
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(b) (1) Liabilities Belonging to Series. The assets belonging to
each particular Series shall be charged with the liabilities of the Trust in
respect of that Series and all expenses, costs, charges and reserves
attributable to that Series. Any general liabilities, expenses, costs, charges
and reserves of the Trust which are not identifiable as belong to any particular
Series shall be allocated and charged by the Trustees to and among any one or
more of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to each Series are herein referred to as "liabilities belonging to"
that Series. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon the shareholders
of all Series for all purposes.
(2) Liabilities Belonging to a Class. If a Series
is divided into more than one Class, the liabilities, expenses, costs, charges
and reserves attributable to a Class shall be charged and allocated to the Class
to which such liabilities, expenses, costs, charges or reserves are
attributable. Any general liabilities, expenses, costs, charges or reserves
belonging to the Series which are not identifiable as belonging to any
particular Class shall be allocated and charged by the Trustees to and among any
one or more of the Classes established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. The allocations described in the two preceding sentences shall be
subject to the 1940 Act and any release, rule, regulation, interpretation or
order thereunder relating to such allocations. The liabilities, expenses, costs,
charges and reserves allocated and so charged to each Class are herein referred
to as "liabilities belonging to" that Class. Each allocation of liabilities,
expenses, costs, charges and reserves by the Trustees shall be conclusive and
binding upon the holders of all Classes for all purposes.
(c) Dividends. Dividends and distributions on Shares of
a particular Series or Class may be paid to the holders of Shares
of that Series or Class, with such frequency as the Trustees may
determine, which may be daily or otherwise, pursuant to a standing
resolution or resolutions adopted only once or with such frequency
as the Trustees may determine, from such of the income and capital
gains, accrued or realized, from the assets belonging to that
Series, as the Trustees may determine, after providing for actual
and accrued liabilities belonging to such Series or Class. All
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dividends and distributions on Shares of a particular Series or Class shall be
distributed pro rata to the Shareholders of such Series or Class in proportion
to the number of Shares of such Series or Class held by such Shareholders at the
date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or times established by the Trustees
under such program or procedure. Such dividends and distributions may be made in
cash or Shares or a combination thereof as determined by the Trustees or
pursuant to any program that the Trustees may have in effect at the time for the
election by each Shareholder of the mode of the making of such dividend or
distribution to that Shareholder. Any such dividend or distribution paid in
Shares will be paid at the net asset value thereof as determined in accordance
with paragraph 13 of Article SEVENTH.
(d) Liquidation. In the event of the liquidation or dissolution
of the Trust, the Shareholders of each Series and all Classes of each Series
that have been established and designated shall be entitled to receive, as a
Series or Class, when and as declared by the Trustees, the excess of the assets
belonging to that Series over the liabilities belonging to that Series or Class.
The assets so distributable to the Shareholders of any particular Class and
Series shall be distributed among such Shareholders in proportion to the number
of Shares of such Class of that Series held by them and recorded on the books of
the Trust.
(e) Transfer. All Shares of each particular Series or Class shall
be transferable, but transfers of Shares of a particular Class or Series will be
recorded on the Share transfer records of the Trust applicable to such Series or
Class only at such times as Shareholders shall have the right to require the
Trust to redeem Shares of such Series or Class and at such other times as may be
permitted by the Trustees.
(f) Equality. All Shares of each Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to the
liabilities belonging to such Series or any Class of that Series), and each
Share of any particular Series shall be equal to each other Share of that Series
and Shares of each Class of a Series shall be equal to each other Share of such
Class; but the provisions of this sentence shall not restrict any
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distinctions permissible under this Article FOURTH that may exist with respect
to Shares of a Series or the different Classes of a Series. The Trustees may
from time to time divide or combine the Shares of any particular Class or Series
into a greater or lesser number of Shares of that Class or Series without
thereby changing the proportionate beneficial interest in the assets belonging
to that Class or Series or in any way affecting the rights of Shares of any
other Class or Series.
(g) Fractions. Any fractional Share of any Class and Series, if
any such fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Class and Series, including
those rights and obligations with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust.
(h) Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to provide
that (i) holders of Shares of any Series shall have the right to exchange said
Shares into Shares of one or more other Series of Shares, (ii) holders of shares
of any Class shall have the right to exchange said Shares into Shares of one or
more other Classes of the same or a different Series, and/or (iii) the Trust
shall have the right to carry out exchanges of the aforesaid kind, in each case
in accordance with such requirements and procedures as may be established by the
Trustees.
(i) Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Class
and Series that has been established and designated. No certification certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Class and Series held from time to time by each such Shareholder.
(j) Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and
for such consideration, not inconsistent with the provisions of the
1940 Act, as they from time to time authorize. The Trustees may
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authorize any distributor, principal underwriter, custodian, transfer agent or
other person to accept orders for the purchase or sale of Shares that conform to
such authorized terms and to reject any purchase or sale orders for Shares
whether or not conforming to such authorized terms.
FIFTH: The following provisions are hereby adopted with
respect to voting Shares of the Trust and certain other rights:
1. The Shareholders shall have the power to vote (a) for the election
of Trustees when that issue is submitted to them, (b) with respect to the
amendment of this Declaration of Trust except where the Trustees are given
authority to amend the Declaration of Trust without shareholder approval, (c) to
the same extent as the shareholders of a Massachusetts business corporation, as
to whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Shareholders, and (d) with respect to those matters relating to the Trust as may
be required by the 1940 Act or required by law, by this Declaration of Trust, or
the By-Laws of the Trust or any registration statement of the Trust filed with
the Commission or any State, or as the Trustees may consider desirable.
2. The Trust will not hold shareholder meetings unless required by the
1940 Act, the provisions of this Declaration of Trust, or any other applicable
law.
3. At all meetings of Shareholders, each Shareholder shall be entitled
to one vote on each matter submitted to a vote of the Shareholders of the
affected Series for each Share standing in his name on the books of the Trust on
the date, fixed in accordance with the By-Laws, for determination of
Shareholders of the affected Series entitled to vote at such meeting (except, if
the Board so determines, for Shares redeemed prior to the meeting), and each
such Series shall vote separately ("Individual Series Voting"); a Series shall
be deemed to be affected when a vote of the holders of that Series on a matter
is required by the 1940 Act; provided, however, that as to any matter with
respect to which a vote of Shareholders is required by the 1940 Act or by any
applicable law that must be complied with, such requirements as to a vote by
Shareholders shall apply in lieu of Individual Series Voting as described above.
If the shares of a Series shall be divided into Classes as provided in Article
FOURTH, the shares of each Class shall have identical voting rights except that
the Trustees, in their discretion, may provide a Class of a Series with
exclusive
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voting rights with respect to matters which relate solely to such Classes. If
the Shares of any Series shall be divided into Classes with a Class having
exclusive voting rights with respect to certain matters, the quorum and voting
requirements described below with respect to action to be taken by the
Shareholders of the Class of such Series on such matters shall be applicable
only to the Shares of such Class. Any fractional Share shall carry
proportionately all the rights of a whole Share, including the right to vote and
the right to receive dividends. The presence in person or by proxy of the
holders of one-third of the Shares, or of the Shares of any Series or Class of
any Series, outstanding and entitled to vote thereat shall constitute a quorum
at any meeting of the Shareholders or of that Series or Class, respectively;
provided however, that if any action to be taken by the Shareholders or by a
Series or Class at a meeting requires an affirmative vote of a majority, or more
than a majority, of the shares outstanding and entitled to vote, then in such
event the presence in person or by proxy of the holders of a majority of the
shares outstanding and entitled to vote at such a meeting shall constitute a
quorum for all purposes. If at any meeting of the Shareholders there shall be
less than a quorum present, the Shareholders or the Trustees present at such
meeting may, without further notice, adjourn the same from time to time until a
quorum shall attend, but no business shall be transacted at any such adjourned
meeting except such as might have been lawfully transacted had the meeting not
been adjourned.
4. Each Shareholder of a Series or Class, upon request to the Trust in
proper form determined by the Trust, shall be entitled to require the Trust to
redeem from the net assets of that Series or Class all or part of the Shares of
such Series or Class standing in the name of such Shareholder. The method of
computing such net asset value, the time at which such net asset value shall be
computed and the time within which the Trust shall make payment therefor, shall
be determined as hereinafter provided in Article SEVENTH of this Declaration of
Trust. Notwithstanding the foregoing, the Trustees, when permitted or required
to do so by the 1940 Act, may suspend the right of the Shareholders to require
the Trust to redeem Shares.
5. No Shareholder shall, as such holder, have any right to purchase or
subscribe for any security of the Trust which it may issue or sell, other than
such right, if any, as the Trustees, in their discretion, may determine.
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6. All persons who shall acquire Shares shall acquire the
same subject to the provisions of the Declaration of Trust.
SIXTH:
1. The persons who shall act as initial Trustees until the first
meeting or until their successors are duly chosen and qualify are the initial
trustees executing this Declaration of Trust or any counterpart thereof.
However, the By-Laws of the Trust may fix the number of Trustees at a number
greater or lesser than the number of initial Trustees and may authorize the
Trustees to increase or decrease the number of Trustees, to fill any vacancies
on the Board which may occur for any reason including any vacancies created by
any such increase in the number of Trustees, to set and alter the terms of
office of the Trustees and to lengthen or lessen their own terms of office or
make their terms of office of indefinite duration, all subject to the 1940 Act.
Unless otherwise provided by the By-Laws of the Trust, the Trustees need not be
Shareholders.
2. A Trustee at any time may be removed either with or without cause by
resolution duly adopted by the affirmative vote of the holders of two-thirds of
the outstanding Shares, present in person or by proxy at any meeting of
Shareholders called for such purpose; such a meeting shall be called by the
Trustees when requested in writing to do so by the record holders of not less
than ten per centum of the outstanding Shares. A Trustee may also be removed by
the Board of Trustees as provided in the By-Laws of the Trust.
3. The Trustees shall make available a list of names and addresses of
all Shareholders as recorded on the books of the Trust, upon receipt of the
request in writing signed by not less than ten Shareholders (who have been
shareholders for at least six months) holding shares of the Trust valued at not
less than $25,000 at current offering price (as defined in the Trust's
Prospectus and\or Statement of Additional Information) or holding not less than
1% in amount of the entire amount of Shares issued and outstanding; such request
must state that such Shareholders wish to communicate with other shareholders
with a view to obtaining signatures to a request for a meeting to take action
pursuant to part 2 of this Article SIXTH and be accompanied by a form of
communication to the Shareholders. The Trustees may, in their discretion,
satisfy their obligation under this part 3 by either making available the
Shareholder list to such Shareholders at the principal offices of the Trust, or
at the offices of the Trust's
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transfer agent, during regular business hours, or by mailing a copy of such
communication and form of request, at the expense of such requesting
Shareholders.
4. If and when the Trust has outstanding two or more series of Shares
pursuant to Article FOURTH of this Declaration of Trust, each Series shall be
considered as if it were a separate common law trust covered by Section 16(c) of
the 1940 Act and parts 2 and 3 of this Article SIXTH. However, the Trust may at
any time or from time to time apply to the Commission for one or more exemptions
from all or part of said Section 16(c) of the 1940 Act, and, if an exemptive
order or orders are issued by the Commission, such order or orders shall be
deemed part of said Section 16(c) for the purposes of parts 2 and 3 of this
Article SIXTH.
SEVENTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the
Trust, the Trustees and the Shareholders.
1. As soon as any Trustee is duly elected by the Shareholders or the
Trustees and shall have accepted this Trust, the Trust estate shall vest in the
new Trustee or Trustees, together with the continuing Trustees, without any
further act or conveyance, and he or she shall be deemed a Trustee hereunder.
2. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
3. The assets of the Trust shall be held separate and apart from any
assets now or hereafter held in any capacity other than as Trustee hereunder by
the Trustees or any successor Trustees. All of the assets of the Trust shall at
all times be considered as vested in the Trustees. No Shareholder shall have, as
a holder of beneficial interest in the Trust, any authority, power or right
whatsoever to transact business for or on behalf of the Trust, or on behalf of
the Trustees, in connection with the property or assets of the Trust, or in any
part thereof.
4. The Trustees in all instances shall act as principals, and are and
shall be free from the control of the Shareholders. The Trustees shall have full
power and authority to do any and all acts and to make and execute, and to
authorize the officers and agents of the Trust to make and execute, any and all
contracts and
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instruments that they may consider necessary or appropriate in connection with
the management of the Trust. The Trustees shall not in any way be bound or
limited by present or future laws or customs in regard to Trust investments, but
shall have full authority and power to make any and all investments which they,
in their uncontrolled discretion, shall deem proper to accomplish the purpose of
this Trust. Subject to any applicable limitation in this Declaration of Trust or
by the By-Laws of the Trust, the Trustees shall have power and authority:
(a) to adopt By-Laws not inconsistent with this Declaration of
Trust providing for the conduct of the business of the Trust and to amend and
repeal them to the extent that they do not reserve that right to the
Shareholders;
(b) to elect and remove such officers and appoint and
terminate such officers as they consider appropriate with or
without cause;
(c) to employ a bank or trust company as custodian of any
assets of the Trust subject to any conditions set forth in this
Declaration of Trust or in the By-Laws;
(d) To retain a transfer agent and shareholder servicing
agent, or both;
(e) To provide for the distribution of Shares either
through a principal underwriter or the Trust itself or both;
(f) To set record dates in the manner provided for in the
By-Laws of the Trust;
(g) to delegate such authority as they consider desirable
to any officers of the Trust and to any agent, custodian or
underwriter;
(h) to vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property held in Trust hereunder;
and to execute and deliver powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power and
discretion with relation to securities or property as the Trustees shall deem
proper;
(i) to exercise powers and rights of subscription or
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otherwise which in any manner arise out of ownership of securities
held in trust hereunder;
(j) to hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, either in its
own name or in the name of a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual practice of
Massachusetts business trusts or investment companies;
(k) to consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern, any
security of which is held in the Trust; to consent to any contract, lease,
mortgage, purchase, or sale of property by such corporation or concern, and to
pay calls or subscriptions with respect to any security held in the Trust;
(l) to compromise, arbitrate, or otherwise adjust claims
in favor of or against the Trust or any matter in controversy
including, but not limited to, claims for taxes;
(m) to make, in the manner provided in the By-Laws,
distributions of income and of capital gains to Shareholders;
(n) to borrow money to the extent and in the manner
permitted by the 1940 Act and the Trust's fundamental policy
thereunder as to borrowing;
(o) to enter into investment advisory or management contracts,
subject to the 1940 Act, with any one or more corporations, partnerships,
trusts, associations or other persons; and
(p) to change the name of the Trust or any Class or
Series of the Trust as they consider appropriate without prior
shareholder approval.
5. No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
6. (a) The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than
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such as the Shareholder may at any time personally agree to pay by way of
subscription to any Shares or otherwise. There is hereby expressly disclaimed
shareholder liability for the acts and obligations of the Trust. Every note,
bond, contract or other undertaking issued by or on behalf of the Trust or the
Trustees relating to the Trust shall include a recitation limiting the
obligation represented thereby to the Trust and its assets (but the omission of
such recitation shall not operate to bind any Shareholder).
(b) Whenever this Declaration of Trust calls for or permits any
action to be taken by the Trustees hereunder, such action shall mean that taken
by the Board of Trustees by vote of the majority of a quorum of Trustees as set
forth from time to time in the By-Laws of the Trust or as required by the 1940
Act.
(c) The Trustees shall possess and exercise any and all such
additional powers as are reasonably implied from the powers herein contained
such as may be necessary or convenient in the conduct of any business or
enterprise of the Trust, to do and perform anything necessary, suitable, or
proper for the accomplishment of any of the purposes, or the attainment of any
one or more of the objects, herein enumerated, or which shall at any time appear
conducive to or expedient for the protection or benefit of the Trust, and to do
and perform all other acts and things necessary or incidental to the purposes
herein before set forth, or that may be deemed necessary by the Trustees.
(d) The Trustees shall have the power, to the extent not
inconsistent with the 1940 Act, to determine conclusively whether any moneys,
securities, or other properties of the Trust are, for the purposes of this
Trust, to be considered as capital or income and in what manner any expenses or
disbursements are to be borne as between capital and income whether or not in
the absence of this provision such moneys, securities, or other properties would
be regarded as capital or income and whether or not in the absence of this
provision such expenses or disbursements would ordinarily be charged to capital
or to income.
7. The By-Laws of the Trust may divide the Trustees into classes and
prescribe the tenure of office of the several classes, but no class of Trustee
shall be elected for a period shorter than that from the time of the election
following the division into classes until the next meeting and thereafter for a
period shorter than the interval between meetings or for a period longer than
five
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years, and the term of office of at least one class shall expire
each year.
8. The Shareholders shall have the right to inspect the records,
documents, accounts and books of the Trust, subject to reasonable regulations of
the Trustees, not contrary to Massachusetts law, as to whether and to what
extent, and at what times and places, and under what conditions and regulations,
such right shall be exercised.
9. Any officer elected or appointed by the Trustees or by any committee
of the Trustees may be removed at any time, with or without cause, by vote of
the Trustees.
10. If the By-Laws so provide, the Trustees shall have power to hold
their meetings, to have an office or offices and, subject to the provisions of
the laws of Massachusetts, to keep the books of the Trust outside of said
Commonwealth at such places as may from time to time be designated by them.
Action may be taken by the Trustees without a meeting by unanimous written
consent or by telephone or similar method of communication.
11. Securities held by the Trust shall be voted in person or by proxy
by the President or a Vice-President, or such officer or officers of the Trust
as the Trustees shall designate for the purpose, or by a proxy or proxies
thereunto duly authorized by the Trustees, except as otherwise ordered by vote
of the holders of a majority of the Shares outstanding and entitled to vote in
respect thereto.
12. (a) Subject to the provisions of the 1940 Act, any Trustee, officer
or employee, individually, or any partnership of which any Trustee, officer or
employee may be a member, or any corporation or association of which any
Trustee, officer or employee may be an officer, director, trustee, employee or
stockholder, may be a party to, or may be pecuniarily or otherwise interested
in, any contract or transaction of the Trust, and in the absence of fraud no
contract or other transaction shall be thereby affected or invalidated; provided
that in case a Trustee, or a partnership, corporation or association of which a
Trustee is a member, officer, director, trustee, employee or stockholder is so
interested, such fact shall be disclosed or shall have been known to the
Trustees or a majority thereof; and any Trustee who is so interested, or who is
also a director, officer, trustee, employee or stockholder of
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such other corporation or a member of such partnership or association which is
so interested, may be counted in determining the existence of a quorum at any
meeting of the Trustees which shall authorize any such contract or transaction,
and may vote thereat to authorize any such contract or transaction, with like
force and effect as if he or she were not such director, officer, trustee,
employee or stockholder of such other trust or corporation or association or a
member of a partnership so interested.
(b) Specifically, but without limitation of the foregoing, the
Trust may enter into a management or investment advisory contract or
underwriting contract and other contracts with, and may otherwise do business
with any manager or investment adviser for the Trust and/or principal
underwriter of the Shares of the Trust or any subsidiary or affiliate of any
such manager or investment adviser and/or principal underwriter and may permit
any such firm or corporation to enter into any contracts or other arrangements
with any other firm or corporation relating to the Trust notwithstanding that
the Trustees of the Trust may be composed in part of partners, directors,
officers or employees of any such firm or corporation, and officers of the Trust
may have been or may be or become partners, directors, officers or employees of
any such firm or corporation, and in the absence of fraud the Trust and any such
firm or corporation may deal freely with each other, and no such contract or
transaction between the Trust and any such firm or corporation shall be
invalidated or in any way affected thereby, nor shall any Trustee or officer of
the Trust be liable to the Trust or to any Shareholder or creditor thereof or to
any other person for any loss incurred by it or him or her solely because of the
existence of any such contract or transaction; provided that nothing herein
shall protect any director or officer of the Trust against any liability to the
Trust or to its security holders to which he or she would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office.
(c) As used in this paragraph the following terms shall
have the meanings set forth below:
(i) the term "indemnitee" shall mean any present or
former Trustee, officer or employee of the Trust, any present or former Trustee
or officer of another trust or corporation whose securities are or were owned by
the Trust or of which the Trust is or was a creditor and who served or serves in
such capacity at the
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request of the Trust, and the heirs, executors, administrators, successors and
assigns of any of the foregoing; however, whenever conduct by an indemnitee is
referred to, the conduct shall be that of the original indemnitee rather than
that of the heir, executor, administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which an indemnitee is or was a
party or is threatened to be made a party by reason of the fact or facts under
which he or she or it is an indemnitee as defined above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office in question;
(iv) the term "covered expenses" shall mean expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by an indemnitee in connection with a covered
proceeding; and
(v) the term "adjudication of liability" shall
mean, as to any covered proceeding and as to any indemnitee, an adverse
determination as to the indemnitee whether by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent.
(d) The Trust shall not indemnify any indemnitee for any
covered expenses in any covered proceeding if there has been an adjudication of
liability against such indemnitee expressly based on a finding of disabling
conduct.
(e) Except as set forth in paragraph (d) above, the Trust shall
indemnify any indemnitee for covered expenses in any covered proceeding, whether
or not there is an adjudication of liability as to such indemnitee if a
determination has been made that the indemnitee was not liable by reason of
disabling conduct by (1) a final decision on the merits of the court or other
body before which the covered proceeding was brought; or (2) in the absence of
such decision, a reasonable determination, based on a review of the facts, by
either (A) the vote of a majority of a quorum of Trustees who are neither
"interested persons" as defined in the 1940 Act nor parties to the covered
proceedings, or (B) an independent legal counsel in a written opinion; provided
that such Trustees or
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counsel, in making such determination, may but need not presume the absence of
disabling conduct on the part of the indemnitee by reason of the manner in which
the covered proceeding was terminated.
(f) Covered expenses incurred by an indemnitee in connection
with a covered proceeding shall be advanced by the Trust to an indemnitee prior
to the final disposition of a covered proceeding upon the request of the
indemnitee for such advance and the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately determined that the
indemnitee is entitled to indemnification hereunder, but only if one or more of
the following is the case: (i) the indemnitee shall provide a security for such
undertaking; (ii) the Trust shall be insured against losses arising out of any
lawful advances; or (iii) there shall have been a determination, based on a
review of the readily available facts (as opposed to a full trial-type inquiry)
that there is a reason to believe that the indemnitee ultimately will be found
entitled to indemnification by either independent legal counsel in a written
opinion or by the vote of a majority of a quorum of trustees who are neither
"interested persons" as defined in the 1940 Act nor parties to the covered
proceeding.
(g) Nothing herein shall be deemed to affect the right of the
Trust and/or any indemnitee to acquire and pay for any insurance covering any or
all indemnitees to the extent permitted by the 1940 Act or to affect any other
indemnification rights to which any indemnitee may be entitled to the extent
permitted by the 1940 Act.
13. For purposes of the computation of net asset value, as in
this Declaration of Trust referred to, the following rules shall
apply:
(a) The net asset value per Share of any Series, as of the time
of valuation on any day, shall be the quotient obtained by dividing the value,
as at such time, of the net assets of that Series (i.e., the value of the assets
of that Series less its liabilities exclusive of its surplus) by the total
number of Shares of that Series outstanding at such time. The assets and
liabilities of any Series shall be determined in accordance with generally
accepted accounting principles, provided, however, that in determining the
liabilities of any Series there shall be included such reserves for taxes or
contingent liabilities as may be authorized or approved by the Trustees, and
provided further
-21-
<PAGE>
that in connection with the accrual of any fee or refund payable to or by an
investment advisor of the Trust for such Series, the amount of which accrual is
not definitely determinable as of any time at which the net asset value of each
Share of that Series is being determined due to the contingent nature of such
fee or refund, the Trustees are authorized to establish from time to time
formulae for such accrual, on the basis of the contingencies in question to the
date of such determination, or on such other bases as the Trustees may
establish.
(1) Shares of a Series to be issued shall be deemed to
be outstanding as of the time of the determination of the net
asset value per Share applicable to such issuance and the net
price thereof shall be deemed to be an asset of that Series;
(2) Shares of a Series to be redeemed by the Trust
shall be deemed to be outstanding until the time of the
determination of the net asset value applicable to such
redemption, and thereupon, and until paid, the redemption price
thereof shall be deemed to be a liability of that Series; and
(3) Shares of a Series voluntarily purchased or
contracted to be purchased by the Trust pursuant to the
provisions of paragraph 4 of Article FIFTH shall be deemed to
be outstanding until whichever is the later of (i) the time of
the making of such purchase or contract of purchase, and (ii)
the time at which the purchase price is determined, and
thereupon, and until paid, the purchase price thereof shall be
deemed to be a liability of that Series.
(b) The Trustees are empowered, in their absolute discretion,
to establish other bases or times, or both, for determining the net asset value
per Share of any Series or Class in accordance with the 1940 Act and to
authorize the voluntary purchase by any Series or Class either directly or
through an agent, of Shares of any Series or Class upon such terms and
conditions and for such consideration as the Trustees shall deem advisable in
accordance with any such provision, rule or regulation.
-22-
<PAGE>
14. Payment of the net asset value per Share of any Class and Series
properly surrendered to it for redemption shall be made by the Trust within
seven days, or as specified in any applicable law or regulation, after tender of
such stock or request for redemption to the Trust for such purpose together with
any additional documentation that may reasonably be required by the Trust or its
transfer agent to evidence the authority of the tenderor or to make such
requests plus any period of time during which the right of the holders of the
shares of such Class of that Series to require the Trust to redeem such shares
has been suspended. Any such payment may be made in portfolio securities of such
Class of that Series and/or in cash, as the Trustees shall deem advisable, and
no Shareholder shall have a right, other than as determined by the Trustees, to
have Shares redeemed in kind.
15. The Trust shall have the right, at any time and without prior
notice to the Shareholder, to redeem Shares of the Class and Series held by such
Shareholder held in any account registered in the name of such Shareholder for
its current net asset value, if and to the extent that such redemption is
necessary to reimburse either that Series or Class of the Trust or the
distributor (i.e., principal underwriter) of the Shares for any loss either has
sustained by reason of the failure of such Shareholder to make timely and good
payment for Shares purchased or subscribed for by such Shareholder, regardless
of whether such Shareholder was a Shareholder at the time of such purchase or
subscription, subject to and upon such terms and conditions as the Trustees may
from time to time prescribe.
EIGHTH: The name "Oppenheimer" included in the name of the Trust and of
any Series shall be used pursuant to a royalty-free, non-exclusive license from
OppenheimerFunds, Inc. ("OFI"), incidental to and as part of an advisory,
management or supervisory contract which may be entered into by the Trust with
OFI. The license may be terminated by OMC upon termination of such advisory,
management or supervisory contract or without cause upon 60 days' written
notice, in which case neither the Trust nor any Series or Class shall have any
further right to use the name "Oppenheimer" in its name or otherwise and the
Trust, the Shareholders and its officers and Trustees shall promptly take
whatever action may be necessary to change its name and the names of any Series
or Classes accordingly.
NINTH:
-23-
<PAGE>
1. In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his being or having been a Shareholder and
not because of his acts or omissions or for some other reason, the Shareholder
or former Shareholder (or the Shareholder's, heirs, executors, administrators or
other legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the Trust estate
to be held harmless from and indemnified against all loss and expense arising
from such liability. The Trust shall, upon request by the Shareholder, assume
the defense of any such claim made against any Shareholder for any act or
obligation of the Trust and satisfy any judgment thereon.
2. It is hereby expressly declared that a trust and not a partnership
is created hereby. No individual Trustee hereunder shall have any power to bind
the Trust, the Trust's officers or any Shareholder. All persons extending credit
to, doing business with, contracting with or having or asserting any claim
against the Trust or the Trustees shall look only to the assets of the Trust for
payment under any such credit, transaction, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past, present or
future, shall be personally liable therefor; notice of such disclaimer shall be
given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. Nothing in this Declaration of Trust shall protect a
Trustee against any liability to which such Trustee would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee
hereunder.
3. The exercise by the Trustees of their powers and discretion
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of paragraph 2 of this Article NINTH, the Trustees shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operations of this
Declaration of Trust, contracts, obligations, transactions or any other business
the Trust may enter into, and subject to the provisions of paragraph 2 of this
Article NINTH, shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is required.
-24-
<PAGE>
4. This Trust shall continue without limitation of time but
subject to the provisions of sub-sections (a), (b), (c) and (d) of
this paragraph 4.
(a) The Trustees, with the favorable vote of the holders of a
majority as defined in the 1940 Act, of the outstanding Shares of any one or
more Series entitled to vote, may sell and convey the assets of that Series
(which sale may be subject to the retention of assets for the payment of
liabilities and expenses) to another issuer for a consideration which may be or
include securities of such issuer. Upon making provision for the payment of
liabilities, by assumption by such issuer or otherwise, the Trustees shall
distribute the remaining proceeds ratably among the holders of the outstanding
Shares of the Series the assets of which have been so transferred.
(b) The Trustees, with the favorable vote of the holders
of a majority, as defined in the 1940 Act, of the outstanding
Shares of any one or more Series entitled to vote, may at any time
sell and convert into money all the assets of that Series. Upon
making provisions for the payment of all outstanding obligations,
taxes and other liabilities, accrued or contingent, of that Series,
the Trustees shall distribute the remaining assets of that Series
ratably among the holders of the outstanding Shares of that Series.
(c) The Trustees, with the favorable vote of the holders of a
majority, as defined in the 1940 Act, of the outstanding Shares of any one or
more Series entitled to vote, may otherwise alter, convert or transfer the
assets of the Series.
(d) Upon completion of the distribution of the remaining
proceeds or the remaining assets as provided in sub-sections (a) and (b), and in
subsection (c) where applicable, the Series the assets of which have been so
transferred shall terminate, and if all the assets of the Trust have been so
transferred, the Trust shall terminate and the Trustees shall be discharged of
any and all further liabilities and duties hereunder and the right, title and
interest of all parties shall be cancelled and discharged.
5. The original or a copy of this instrument and of each restated
declaration of trust or instrument supplemental hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental or restated declaration of trust shall be
filed with the Secretary of State of Massachusetts, as well as any other
-25-
<PAGE>
governmental office where such filing may from time to time be required. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such supplemental or restated declarations of trust have
been made and as to any matters in connection with the Trust hereunder, and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
supplemental or restated declaration of trust. In this instrument or in any such
supplemental or restated declaration of trust, references to this instrument,
and all expressions like "herein", "hereof" and "hereunder" shall be deemed to
refer to this instrument as amended or affected by any such supplemental or
restated declaration of trust. This instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
6. The Trust set forth in this instrument is created under and is to be
governed by and construed and administered according to the laws of the
Commonwealth of Massachusetts. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof, the
Trust may exercise all powers which are ordinarily exercised by such a trust.
7. The Board of Trustees is empowered to cause the redemption of the
Shares held in any account if the aggregate net asset value of such Shares
(taken at cost or value, as determined by the Board) has been reduced to $200 or
less upon such notice to the shareholder in question, with such permission to
increase the investment in question and upon such other terms and conditions as
may be fixed by the Board of Trustees in accordance with the 1940 Act.
8. In the event that any person advances the organizational expenses of
the Trust, such advances shall become an obligation of the Trust subject to such
terms and conditions as may be fixed by, and on a date fixed by, or determined
with criteria fixed by the Board of Trustees, to be amortized over a period or
periods to be fixed by the Board.
9. Whenever any action is taken under this Declaration of Trust under
any authorization to take action which is permitted by the 1940 Act or any other
applicable law, such action shall be deemed to have been properly taken if such
action is in accordance with the construction of the 1940 Act or such other
applicable law then in effect as expressed in "no action" letters of the staff
of
-26-
<PAGE>
the Commission or any release, rule, regulation or order under the 1940 Act or
any decision of a court of competent jurisdiction, notwithstanding that any of
the foregoing shall later be found to be invalid or otherwise reversed or
modified by any of the foregoing.
10. Any action which may be taken by the Board of Trustees under this
Declaration of Trust or its By-Laws may be taken by the description thereof in
the then effective Prospectus and/or Statement of Additional Information
relating to the Shares under the Securities Act of 1933 or in any proxy
statement of the Trust rather than by formal resolution of the Board.
11. Whenever under this Declaration of Trust, the Board of Trustees is
permitted or required to place a value on assets of the Trust, such action may
be delegated by the Board, and/or determined in accordance with a formula
determined by the Board, to the extent permitted by the 1940 Act.
12. If authorized by vote of the Trustees and, if a vote of
Shareholders is required under this Declaration of Trust, the favorable vote of
the holders of a "majority", as defined in the 1940 Act, of the outstanding
Shares entitled to vote, or by any larger vote which may be required by
applicable law in any particular case, the Trustees shall amend or otherwise
supplement this instrument, by making a Declaration of Trust supplemental
hereto, which thereafter shall form a part hereof; any such Supplemental or
Restated Declaration of Trust may be executed by and on behalf of the Trust and
the Trustees by an officer or officers of the Trust.
-27-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
this 18th day of December, 1996.
/s/ Benjamin Lipstein /s/ Robert G.Galli
- --------------------- ------------------
Benjamin Lipstein Robert G. Galli
591 Breezy Hill Road 111-54 Shearwater Court
Hillside, NY 12529 Jersey City, NJ 07305
/s/ Donald W. Spiro /s/ Edward V. Regan
- ------------------- -------------------
Donald W. Spiro Edward V. Regan
399 Ski Trail 40 Park Avenue
Smoke Rise, NJ 07405 New York, NY 10016
/s/ Leon Levy /s/ Pauline Trigere
- ------------- -------------------
Leon Levy Pauline Trigere
One Sutton Place South 525 Park Avenue
New York, NY 10016 New York, NY 10021
/s/ Bridget A. Macaskill /s/ Elizabeth B. Moynihan
- ----------------------- -------------------------
Bridget A. Macaskill Elizabeth B. Moynihan
200 East 69th Street 801 Pennsylvania Avenue
New York, NY 10021 Washington, D.C. 20004
/s/ Sidney M. Robbins /s/ Kenneth A. Randall
- --------------------- ----------------------
Sidney M. Robbins Kenneth A. Randall
50 Overlook Road 6 Whittaker's Mill
Ossining, NY 10562 Williamsburg, VA 23185
/s/ Russell S. Reynolds /s/ Clayton K. Yeutter
- ----------------------- ----------------------
Russell S. Reynolds Clayton K. Yeutter
39 Clapboard Ridge Road 1325 Merrie Ridge Road
Greenwich, CT 06830 McLean, VA 22101
-28-
<PAGE>
Exhibit 24(b)(4)(i)
OPPENHEIMER CAPITAL APPRECIATION FUND
Class A Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within 8-
1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS A SHARES below cert. no.)
(centered below boxes) OPPENHEIMER CAPITAL APPRECIATION FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT
(at right) SEE REVERSE FOR CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID CLASS A SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER CAPITAL APPRECIATION FUND
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.
(at left of seal) Dated: (at right of seal)
(signature) (signature)
/s/ George Bowen /s/ Bridget A. Macaskill
- ---------------- ------------------------
TREASURER PRESIDENT
(centered at bottom) 1-1/2" diameter facsimile seal with legend
OPPENHEIMER CAPITAL APPRECIATION FUND
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
<PAGE>
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
[A DIVISION OF OPPENHEIMERFUNDS, INC.]
Denver (CO.) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT
TEN WROS NOT TC - as joint tenants with rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian _____________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not on above list.
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR oTHER IDENTIFYING NUMBER OF
ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
- -----------------------------------------------------------------
(Please print or type name and address of assignee)
_________________________________________________ Class A Shares of beneficial
interest represented by the within certificate, and do hereby irrevocably
constitute and appoint ____________________ Attorney to transfer the said shares
on the books of the within named Fund with full power of substitution in the
premises.
Dated: ______________
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
<PAGE>
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment
vertically to must correspond with the name(s) as written
right of above upon the face of the certificate in every
paragraph) particular without alteration or enlargement
or any change whatever.
(text printed Signatures must be guaranteed by a financial
in box to left institution of the type described in the
of signature(s)) current prospectus of the Fund.
(printed to the left): PLEASE NOTE: This document contains a
watermark when viewed at an angle. It is invalid without this
watermark:
(printed to the right): OppenheimerFunds "four hands" logotype.
- ------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
certific\320cert.a
<PAGE>
Exhibit 24(b)(4)(ii)
OPPENHEIMER CAPITAL APPRECIATION FUND
Class B Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within 8-
1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS B SHARES below cert. no.)
(centered below boxes) OPPENHEIMER CAPITAL APPRECIATION FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT
(at right) SEE REVERSE FOR CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID CLASS B SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER CAPITAL APPRECIATION FUND
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.
(at left of seal) Dated: (at right of seal)
(signature) (signature)
/s/ George Bowen /s/ Bridget A. Macaskill
- ---------------- ------------------------
TREASURER PRESIDENT
(centered at bottom) 1-1/2" diameter facsimile seal with legend
OPPENHEIMER CAPITAL APPRECIATION FUND
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
<PAGE>
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
[A DIVISION OF OPPENHEIMERFUNDS, INC.]
Denver (CO.) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT
TEN WROS NOT TC - as joint tenants with rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian _____________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not on above list.
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR oTHER IDENTIFYING NUMBER OF
ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
- -----------------------------------------------------------------
(Please print or type name and address of assignee)
_________________________________________________ Class B Shares of beneficial
interest represented by the within certificate, and do hereby irrevocably
constitute and appoint ____________________ Attorney to transfer the said shares
on the books of the within named Fund with full power of substitution in the
premises.
Dated: ______________
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
<PAGE>
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment
vertically to must correspond with the name(s) as written
right of above upon the face of the certificate in every
paragraph) particular without alteration or enlargement
or any change whatever.
(text printed Signatures must be guaranteed by a financial
in box to left institution of the type described in the
of signature(s)) current prospectus of the Fund.
(printed to the left): PLEASE NOTE: This document contains a
watermark when viewed at an angle. It is invalid without this
watermark:
(printed to the right): OppenheimerFunds "four hands" logotype.
- ------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
certific\320cert.b
<PAGE>
Exhibit 24(b)(4)(iii)
OPPENHEIMER CAPITAL APPRECIATION FUND
Class C Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within 8-
1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS C SHARES below cert. no.)
(centered below boxes) OPPENHEIMER CAPITAL APPRECIATION FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT
(at right) SEE REVERSE FOR CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID CLASS C SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER CAPITAL APPRECIATION FUND
(hereinafter called the "Fund"), transferable only on the books of the
Fund by the holder hereof in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate
and the shares represented hereby are issued and shall be held subject
to all of the provisions of the Declaration of Trust of the Fund to all
of which the holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Fund and the signatures of its duly
authorized officers.
(at left of seal) Dated: (at right of seal)
(signature) (signature)
/s/ George Bowen /s/ Bridget A. Macaskill
- ---------------- ------------------------
TREASURER PRESIDENT
(centered at bottom) 1-1/2" diameter facsimile seal with legend
OPPENHEIMER CAPITAL APPRECIATION FUND
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
<PAGE>
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
[A DIVISION OF OPPENHEIMERFUNDS, INC.]
Denver (CO.) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common TEN ENT - as tenants by the entirety JT
TEN WROS NOT TC - as joint tenants with rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian _____________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not on above list.
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR oTHER IDENTIFYING NUMBER OF
ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
- -----------------------------------------------------------------
(Please print or type name and address of assignee)
_________________________________________________ Class C Shares of beneficial
interest represented by the within certificate, and do hereby irrevocably
constitute and appoint ____________________ Attorney to transfer the said shares
on the books of the within named Fund with full power of substitution in the
premises.
Dated: ______________
Signed: __________________________
-----------------------------------
(Both must sign if joint owners)
<PAGE>
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment
vertically to must correspond with the name(s) as written
right of above upon the face of the certificate in every
paragraph) particular without alteration or enlargement
or any change whatever.
(text printed Signatures must be guaranteed by a financial
in box to left institution of the type described in the
of signature(s)) current prospectus of the Fund.
(printed to the left): PLEASE NOTE: This document contains a
watermark when viewed at an angle. It is invalid without this
watermark:
(printed to the right): OppenheimerFunds "four hands" logotype.
- ------------------------------------------------------
THIS SPACE MUST NOT BE COVERED IN ANY WAY
certific\320cert.c
<PAGE>
AMENDMENT TO
INVESTMENT ADVISORY AGREEMENT
WHEREAS, Oppenheimer Capital Appreciation Fund, formerly named
Oppenheimer Target Fund (hereinafter referred to as the "Fund"), and
OppenheimerFunds, Inc ., formerly named Oppenheimer Management Corporation
(hereinafter referred to as "OFI"), have agreed, per a resolution dated December
14, 1995 of the Fund's Board of Trustees, to reduce the Fund's management fee on
assets in excess of $1.5 billion;
NOW, THEREFORE, the Fund and OFI agree as follows:
PARAGRAPH 5. of the Investment Advisory Agreement dated June 20, 1991
between the Fund and OFI is deleted and replaced with the following:
5. Compensation of OFI.
The Fund agrees to pay OFI and OFI agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a management fee computed on the
aggregate net assets of the Fund as of the close of each business day and
payable monthly at the following annual rates:
.75% of the first $200 million of aggregate net assets; .72% of the
next $200 million of aggregate net assets; .69% of the next $200
million of aggregate net assets; .66% of the next $200 million of
aggregate net assets; .60% of the next $700 million of aggregate net
assets; and .58% of aggregate net assets in excess of $1.5 billion.
ALL OTHER PROVISIONS of the Investment Advisory Agreement dated June 20, 1991
between the Fund and OFI shall remain in full force and effect.
Date: December 18, 1996
Oppenheimer Capital Appreciation Fund
By: /s/ Andrew J. Donohue
----------------------------------
Andrew J. Donohue, Secretary
OppenheimerFunds, Inc.
By: /s/ Katherine P. Feld
----------------------------------
Katherine P. Feld, Vice President
advisory\320.ame
<PAGE>
INDEPENDENT AUDITORS' CONSENT
To The Board of Trustees of
Oppenheimer Capital Appreciation Fund:
We consent to the use in this Registration Statement of Oppenheimer
Capital Appreciation Fund (formerly Oppenheimer Target Fund) of our report dated
September 23, 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
December 11, 1996
<PAGE>
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:
<TABLE>
<CAPTION>
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income Capital Gains Price
<S> <C> <C> <C>
Class A Shares
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
</TABLE>
1. AVERAGE TOTAL RETURN FOR THE PERIODS ENDED 08/31/96:
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
<PAGE>
Oppenheimer Target Fund
Page 2
1. AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96 (CONTINUED):
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,115.14 1 $1,778.26 .2
(---------) - 1 = 11.51% (---------) - 1 = 12.20%
$1,000 $1,000
Ten Year
$2,614.04 .1
(---------) - 1 = 10.09%
$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
$1,163.22 1 $1,501.06 .3636
(---------) - 1 = 16.32% (---------) - 1 = 15.92%
$1,000 $1,000
Examples at NAV:
Class A Shares
One Year Five Year
$1,183.13 1 $1,886.77 .2
(---------) - 1 = 18.32% (---------) - 1 = 13.54%
$1,000 $1,000
Ten Year
$2,773.45 .1
(---------) - 1 = 10.74%
$1,000
Class C Shares
One Year Inception
$1,173.20 1 $1,501.06 .3636
(---------) - 1 = 17.32% (---------) - 1 = 15.92%
$1,000 $1,000
<PAGE>
Oppenheimer Target Fund
Page 3
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96:
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
$1,115.14 - $1,000 $1,778.26 - $1,000
------------------ = 11.51% ------------------ = 77.83%
$1,000 $1,000
Ten Year
$2,614.04 - $1,000
------------------ = 161.40%
$1,000
Class B Shares
Example assuming a maximum contingent deferred sales charge of 5.00% for the
inception year:
Inception
$ 1,085.19 - $1,000
------------------ = 8.52%
$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
$1,163.22 - $1,000 $1,501.06 - $1,000
------------------ = 16.32% ------------------ = 50.11%
$1,000 $1,000
<PAGE>
Oppenheimer Target Fund
Page 4
2. CUMULATIVE TOTAL RETURNS FOR THE PERIODS ENDED 08/31/96 (CONTINUED):
Examples at NAV:
Class A Shares
One Year Five Year
$1,183.13 - $1,000 $1,886.77 - $1,000
------------------ = 18.32% ------------------ = 88.68%
$1,000 $1,000
Ten Year
$2,773.45 - $1,000
------------------ = 177.35%
$1,000
Class B Shares
Inception
$1,135.18 - $1,000
------------------ = 13.52%
$1,000
Class C Shares
One Year Inception Year
$1,173.20 - $1,000 $1,501.06 - $1,000
------------------ = 17.32% ------------------ = 50.11%
$1,000 $1,000
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 319767
<NAME> Oppenheimer Target Fund Class A
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 618,775,667
<INVESTMENTS-AT-VALUE> 806,699,153
<RECEIVABLES> 9,903,402
<ASSETS-OTHER> 141,517
<OTHER-ITEMS-ASSETS> 76,159
<TOTAL-ASSETS> 816,820,231
<PAYABLE-FOR-SECURITIES> 10,264,958
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,248,832
<TOTAL-LIABILITIES> 12,513,790
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 533,332,192
<SHARES-COMMON-STOCK> 25,596,271
<SHARES-COMMON-PRIOR> 27,639,405
<ACCUMULATED-NII-CURRENT> 2,693,760
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 80,357,003
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187,923,486
<NET-ASSETS> 788,504,058
<DIVIDEND-INCOME> 4,432,642
<INTEREST-INCOME> 4,345,256
<OTHER-INCOME> 0
<EXPENSES-NET> 5,915,560
<NET-INVESTMENT-INCOME> 2,862,338
<REALIZED-GAINS-CURRENT> 75,873,404
<APPREC-INCREASE-CURRENT> 11,279,147
<NET-CHANGE-FROM-OPS> 90,014,889
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,809,568
<NUMBER-OF-SHARES-REDEEMED> 4,852,702
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 35,879,643
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,483,599
<OVERDISTRIB-NII-PRIOR> 168,578
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,767,997
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,915,560
<AVERAGE-NET-ASSETS> 789,903,000
<PER-SHARE-NAV-BEGIN> 27.44
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 3.26
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 30.81
<EXPENSE-RATIO> 1.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 319767
<NAME> Oppenheimer Target Fund Class B
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 618,775,667
<INVESTMENTS-AT-VALUE> 806,699,153
<RECEIVABLES> 9,903,402
<ASSETS-OTHER> 141,517
<OTHER-ITEMS-ASSETS> 76,159
<TOTAL-ASSETS> 816,820,231
<PAYABLE-FOR-SECURITIES> 10,264,958
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,248,832
<TOTAL-LIABILITIES> 12,513,790
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 533,332,192
<SHARES-COMMON-STOCK> 178,275
<SHARES-COMMON-PRIOR> 100,518
<ACCUMULATED-NII-CURRENT> 2,693,760
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 80,357,003
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187,923,486
<NET-ASSETS> 5,447,519
<DIVIDEND-INCOME> 4,432,642
<INTEREST-INCOME> 4,345,256
<OTHER-INCOME> 0
<EXPENSES-NET> 5,915,560
<NET-INVESTMENT-INCOME> 2,862,338
<REALIZED-GAINS-CURRENT> 75,873,404
<APPREC-INCREASE-CURRENT> 11,279,147
<NET-CHANGE-FROM-OPS> 90,014,889
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 358,325
<NUMBER-OF-SHARES-REDEEMED> 280,568
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 35,879,643
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,483,599
<OVERDISTRIB-NII-PRIOR> 168,578
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,767,997
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,915,560
<AVERAGE-NET-ASSETS> 4,285,000
<PER-SHARE-NAV-BEGIN> 27.37
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 3.19
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 30.56
<EXPENSE-RATIO> 1.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 319767
<NAME> Oppenheimer Target Fund Class C
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Aug-31-1996
<INVESTMENTS-AT-COST> 618,775,667
<INVESTMENTS-AT-VALUE> 806,699,153
<RECEIVABLES> 9,903,402
<ASSETS-OTHER> 141,517
<OTHER-ITEMS-ASSETS> 76,159
<TOTAL-ASSETS> 816,820,231
<PAYABLE-FOR-SECURITIES> 10,264,958
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,248,832
<TOTAL-LIABILITIES> 12,513,790
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 533,332,192
<SHARES-COMMON-STOCK> 342,134
<SHARES-COMMON-PRIOR> 266,928
<ACCUMULATED-NII-CURRENT> 2,693,760
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 80,357,003
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 187,923,486
<NET-ASSETS> 10,354,864
<DIVIDEND-INCOME> 4,432,642
<INTEREST-INCOME> 4,345,256
<OTHER-INCOME> 0
<EXPENSES-NET> 5,915,560
<NET-INVESTMENT-INCOME> 2,862,338
<REALIZED-GAINS-CURRENT> 75,873,404
<APPREC-INCREASE-CURRENT> 11,279,147
<NET-CHANGE-FROM-OPS> 90,014,889
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 152,465
<NUMBER-OF-SHARES-REDEEMED> 77,259
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 35,879,643
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,483,599
<OVERDISTRIB-NII-PRIOR> 168,578
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,767,997
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,915,560
<AVERAGE-NET-ASSETS> 9,053,000
<PER-SHARE-NAV-BEGIN> 27.11
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 3.19
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 30.27
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
