OPPENHEIMER TIME FUND
Supplement dated June 5, 1995 to
the Proxy Statement and Prospectus
Special Meeting of Shareholders
To Be Held June 20, 1995
The Capitalization Table on page 20 is revised as follows:
<TABLE>
<CAPTION>
Net Asset
Shares Value
Net Assets Outstanding Per Share
<S> <C> <C> <C>
Oppenheimer Target Fund
Class A Shares $301,698,437 13,330,877 $22.63
Class C Shares $ 1,065,787 47,375 $22.50
Oppenheimer Time Fund
Class A Shares $326,410,301 21,387,554 $14.98
Pro Forma Combined Fund
Class A Shares $628,108,738 27,754,663 $22.63
Class C Shares $ 1,069,787 47,375 $22.50
<FN>
____________________
* Reflects issuance of 14,423,786 shares of Target Fund in a tax-free exchange for the net assets of the Fund, aggregating
$326,410,301.
</TABLE>
June 5, 1995
<PAGE>
OPPENHEIMER TIME FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 1995
To the Shareholders of Oppenheimer Time Fund:
Notice is hereby given that a Special Meeting of the Shareholders of
Oppenheimer Time Fund (the "Fund"), a registered management investment
company, will be held at 3410 South Galena Street, Denver, Colorado 80231,
at 10:00 A.M., Denver time, on June 20, 1995, or any adjournments thereof
(the "Meeting"), for the following purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization
between the Fund and Oppenheimer Target Fund ("Target Fund") and the
transactions contemplated thereby, including the transfer of substantially
all the assets of the Fund, in exchange for Class A shares of Target Fund,
the distribution of such Class A shares to the shareholders of the Fund
in complete liquidation of the Fund, the de-registration of the Fund as
an investment company under the Investment Company Act of 1940, as
amended, and the cancellation of the outstanding shares of the Fund (The
Proposal); and
2. To act upon such other matters as may properly come before the
Meeting.
Shareholders of record at the close of business on April 21, 1995 are
entitled to notice of, and to vote at, the Meeting. The Proposal is more
fully discussed in the Proxy Statement and Prospectus. Please read it
carefully before telling us, through your proxy or in person, how you wish
your shares to be voted. The Fund's Board of Trustees recommends a vote
in favor of the Proposal. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED
PROXY PROMPTLY.
By Order of the Board of Trustees,
Andrew J. Donohue, Secretary
May 15, 1995
_______________________________________________________________________
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign and
return it in the accompanying postage-paid envelope. To avoid unnecessary
duplicate mailings, we ask your cooperation in promptly mailing your proxy
no matter how large or small your holdings may be.
320
<PAGE>
OPPENHEIMER TARGET FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
Oppenheimer Target Fund ("Target Fund") has filed with the Securities and
Exchange Commission (the "SEC") a Registration Statement on Form N-14
relating to the registration of shares of Target Fund to be offered to the
shareholders of Oppenheimer Time Fund (the "Fund"), located at Two World
Trade Center, New York, New York 10048-0203 (telephone 1-800-525-7048),
pursuant to an Agreement and Plan of Reorganization (the "Reorganization
Agreement") between Target Fund and the Fund. This Proxy Statement of the
Fund relating to the Reorganization Agreement and the transactions
contemplated thereby (the "Reorganization") also constitutes a Prospectus
of Target Fund filed as part of such Registration Statement. Target Fund
is a mutual fund that seeks capital appreciation as its investment
objective by investing in securities of "growth-type" companies and
cyclical industries.
This Proxy Statement and Prospectus sets forth concisely information about
Target Fund that shareholders of the Fund should know before voting on the
Reorganization. A copy of the Prospectus for Target Fund, dated May 1,
1995, is enclosed, and is incorporated herein by reference. The following
documents have been filed with the SEC and are available without charge
upon written request to Oppenheimer Shareholder Services ("OSS"), the
transfer and shareholder servicing agent for Target Fund and the Fund, at
P.O. Box 5270, Denver, Colorado 80217, or by calling the toll-free number
shown above: (i) a Prospectus for the Fund, dated October 21, 1994,
supplemented April 13, 1995; (ii) a Statement of Additional Information
about the Fund, dated October 21, 1994, supplemented January 3, 1995; and
(iii) a Statement of Additional Information about Target Fund, dated May
1, 1995, (the "Target Fund Additional Statement"). The Target Fund
Additional Statement, which is incorporated herein by reference, contains
more detailed information about Target Fund and its management. A
Statement of Additional Information relating to the Reorganization, dated
May 15, 1995, has been filed with the SEC as part of the Target Fund
Registration Statement on Form N-14 and is incorporated herein by
reference and is available by written request to OSS at the same address
immediately above or by calling the toll-free number shown above.
Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated May 15, 1995.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
Page
Introduction
General
Record Date; Vote Required; Share Information
Proxies
Costs of the Solicitation and the Reorganization
Comparative Fee Table
Synopsis
Parties to the Reorganization
The Reorganization
Reasons for the Reorganization
Tax Consequences of the Reorganization
Investment Objectives and Policies
Investment Advisory and Service Plan Fees
Purchases, Exchanges and Redemptions
Principal Risk Factors
Approval of the Reorganization (The Proposal)
Reasons for the Reorganization
The Reorganization
Tax Aspects of the Reorganization
Capitalization Table (Unaudited)
Comparison Between the Fund and Target Fund
Investment Objectives and Policies
Special Investment Methods
Investment Restrictions
Portfolio Turnover
Description of Brokerage Practices
Expense Ratios and Performance
Shareholder Services
Rights of Shareholders
Management and Distribution Arrangements
Purchase of Additional Shares
Method of Carrying Out the Reorganization
Miscellaneous
Financial Information
Public Information
Other Business
Annex A - Agreement and Plan of Reorganization, dated March 16, 1995, by
and between Oppenheimer Time Fund and Oppenheimer Target Fund A-1
<PAGE>
OPPENHEIMER TIME FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PROXY STATEMENT AND PROSPECTUS
Special Meeting of Shareholders
to be held June 20, 1995
INTRODUCTION
General
This Proxy Statement and Prospectus is being furnished to the shareholders
of Oppenheimer Time Fund (the "Fund"), a registered management investment
company, in connection with the solicitation by the Fund's Board of
Trustees (the "Board") of proxies to be used at the Special Meeting of
Shareholders of the Fund to be held at 3410 South Galena Street, Denver,
Colorado 80231, at 10:00 A.M., Denver time, on June 20, 1995, or any
adjournments thereof (the "Meeting"). It is expected that the mailing of
this Proxy Statement and Prospectus will commence on or about May 26,
1995.
At the Meeting, shareholders of the Fund will be asked to approve an
Agreement and Plan of Reorganization (the "Reorganization Agreement")
between the Fund and Oppenheimer Target Fund, including the transfer of
substantially all the assets of the Fund (consisting of Class A shares)
in exchange for Class A shares of Target Fund, the distribution of such
Class A shares to the shareholders of the Fund in complete liquidation of
the Fund, the deregistration of the Fund as an investment company under
the Investment Company Act of 1940, as amended (the "Investment Company
Act"), and the cancellation of the outstanding shares of the Fund. Target
Fund currently offers Class A shares with a sales charge imposed at the
time of purchase (certain purchases aggregating $1.0 million or more are
not subject to a sales charge, but may be subject to a contingent deferred
sales charge). Target Fund also offers Class C shares which are offered
without a sales or front-end sales charge, although an investor may pay
a sales charge when shares are redeemed, depending on how long they are
held. A contingent deferred sales charge is imposed on most Class C
shares redeemed within 12 months of purchase. The Class A shares to be
issued by Target Fund pursuant to the Reorganization will be issued at net
asset value without a sales charge.
Record Date; Vote Required; Share Information
The Board has fixed the close of business on April 21, 1995 as the record
date (the "Record Date") for the determination of shareholders entitled
to notice of, and to vote at, the Meeting. An affirmative vote of the
holders of a majority of the outstanding shares of the Fund entitled to
vote at the Meeting is required for approval of the Proposal. An
affirmative vote of the holders of a majority of the outstanding shares
of the Fund is defined as the vote of the holders of the lesser of: (i)
67% or more of the voting securities present or represented by proxy of
the shareholder meeting if the holders of more than 50% of the outstanding
voting securities are present or represented by proxy, or (ii) more than
50% of the outstanding voting securities. Each shareholder will be
entitled to one vote for each share and a fractional vote for each
fractional share held of record at the close of business on the Record
Date. Only shareholders of the Fund will vote on the Reorganization. The
vote of shareholders of Target Fund is not being solicited.
At the close of business on the Record Date, there were approximately
20,700,306.546 shares of the Fund issued and outstanding, 13,517,341.701
shares of Class A of Target Fund issued and outstanding and 96,636.869
shares of Class C of Target Fund issued and outstanding. The presence in
person or by proxy of the holders of a majority of such shares constitutes
a quorum for the transaction of business at the Meeting. To the knowledge
of the Fund, as of the Record Date, no person owned of record or
beneficially 5% or more of the outstanding shares of the Fund or 5% or
more of the outstanding Class A or Class C shares of Target Fund. In
addition, as of the record date, the Trustees and officers of the Fund
owned less than 1% of the outstanding shares. As of the record date, the
Trustees and officers of Target Fund as a group owned less than 1% of the
outstanding shares of each class of Target Fund.
Proxies
The enclosed form of proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in accordance
with the choices specified thereon, and will be included in determining
whether there is quorum to conduct the Meeting. The proxy will be voted
in favor of the Proposal unless a choice is indicated to vote against or
to abstain from voting on the Proposal.
Shares owned of record by broker-dealers for the benefit of their
customers ("street account shares") will be voted by the broker-dealer
based on instructions received from its customers. If no instructions are
received, the broker-dealer may (if permitted under applicable stock
exchange rules), as record holder, vote such shares on the Proposal in the
same proportion as that broker-dealer votes street account shares for
which voting instructions were received in time to be voted. If a
shareholder executes and returns a proxy but fails to indicate how the
votes should be cast, the proxy will be voted in favor of the Proposal.
The proxy may be revoked at any time prior to the voting thereof by: (i)
writing to the Secretary of the Fund at Two World Trade Center, 34th
Floor, New York, New York 10048-0203; (ii) attending the Meeting and
voting in person; or (iii) signing and returning a new proxy (if returned
and received in time to be voted).
Costs of the Solicitation and the Reorganization
All expenses of this solicitation, including the cost of printing and
mailing this Proxy Statement and Prospectus, will be borne by the Fund.
Any documents such as existing prospectuses or annual reports that are
included in that mailing will be a cost of the fund issuing the document.
In addition to the solicitation of proxies by mail, proxies may be
solicited by officers of the Fund or officers and employees of OSS,
personally or by telephone or telegraph or may be solicited by a proxy
solicitation firm hired for such purpose; any expenses so incurred will
be borne by OSS. Proxies may also be solicited by a proxy solicitation
firm hired at the Fund's expense. Brokerage houses, banks and other
fiduciaries may be requested to forward soliciting material to the
beneficial owners of shares of the Fund and to obtain authorization for
the execution of proxies. For those services, if any, they will be
reimbursed by the Fund for their reasonable out-of-pocket expenses.
With respect to the Reorganization, the Fund and Target Fund will bear the
cost of their respective tax opinion. Any other out-of-pocket expenses
of the Fund and Target Fund associated with the Reorganization, including
legal, accounting and transfer agent expenses, will be borne by the Fund
and Target Fund, respectively, in the amounts so incurred by each.
COMPARATIVE FEE TABLE
The Fund and Target Fund each pay a variety of expenses directly for
management of their assets, administration, distribution of their shares
and other services, and those expenses reflected in each fund's net asset
value per share. Shareholders pay other expenses directly, such as sales
charges. The following tables show the expenses of the Fund and Target
Fund and the pro forma expenses of a combined fund after giving effect to
the Reorganization.
<TABLE>
<CAPTION>
Oppenheimer Oppenheimer Pro forma
Target Fund Time Fund Combined Fund
Class A Class C Class A Class A Class C
<S> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Charge on Purchases
(as a % of offering price) 5.75% None 5.75% 5.75% None
Sales Charge on Reinvested Dividends None None None None None
Deferred Sales Charge
(as a % of the lower of the original
purchase price or redemption proceeds) None(1) 1.0%(2) None(1) None(1) 1.0%(2)
Exchange Fee None None None None None
<FN>
_______________________
(1) If you invest more than $1 million in Class A shares, you may have to pay a sales charge of up to 1% if you sell your shares
within 18 calendar months from the end of the calendar month during which you purchased those shares.
(2) If you redeem Class C shares within 12 months of buying them, you may have to pay a 1.0% contingent deferred sales
charge.
</TABLE>
The sales charge on purchases of the Fund, and the sales charge on
purchases of Class A shares of Target Fund, are identical, and are not
expected to change as a result of the reorganization.
The calculations in the table below are based on the Fund's business
expenses for the twelve month period ended December 31, 1994 and
calculations for Target Fund are based on expenses for its Class A and
Class C shares for the fiscal period ended December 31, 1994. The pro
forma fees reflect the combined funds at December 31, 1994, as if the
Reorganization had occurred on that date. These amounts are shown as a
percentage of the average net assets of each class of a fund's shares for
that year.
<TABLE>
<CAPTION> Pro forma
Oppenheimer Oppenheimer Combined
Target Fund Time Fund Fund
Class A Class C Class A Class A Class C
<S> <C> <C> <C> <C> <C>
Annual Fund Operating Expenses
Management Fees 0.74%+ 0.74%+ 0.74% 0.71% 0.71%
12b-1 Service Plan Fees 0.17%* 1.00% 0.16%* 0.16% 1.00%
Other Expenses 0.30% 0.42% 0.26% 0.27% 0.39%
Total Fund Operating 1.21% 2.16% 1.16% 1.14% 2.10%
Expenses
<FN>
___________________
+ Management fees for Target Fund have been restated in the fee table because the annual fees on the first and second $200
million of net assets decreased to .75% and .70%, respectively, on July 1, 1994. The fees in the table are based on expenses
that would have been incurred if the lower management rate had been in effect for the twelve months ended December 31, 1994.
* The 12b-1 Service Plan fees for Target Fund have been restated in the table because an amended Service Plan for Target
Fund shares took effect July 1, 1994. That applies to all shares of the Fund, regardless of the date on which the shares were
purchased. The fees in the table are based on expenses that would have been incurred if that plan had been in effect during the
twelve months ended December 31, 1994. Actual management fees for Target Fund for Class A shares would have been .76%,
and the Class A Service Plan fees would have been .10% and the total operating expenses would have been 1.16% for Class A
and 2.18% for Class C shares, respectively. The 12b-1 Service Plan fees for Time Fund have been restated for the same reasons
as described above. The actual Service Plan fees would have been .11%, and the total fund operating expenses would have been
1.11%. Target Fund Class C shares have a 12b-1 Distribution and Service Plan Fee which includes an asset-based sales charge.
The maximum service fee is 0.25% of average net assets of that class and the asset-based sales charge of 0.75%.
</TABLE>
To try and show the effect of these expenses, on an investment over
time, the hypotheticals shown below have been created. Assume that you
make a $1,000 investment in either the Fund or Target Fund or the pro
forma combined fund and that the annual return is 5% and that the
operating expenses for each fund are the ones shown in the chart above.
If you were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of each
period shown:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years(1)
<S> <C> <C> <C> <C>
Oppenheimer Target Fund
Class A Shares $69 $94 $120 $196
Class C Shares $32 $68 $116 $249
Oppenheimer Time Fund
Class A Shares $69 $92 $118 $190
Pro Forma Combined Fund
Class A Shares $68 $92 $117 $188
Class C Shares $31 $66 $113 $243
If you did not redeem your investment, it would incur the following expenses:
1 year 3 years 5 years 10 years(1)
Oppenheimer Target Fund
Class A Shares $69 $94 $120 $196
Class C Shares $22 $68 $116 $249
Oppenheimer Time Fund
Class A Shares $69 $68 $118 $190
Pro Forma Combined Fund
Class A Shares $68 $92 $117 $188
Class C Shares $21 $66 $113 $243
<FN>
______________________
(1) Because of the asset-based sales charge imposed on Class C shares of Target Fund, long-term shareholders of Class C shares
could bear expenses that would be the economic equivalent of an amount greater than the maximum front-end sales charges
permitted under applicable regulatory requirements.
</TABLE>
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of the Fund to assist them
in determining whether to approve the Reorganization. This synopsis is
only a summary and is qualified in its entirety by the more detailed
information contained in or incorporated by reference in this Proxy
Statement and Prospectus and the Annex hereto. Shareholders should
carefully review this Proxy Statement and Prospectus and the Annex hereto
in their entirety and, in particular, the current Prospectus of Target
Fund which accompanies this Proxy Statement and Prospectus and is
incorporated by reference herein.
Parties to the Reorganization
The Fund is a diversified, open-end, management investment company.
Target Fund is a diversified, open-end, management investment company
which was reorganized as a Massachusetts business trust on February 25,
1987. The Fund and Target Fund are each located at Two World Trade
Center, New York, New York 10048-0203. The members of the Board of the
Fund and the Board of Trustees of Target Fund are the same. Oppenheimer
Management Corporation (the "Manager") acts as investment adviser to the
Fund and Target Fund (collectively referred to herein as the "funds").
Additional information about the parties is set forth below.
Shares to be Issued
Shareholders of the Fund will receive Class A shares of Target Fund.
The Board of Trustees of Target Fund has established two classes of shares
which are Class A and Class C. All classes vote together in the aggregate
as to certain matters, however shares of a particular class vote together
on matters that affect that class alone. With respect to the Fund, there
is only one class of shares and Fund shareholders vote exclusively on all
matters submitted to a vote of Fund shareholders.
The Reorganization
The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund, consisting of Class A shares, to Target Fund
in exchange for Class A shares of Target Fund. The net asset value of
Target Fund's Class A shares issued in the exchange will equal the value
of the assets of the Fund received by Target Fund. Following the Closing
Date (as hereafter defined) scheduled for the Reorganization, the Fund
will distribute the Class A shares of Target Fund received by the Fund on
the Closing Date to holders of Fund shares issued and outstanding as of
the Valuation Date (as hereinafter defined) in complete liquidation of the
Fund and the Fund will thereafter be dissolved and deregistered under the
Investment Company Act. As a result of the Reorganization, each Fund
shareholder will receive that number of full and fractional Target Fund,
Class A shares equal in value to such shareholder's pro rata interest in
the assets transferred to Target Fund as of the Valuation Date. The Board
has determined that the interests of existing Fund shareholders will not
be diluted as a result of the Reorganization. For the reasons set forth
below under "The Reorganization - Reasons for the Reorganization," the
Board, including the trustees who are not "interested persons" of the Fund
(the "Independent Trustees'), as that term is defined in the Investment
Company Act, has concluded that the Reorganization is in the best
interests of the Fund and its shareholders and recommends approval of the
Reorganization by Fund shareholders. If the Reorganization is not
approved, the Fund will continue in existence and the Board will determine
whether to pursue alternative actions.
Reasons for the Reorganization
The Board of Trustees of the Fund (the "Board"), including the
Independent Trustees, at a meeting held on March 16, 1995, unanimously
approved and recommended to the shareholders of the Fund that they approve
the Reorganization and Reorganization Agreement. In considering the
Reorganization, the Board compared the Fund to Target Fund with respect
to size, investment objectives, management fees and performance. Both the
Fund and Target Fund are equity funds sharing similar investment
objectives of seeking capital appreciation through emphasis on securities
of "growth-type companies." Each of the funds seeks its investment
objective by investing in common stocks, preferred stocks, convertible
securities and rights and warrants which vary in proportion from time to
time. Both funds may invest in stocks that are sensitive to changes in
the business cycle, known as "cyclicals" if they present opportunities for
long term growth. The funds do not invest to seek current income to pay
shareholders. Among other factors, the Board took into consideration that
the schedule of management fee rates are identical for both funds. The
Board also considered pro forma financial information which indicated that
the average management fee rate paid by shareholders in a combined fund
would likely be lower and that the expense ratio would be lower for Class
A shareholders of the combined fund. For the fiscal year ended June 30,
1994, the expense ratio for Time Fund was .94% of average annual net
assets. For the fiscal year ended December 31, 1994, the expense ratio
was 1.16% of the average annual net assets for Class A shares of Target
Fund and it was 2.18% of the average annual net assets for Class C shares.
With respect to the six months ended December 31, 1994, the expense ratio
for Time Fund was 1.29% of the average annual net assets (annualized).
The expenses of Time Fund for the twelve month period ended December 31,
1994 were 1.16% of the average annual net assets (restated). For the
fiscal year ended December 31, 1994, on a pro forma basis, giving effect
to the Reorganization, the expense ratio for Target Fund as the surviving
fund, would be 1.14% of the average annual net assets for Class A shares
and 2.10% of the average annual net assets for Class C shares.
The Board also considered that the Fund consists solely of Class A shares,
while Target Fund offers Class A shares and Class C shares. Class A
shares of the Fund could easily be exchanged for Class A shares of Target
Fund. The Board compared the size of each fund. As of March 15, 1995,
the net assets of the Fund were approximately $311 million and the net
assets of Target Fund were approximately $317 million. While the funds
are similar in size, it is expected that over time, Target Fund will
continue to grow and become the larger fund. In the month of February,
the Fund had over $7 million in net redemptions while Target Fund had over
$5 million in net purchases. In addition, as a result of the
Reorganization, the combined fund will be much larger and shareholders of
the Fund should benefit from the economies of scale available to a larger
fund. These economies of scale should result in lower costs per account
for each shareholder through lower operating expenses and transfer agency
expenses.
The Board also considered that there would be no sales charge imposed in
effecting the Reorganization, and that the Reorganization would be
effected as a tax-free exchange. The Board determined that it would be
in the best interests of Time Fund and its shareholders to combine with
Target Fund. The Board also determined that combining the funds would not
result in a dilution of the interests of Time Fund shareholders.
In determining to recommend approval of the reorganization to
shareholders, the Board also considered information on the historical
performance of both funds. Target Fund has enjoyed significantly better
performance than the Fund, for the one and five year periods ended
December 31, 1994. Although past performance is not predictive of future
results the Board determined that the shareholders of the Fund would have
the opportunity to be shareholders in a similar fund with more favorable
past performance.
Tax Consequences of the Reorganization
In the opinion of KPMG Peat Marwick LLP ("Peat Marwick"), tax adviser to
the Fund, the Reorganization will qualify as a tax-free reorganization for
Federal income tax purposes. As a result, no gain or loss will be
recognized by the Fund, Target Fund, or the shareholders of the combined
fund for Federal income tax purposes as a result of the Reorganization.
For further information about the tax consequences of the Reorganization,
see "Approval of the Reorganization - Tax Aspects" below.
Investment Objectives and Policies
As its investment objective, both the Fund and Target Fund seek capital
appreciation.
The Fund seeks its investment objective of capital appreciation by
emphasizing investment in "mid-capitalization" companies (those generally
with capitalization between $500 million and $5 billion, also known as
"mid-cap" companies) that are, in the Manager's opinion, established, well
managed companies with strong market positions, high quality products and
high earnings growth potential that have a proven ability to translate
growth in sales and market share into earnings.
The Fund's investments include common stocks, preferred stocks,
convertible securities, and rights and warrants in proportions which vary
from time to time. Of the companies whose stocks the Fund held during the
fiscal year ended June 30, 1994, some are categorized as "consumer
cyclicals" that do well in the early to middle stages of the economic
cycle; some fall into the technology sectors, others are classified as
financial services issues. In every case, however, sector classifications
are less important selection criteria for the Fund than specific company
characteristics.
Target Fund seeks its investment objective of capital appreciation by
emphasizing investment in common stocks or other equity securities,
including convertible securities or may, just as with the Fund, hold
warrants and rights. Target Fund may also seek to take advantage of
changes in the business cycle by investing in companies that are sensitive
to those changes, if the Manager believes they present opportunities for
long-term growth. For example, when the economy is expanding, companies
in the financial services and consumer products industries may be in a
position to benefit from changes in the business cycle and may present
long-term growth opportunities.
Both the Fund and Target Fund may purchase equity and debt securities
issued or guaranteed by foreign companies or foreign governments or their
agencies. The Fund may purchase securities in any country, developed or
underdeveloped. There is no limit on the amount of assets each fund may
invest in foreign securities, although as to Target Fund, it does not
normally "expect" to have more than 35% of its assets invested in foreign
securities. Foreign currency will be held by each fund only in connection
with the purchase or sale of foreign securities.
The Manager considers many identical factors, when investing the assets
of the Fund or the assets of Target Fund, including general economic
conditions in the U.S. relative to foreign economies, and the trends in
domestic and foreign stock markets. Each of the funds may try to hedge
against losses in the value of its portfolio of securities by using
hedging strategies. When market conditions are unstable, each of the
funds may invest substantial amounts of their assets in debt securities,
such as money market instruments or government securities. The Manager
may, with respect to both funds, invest in securities of companies that
are in special situations that the Manager believes presents opportunities
for capital growth, such as a proposed merger or reorganization. There
is a risk that the price of a security may decline if the anticipated
development fails to occur. There is no restriction on the amount of
assets that each fund may invest in special situations.
Because the type of securities each fund invests in, and the investment
techniques each fund uses, some of which may be speculative, both funds
are designed for investors who are willing to accept greater risks of loss
of their capital in the hope of achieving capital appreciation. Neither
fund is intended for investors seeking assured income and preservation of
capital.
Investment Advisory and Service Plan Fees
The funds both obtain investment management services from Oppenheimer
Management Corporation (the "Manager"). The management fee is payable
monthly and computed on the net asset value of each fund as of the close
of business each day. The Fund pays a management fee at the rate of 0.75%
of the first $200 million of net assets, 0.72% of the next $200 million,
0.69% of the next $200 million, 0.66% of the next $200 million, and 0.60%
of aggregate assets over $800 million. Target Fund pays the identical
management fee rate, however, prior to July 1, 1994 the annual management
fee rate for Target Fund on the first and second $200 million of the
Target Funds aggregate net assets was 0.80% and 0.75% respectively. That
rate was lowered subsequent to July 1, 1994 and Target Fund and the Fund
now have the same management fee rates. Both the Fund and Target Fund
have service plans pursuant to Rule 12b-1 under the Investment Company
Act. Specifically, Target Fund has adopted a service plan for its Class
A shares and a Distribution and Service Plan for its Class C shares to
compensate the Distributor for its services and costs in distributing
Class C shares and servicing accounts. Fund shareholders, as a result of
the reorganization will become Class A shareholders of Target Fund and
will not be affected by the Distribution and Service Plan for Class C
shares. The Service Plan adopted by the Fund, and the Service Plan
adopted by Target Fund for its Class A shares (the "Service Plan") provide
that each of the funds reimburses Oppenheimer Funds Distributor, Inc. (the
"Distributor"), the distributor of each fund's shares, quarterly for all
or a portion of the Distributor's costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold the
funds' shares. Both the Fund and Target Fund amended their Service Plans,
effective July 1, 1994. The Service Plans, as amended, applies to all
shares of each of the funds regardless of the date on which they were
purchased. The current maximum annual fee payable by the Fund pursuant
to its service plan is 0.25% of the average net asset value of the Fund's
shares, and for Target Fund it is 0.25% of the average net assets of Class
A shares, computed as of the close of each business day. See "Comparison
Between the Fund and Target Fund - Expense Ratios and Performance" below.
Purchases, Exchanges and Redemptions
The Fund and Target Fund are part of the OppenheimerFunds complex of
mutual funds. The procedures for purchases, exchanges and redemptions of
shares of the funds are substantially the same.
The maximum sales charge on shares of the Fund and Class A shares of
Target Fund is 5.75%, and is reduced for purchases of $25,000 or more.
For certain purchases of $1 million or more, the funds do not charge a
front-end sales charge but impose a contingent deferred sales charge of
a maximum of 1% on shares redeemed within 18 months of the end of the
calendar month of their purchase. Shares of Target Fund received in the
Reorganization will be issued at net asset value, without a sales charge.
Shareholders may purchase through AccountLink (whereby funds are
transmitted electronically from an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member up
to $100,000. Shareholders of the funds may exchange their shares at net
asset value without a sales charge for shares of certain OppenheimerFunds
provided certain conditions are met. However, shares of a particular
class may be exchanged only for shares of the same class in other
OppenheimerFunds. For example, shareholders of the Fund can only exchange
their Class A shares for Class A shares of another fund. At present, not
all of the OppenheimerFunds offer the same class of shares. Shareholders
of the funds may redeem their shares by written request or by telephone
request in an amount up to $50,000 in any seven-day period, or they may
arrange to have share redemption proceeds wired to a pre-designated
account at a U.S. bank or other financial institution that is an ACH
member ("AccountLink redemption"). Shareholders may redeem shares
automatically by calling PhoneLink and having redemption proceeds wired
to a pre-established AccountLink bank account. Shareholders of the funds
have up to six months to reinvest redemption proceeds of their Class A
shares in Class A shares of the funds or other OppenheimerFunds without
paying a sales charge. The Fund and Target Fund may redeem accounts
valued at less than $500 and $200, respectively, if the account has fallen
below such stated amount for reasons other than market value fluctuations.
Both funds offer Automatic Withdrawal and Exchange Plans.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in Target
Fund, shareholders should carefully consider the following risk factors,
which is a summary only, relating to both Target Fund and the Fund, in
addition to the other information set forth in this Proxy Statement and
Prospectus and the more complete description of risk factors set forth in
the documents incorporated by reference herein, including the Prospectuses
of the funds and their respective Statements of Additional Information.
As stated in their respective Prospectuses, as a general matter, the Fund
and Target Fund are both intended for investors seeking capital
appreciation who are willing to accept greater risks of loss in the hopes
of greater gains. The funds do not invest to seek current income to pay
shareholders. There is no assurance that either the Fund or Target Fund
will achieve its investment objective.
Investment By The Funds in Foreign Securities
Each of the funds may invest in "foreign securities," which include
equity and debt securities of companies organized under the laws of
countries other than the United States and debt securities of foreign
governments that are traded on foreign securities exchanges or in the
foreign over-the-counter market. The funds may purchase securities in any
country, developed or undeveloped. There is no limit on the amount of
each fund assets that may be invested in foreign securities, however,
Target Fund normally does not expect to have more than 35% of its assets
invested in foreign securities. The Fund may write and purchase both
covered and uncovered calls and puts on foreign currencies. The Fund may
also enter into Forward Contracts to protect against uncertainty in the
level of future exchange rates. Investments in foreign securities present
special additional risks and considerations not typically associated with
instruments in domestic securities. For example, foreign issuers are not
subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign instruments may be
affected by changes in foreign currency rates, exchange control
regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in
governmental, economic or monetary policy in the U.S. or abroad, or other
political and economic factors. Other risks include reduction of income
by foreign taxes; fluctuation in value of foreign portfolio investments
due to changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of public
information about foreign issuers; lack of uniform accounting, auditing
and financial reporting standards comparable to those applicable to
domestic issuers; less volume on foreign exchanges than on U.S. exchanges;
greater volatility and less liquidity on foreign markets than in the U.S.;
less regulation of foreign issuers, stock exchanges and brokers than in
the U.S.; greater difficulties in commencing lawsuits; higher brokerage
commission rates than in the U.S.; increased risks of delays in settlement
of portfolio transactions or loss of certificates for portfolio
securities; possibilities in some countries of expropriation, confiscatory
taxation, political, financial or social instability or adverse diplomatic
developments; and unfavorable differences between the U.S. economy and
foreign economies. In the past, U.S. Government policies have
discouraged certain investments abroad by U.S. investors, through taxation
or other restrictions, and it is possible that such restrictions could be
re-imposed.
Investment In Growth Type Companies
The funds both seek their investment of capital appreciation by
emphasizing investment in "growth-type" companies. Specifically, the Fund
invests in "mid-capitalization" companies those generally with
capitalization between $500 million and $5 billion, also known as "mid-
cap" companies. With respect to Target Fund, the Manager may emphasize
investment in companies in particular ranges of size. Both funds may
invest in companies of any size and capitalization, however, in general
capital appreciation is more likely to be found in the securities of
"growth-type" companies that have a proven ability to translate growth in
sales and market shares into earnings gain. Some of the investment
techniques used by the Funds (see Risks of Hedging With Options and
Futures, described below) may be considered to be speculative and may
increase the risks of investing in the funds, and may also increase each
funds' operating costs.
Special Situations
Each of the funds, may invest in securities of companies that are in
"special situations" that the Manager believes present opportunities for
capital growth. A "special situation" may be an event such as a proposed
merger, reorganization, or other unusual development that is expected to
occur and which may result in an increase in the value of a company's
securities regardless of general business conditions or the movement of
prices in the securities market as a whole. There is a risk that the
price of the security may decline if the anticipated development fails to
occur. There is no limit on the amount of assets that each of the funds
may invest in "special situations."
Borrowing for Leverage
The Fund and Target Fund may borrow up to 10% of the value of their
respective total assets from banks on an unsecured basis to buy
securities. This is a speculative investment method known as "leverage."
Leveraging may subject an investment in the fund to greater risks and
costs than funds that do not borrow. These risks may include the possible
reduction of income and increased fluctuation in the fund's net asset
value per share, since the fund pays interest on borrowings.
Small, Unseasoned Companies. The funds may invest in securities of
small, unseasoned companies. These are companies that have been in
operation for less than three years, even after including the operations
of any predecessors. Securities of these companies may have limited
liquidity and may be subject to volatility in their prices. Neither of
the funds currently intends to invest no more than 5% of its respective
net assets in securities of small, unseasoned issuers.
Warrants and Rights
Each of the funds may invest in warrants, which are the option to purchase
stock at set prices that are valid for a limited period of time. The Fund
may invest up to 2% of its total assets in warrants or rights. Target
Fund may invest up to 5% of its total assets. These restrictions do not
include warrants or rights that have been acquired in units or are
attached to other securities. With respect to Target Fund no more than
2% of its assets may be invested in warrants that are not listed on the
New York or American Stock Exchanges.
Risks of Hedging With Options and Futures
The funds may write covered call options and engage in hedging
transactions as described below in "Comparison Between the Fund and Target
Fund - Special Investment Methods". There are certain risks in writing
calls. If a call written by the fund is exercised, the fund forgoes any
profit from any increase in the market price above the call price of the
underlying investment on which the call was written. In addition, the
fund could experience capital losses which might cause previously
distributed short-term capital gains to be re-characterized as a non-
taxable return of capital to shareholders. In writing puts, there is the
risk that the fund may be required to buy the underlying security at a
disadvantageous price. The principal risks of trading futures are (i)
possible imperfect correlation between the prices of the futures an the
market value of the dept securities in the fund's portfolio, (ii) possible
lack of a liquid secondary market for closing out a futures position,
(iii) the need for additional skills and techniques beyond those required
for normal portfolio management and (iv) losses on futures resulting from
interest rate movements not anticipated by the Manager. Writing covered
calls and the buying and selling of options and futures contracts are
considered derivative investments. A derivative investment is a specially
designed investment whose performance is linked to the performance of
another investment or security, such as an option, future, index or
currency. The risks of investing in derivative investments include not
only the ability of the company issuing the instrument to pay the amount
due on the maturity of the instrument, but also the risk that the
underlying investment or security might not perform the way the Manager
expected it to perform. The performance of derivative investments may
also be influenced by interest rate changes in the U.S. and abroad. All
of this can mean that the Fund will realize less income than expected.
Certain derivative instruments held by the Fund and Target Fund may trade
in the over-the-counter markets and may be illiquid. See "Illiquid and
Restricted Securities" below.
APPROVAL OF THE REORGANIZATION
(The Proposal)
Reasons for the Reorganization
The Board of Trustees of the Fund (the "Board"), including the Independent
Trustees, at a meeting held on March 16, 1995, unanimously approved and
recommended to the shareholders of the Fund that they approve the
Reorganization and Reorganization Agreement. In considering the
Reorganization, the Board compared the Fund to Target Fund with respect
to size, investment objectives, management fees and performance. Both the
Fund and Target Fund are equity funds sharing similar investment
objectives of seeking capital appreciation through emphasis on securities
of "growth-type companies." Each of the funds seeks its investment
objective by investing in common stocks, preferred stocks, convertible
securities and rights and warrants which vary in proportion from time to
time. Both funds may invest in stocks that are sensitive to changes in
the business cycle, known as "cyclicals" if they present opportunities for
long term growth. The funds do not invest to seek current income to pay
shareholders. Among other factors, the Board took into consideration that
the schedule of management fee rates are identical for both funds. The
Board also considered pro forma financial information which indicated that
the average management fee rate paid by shareholders in a combined fund
would likely be lower and that the expense ratio would be lower for Class
A shareholders of the combined fund. For the fiscal year ended June 30,
1994, the expense ratio for Time Fund was .94% of average annual net
assets. For the fiscal year ended December 31, 1994, the expense ratio
was 1.16% of the average annual net assets for Class A shares of Target
Fund and it was 2.18% of the average annual net assets for Class C shares.
With respect to the six months ended December 31, 1994, the expense ratio
for Time Fund was 1.29% of the average annual net assets (annualized).
For the fiscal year ended December 31, 1994, on a pro forma basis, giving
effect to the Reorganization, the expense ratio for Target Fund as the
surviving fund, would be 1.14% of the average annual net assets for Class
A shares and 2.10% of the average annual net assets for Class C shares.
The Board also considered that the Fund consists solely of Class A shares,
while Target Fund offers Class A shares and Class C shares. Class A
shares of the Fund could easily be exchanged for Class A shares of Target
Fund. The Board compared the size of each fund. As of March 15, 1995,
the net assets of the Fund were approximately $311 million and the net
assets of Target Fund were approximately $317 million. While the funds
are similar in size, it is expected that over time, Target Fund will
continue to grow and become the larger fund. In the month of February,
the Fund had over 7 million in net redemptions while Target Fund had over
5 million in net purchases. In addition, as a result of the
Reorganization, the combined fund will be much larger and shareholders of
the Fund should benefit from the economies of scale available to a larger
fund. These economies of scale should result in lower costs per account
for each shareholder through lower operating expenses and transfer agency
expenses.
The Board also considered that there would be no sales charge imposed in
effecting the Reorganization, and that the Reorganization would be
effected as a tax-free exchange. The Board determined that it would be
in the best interests of Time Fund and its shareholders to combine with
Target Fund. The Board also determined that combining the funds would not
result in a dilution of the interests of Time Fund shareholders.
In determining to recommend approval of the reorganization to
shareholders, the Board also considered information on the historical
performance of both funds. Target Fund has enjoyed significantly better
performance than the Fund, for the one and five year periods ended
December 31, 1994. Although past performance is not predictive of future
results the Board determined that the shareholders of the Fund would have
the opportunity to be shareholders in a similar fund with more favorable
past performance.
The Reorganization
The Reorganization Agreement (a copy of which is set forth in full as
Annex A to this Proxy Statement and Prospectus) contemplates a
reorganization under which (i) all of the assets of the Fund (other than
the cash reserve described below (the "Cash Reserve")) would be
transferred to Target Fund in exchange for Class A shares of Target Fund,
(ii) these shares would be distributed among the shareholders of the Fund
in complete liquidation of the Fund, (iii) the Fund would be deregistered
as an investment company under the Investment Company Act and (iv) the
outstanding shares of the Fund would be cancelled. Target Fund will not
assume any of the Fund's liabilities except for portfolio securities
purchased which have not settled and outstanding shareholder redemption
and dividend checks.
The result of effectuating the Reorganization would be that: (i) Target
Fund would add to its gross assets all of the assets (net of any liability
for portfolio securities purchased but not settled and outstanding
shareholder redemption and dividend checks) of the Fund other than its
Cash Reserve; and (ii) the shareholders of the Fund as of the close of
business on the Closing Date would become shareholders of Target Fund.
The effect of the Reorganization will be that shareholders of the Fund
who vote their shares in favor of the Reorganization will be electing to
redeem their shares of the Fund (at net asset value on the Valuation Date
referred to below under "Method of Carrying Out the Reorganization Plan,"
calculated after subtracting the Cash Reserve) and reinvest the proceeds
in Class A shares of Target Fund at net asset value without sales charge
and without recognition of taxable gain or loss for Federal income tax
purposes (see "Tax Aspects of the Reorganization" below). The Cash
Reserve is that amount retained by the Fund which is sufficient in the
discretion of the Board for the payment of: (a) the Fund's expenses of
liquidation, and (b) its liabilities, other than those assumed by Target
Fund. The Fund and Target Fund will bear all of their respective expenses
associated with the Reorganization, as set forth under "Costs of the
Solicitation and the Reorganization" above. Management estimates that
such expenses associated with the Reorganization to be borne by the Fund
will not exceed $98,000. Liabilities as of the date of the transfer of
assets will consist primarily of accrued but unpaid normal operating
expenses of the Fund, excluding the cost of any portfolio securities
purchased but not yet settled and outstanding shareholder redemption and
dividend checks. See "Method of Carrying Out the Reorganization Plan"
below.
The Reorganization Agreement provides for coordination between the funds
as to their respective portfolios so that, after the closing, Target Fund
will be in compliance with all of its investment policies and
restrictions. The Fund will recognize no capital gain or loss on any
sales made pursuant to this paragraph. As noted in "Tax Aspects of the
Reorganization" below, if the Fund realizes net gain from the sale of
securities in 1994, such gain, to the extent not offset by capital loss
carry forward, will be distributed to shareholders prior to the Closing
Date and will be taxable to shareholders as capital gain.
Tax Aspects of the Reorganization
Immediately prior to the Valuation Date referred to in the Reorganization
Agreement, the Fund will pay a dividend or dividends which, together with
all previous such dividends, will have the effect of distributing to the
Fund shareholders all of the Fund's investment company taxable income for
taxable years ending on or prior to the Closing Date (computed without
regard to any deduction for dividends paid) and all of its net capital
gain, if any, realized in taxable years ending on or prior to the Closing
Date (after reduction for any available capital loss carry-forward). Such
dividends will be included in the taxable income of the Fund's
shareholders as ordinary income and capital gain, respectively.
The exchange of the assets of the Fund for Class A shares of Target
Fund and the assumption by Target Fund of certain liabilities of the Fund
is intended to qualify for Federal income tax purposes as a tax-free
reorganization under Section 368(a)(1) of the Internal Revenue Code of
1986, as amended (the "Code"). The Fund has represented to KPMG Peat
Marwick LLP, tax adviser to the Fund, that there is no plan or intention
by any Fund shareholder who owns 5% or more of the Fund's outstanding
shares, and, to the Fund's best knowledge, there is no plan or intention
on the part of the remaining Fund shareholders, to redeem, sell, exchange
or otherwise dispose of a number of Target Fund shares received in the
transaction that would reduce the Fund shareholders' ownership of Target
Fund Class A shares to a number of shares having a value, as of the
Closing Date, of less than 50% of the value of all the formerly
outstanding Fund shares as of the same date. The Fund and Target Fund
have each further represented to KPMG Peat Marwick LLP that, as of the
Closing Date, the Fund and Target Fund will qualify as regulated
investment companies or will meet the diversification test of Section
368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Target Fund and the
Fund will receive the opinion of KPMG Peat Marwick LLP to the effect that,
based on the Reorganization Agreement, the above representations, existing
provisions of the Code, Treasury Regulations issued thereunder, current
Revenue Rulings, Revenue Procedures and court decisions, for Federal
income tax purposes:
1. The transactions contemplated by the Reorganization Agreement will
qualify as a tax-free "reorganization" within the meaning of Section
368(a)(1) of the Code.
2. The Fund and Target Fund will each qualify as "a party to a
reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of the Fund
upon the distribution of Class A shares of beneficial interest in
Target Fund to the shareholders of the Fund pursuant to Section 354
of the Code.
4. Under Section 361(a) of the Code no gain or loss will be recognized
by the Fund by reason of the transfer of its assets solely in
exchange for Class A shares of Target Fund.
5. Under Section 1032 of the Code no gain or loss will be recognized by
Target Fund by reason of the transfer of the Fund's assets solely in
exchange for Class A shares of Target Fund.
6. The shareholders of the Fund will have the same tax basis and
holding period for the Class A shares of beneficial interest in
Target Fund that they receive as they had for the Fund stock that
they previously held, pursuant to Sections 358(a) and 1223(1) of the
Code, respectively.
7. The securities transferred by the Fund to Target Fund will have the
same tax basis and holding period in the hands of Target Fund as
they had for the Fund, pursuant to Sections 362(b) and 1223(1) of
the Code, respectively.
Shareholders of the Fund should consult their tax advisors regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the Federal
income tax consequences of the Reorganization, shareholders of the Fund
should also consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.
Capitalization Table (Unaudited)
The table below sets forth the capitalization of the Fund and Target Fund
and indicates the pro forma combined capitalization as of December 31,
1994 as if the Reorganization had occurred on that date.
<TABLE>
<CAPTION>
Net Asset
Shares Value
Net Assets Outstanding Per Share
<S> <C> <C> <C>
Oppenheimer Target Fund
Class A Shares $301,698,437 13,330,877 $22.63
Class C Shares $ 1,065,787 47,375 $22.50
Oppenheimer Time Fund
Class A Shares $326,410,301 21,387,554 $14.98
Pro Forma Combined Fund
Class A Shares $628,108,738 27,754,663 $22.63
Class C Shares $ 1,069,787 47,375 $22.50
<FN>
____________________
* Reflects issuance of 14,423,786 shares of Target Fund in a tax-free exchange for the net assets of the Fund, aggregating
$326,410,301.
</TABLE>
The pro forma ratio of expenses to average annual net assets of the
combined funds at December 31, 1994 would have been 1.14% with respect to
Class A shares and 2.10% with respect to Class C shares.
COMPARISON BETWEEN THE FUND AND TARGET FUND
Comparative information about the Fund and Target Fund is presented below.
Additional information about Target Fund is set forth in its Prospectus,
accompanying this Proxy Statement and Prospectus, and additional
information about both funds is set forth in documents that may be
obtained upon request of OSS or are available for review at the offices
of the SEC. See "Miscellaneous - Public Information."
Investment Objectives and Policies
As its investment objective, each of the Fund and Target Fund seeks
capital appreciation in the value of its shares. Current income is not
an objective of either fund. In seeking their investment objectives, the
Fund and Target Fund employ various investment policies as described in
detail below. The Manager is the investment adviser to both the Fund and
Target Fund.
The Fund. The Fund seeks its investment objective of capital appreciation
by emphasizing investment in "mid-capitalization" companies (those
generally with capitalization between $500 million and $5 billion, also
known as "mid-cap" companies) that are, in the Manager's opinion,
established, well-managed companies with strong market positions, high
quality products and high earnings growth potential that have a proven
ability to translate growth in sales and market share into earnings gains.
The Fund's investments include common stocks, preferred stocks,
convertible securities, and rights and warrants in proportions which vary
from time to time. Of the companies whose stocks the Fund held during the
fiscal year ended June 30, 1994, some are categorized as "consumer
cyclicals" that do well in the early to middle stages of the economic
cycle; some fall into the technology sector, others are considered
healthcare companies and a few are classified as financial-services
issues. As a group, mid-cap stocks may be more vulnerable to a weaker
economy than other stock sectors. In every case, however, sector
classifications are a less important selection criterion for the Fund than
specific company characteristics.
When investing the Fund's assets, the Manager considers many factors,
including general economic conditions in the U.S. relative to foreign
economies, and the trends in domestic and foreign stock markets. The Fund
may try to hedge against losses in the value of its portfolio of
securities by using hedging strategies described below. When market
conditions are unstable, the Fund may invest substantial amounts of its
assets in debt securities, such as money market instruments or government
securities. Securities selected for defensive purposes may include debt
securities such as rated or unrated bonds and debentures, and preferred
stocks, cash or cash equivalents, such as U.S. Treasury Bills and other
short-term obligations of the U.S. government, its agencies or
instrumentalities, or commercial paper rated "A-1" or better by Standard
& Poor's Corporation or "P-1" or better by Moody's Investors Services,
Inc.
The Fund may enter into interest rate swaps. In an interest rate swap,
the Fund and another party exchange their respective commitments to pay
or receive interest on a security, e.g., an exchange of floating rate
payments for fixed rate payments. The Fund will not use interest rate
swaps for leverage. Swap transactions will be entered into only as to
security positions held by the Fund. The Fund may not enter into swap
transactions with respect to more than 25% of its total assets. The Fund
will segregate liquid assets equal to the net excess, if any, of its
obligations over its entitlements under the swap and will mark to market
that amount daily. There is a risk of loss on a swap equal to the net
amount of interest payments that the Fund is contractually obligated to
make. The credit risk of an interest rate swap depends on the
counterparty's ability to perform.
Target Fund
Target Fund invests its assets to seek capital appreciation for
shareholders. Target Fund does not invest to seek current income to pay
to shareholders.
Target Fund seeks its investment objective by emphasizing investment in
common stocks or other equity securities, including convertible
securities, and may hold warrants and rights. These may include securities
of U.S. companies or foreign companies.
Target Fund's investment adviser, Oppenheimer Management Corporation (the
"Manager"), looks for securities that it believes may appreciate in value.
The Fund may invest in companies of any size and capitalization, and at
times the Manager may emphasize investment in companies in particular
ranges of size. However, in general, capital appreciation possibilities
are more likely to be found in the securities of "growth-type" companies
than larger, more established companies.
Target Fund may also seek to take advantage of changes in the business
cycle by investing in companies that are sensitive to those changes, if
the Manager believes they present opportunities for long-term growth. For
example, when the economy is expanding, companies in the financial
services and consumer products industries may be in a position to benefit
from changes in the business cycle and may present long-term growth
opportunities.
When investing Target Fund's assets, the Manager considers many factors,
including general economic conditions in the U.S. relative to foreign
economies, and the trends in domestic and foreign stock markets. The Fund
may try to hedge against losses in the value of its portfolio of
securities by using hedging strategies described below. When market
conditions are unstable, Target Fund may invest substantial amounts of its
assets in debt securities, such as money market instruments or government
securities. Securities selected for defensive purposes may include debt
securities, such as rated or unrated bonds and debentures, and preferred
stocks, cash or cash equivalents, such as U.S. Treasury Bills and other
short-term obligations of the U.S. Government, its agencies or
instrumentalities, or commercial paper rated "A-1" or better by Standard
& Poor's Corporation or "P-1" or better by Moody's Investors Service, Inc.
The Fund's portfolio manager may employ special investment techniques in
selecting securities for the Fund.
Growth companies tend to be newer companies that may be developing new
products or services, or expanding into new markets for their products.
While they may have what the Manager believes to be favorable prospects
for the long-term, they normally retain a large part of their earnings for
research, development and investment in capital assets. Therefore, they
tend not to emphasize the payment of dividends.
Special Investment Methods
The Fund and Target Fund each use the special investment methods
summarized below.
Borrowing. The Fund and Target Fund may borrow up to 10% of the value of
their respective total assets from banks on an unsecured basis to buy
securities and invest the borrowed funds, subject to the 300% asset
coverage requirement to the Investment Company Act. This is a speculative
investment method known as "leveraging." Leveraging may subject an
investment in the Fund to greater risks and costs than funds that do not
borrow. These risks may include the possible reduction of income and
increased fluctuation in a fund's net asset value per share, since the
each fund pays interest on borrowings. Borrowing is subject to regulatory
limits.
Short Sales Against-the-Box. The funds may not sell securities short
except in transactions referred to as "short sales against-the-box." No
more than 15% of each funds' respective net assets will be held as
collateral for such short sales at any one time.
Foreign Securities. The Fund and Target Fund may purchase equity (and
debt) securities issued or guaranteed by foreign companies or foreign
governments or their agencies. The funds may buy securities of companies
in any country, developed or underdeveloped. There is no limit on the
amount of each funds' assets that may be invested in foreign securities,
although Target Fund normally does not expect to have more than 35% of its
assets invested in foreign securities. Foreign currency will be held by
each of the funds only in connection with the purchase or sale of foreign
securities. The Fund may write and purchase both covered and uncovered
calls and puts on foreign currencies. The Fund may also enter into
Forward Contracts to protect against uncertainty in the level of future
exchange rates. If the funds' securities are held abroad, the countries
in which they are held and the sub-custodians holding them must be
approved by the Fund's Board of Trustees.
Foreign securities have special risks. For example, foreign issuers are
not subject to the same accounting and disclosure requirements that U.S.
companies are subject to. The value of foreign investments may be affected
by changes in foreign currency rates, exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes,
delays in settlement of transactions, changes in governmental economic or
monetary policy in the U.S. or abroad, or other political and economic
factors.
Writing Covered Calls. The Fund and Target Fund may write (that is, sell)
covered call options (calls) to raise cash for liquidity purposes (for
example, to meet redemption requirements) or for defensive reasons. They
may write calls only if certain conditions are met: (1) after writing any
call, not more than 25% of each funds' total assets may be subject to
calls; (2) the calls must be listed on a domestic securities exchange or
quoted on the Automated Quotation System of the National Association of
Securities Dealers, Inc.; and (3) each call must be "covered" while it is
outstanding; that is, the Fund must own the securities on which the call
is written or it must own other securities that are acceptable for the
escrow arrangements required for calls. If a covered call written by one
of the funds is exercised on a security that has increased in value, that
fund will be required to sell the security at the call price and will not
be able to realize any profit on the security above the call price.
Hedging With Options and Futures Contracts. Each fund may buy and sell
options and futures contracts to try to manage its exposure to declining
prices on its portfolio securities or to establish a position in the
equity securities market as a temporary substitute for purchasing
individual securities. Some of these strategies, such as selling futures,
buying puts and writing covered calls, hedge the fund's portfolio against
price fluctuations. Other hedging strategies, such as buying futures and
buying call options, tend to increase the fund's exposure to the market.
Each of the funds may buy and sell futures contracts only if they relate
to broadly-based stock indices, referred to as "Stock Index Futures".
Each fund may purchase certain kinds of put and call options, Stock Index
Futures (described below), financial futures, options on Stock Index
Futures and on broadly-based stock indices. The Fund may enter into
interest rate swaps, only as to security positions held by the Fund and
not with respect to more than 25% of the Fund's total assets. These are
all referred to as "hedging instruments." The funds do not use hedging
instruments for speculative purposes.
Each fund may purchase put options (puts). Buying a put on an investment
gives the fund the right to sell the investment to a seller of a put on
that investment at a set price. Each fund can buy only puts that relate
to (1) securities or Stock Index Futures, or (2) broadly-based stock
indices. The Fund can buy a put on a security or Stock Index Future
whether or not the Fund owns the particular security or Stock Index Future
in its portfolio, however, Target Fund may not purchase puts on securities
it does not own. Target Fund may purchase puts which relate to Stock
Index Futures, whether or not it owns the particular Stock Index Future
in its portfolio. The Fund may sell puts on securities indices or Futures
only if such puts are covered by segregated liquid assets, but may not
sell puts if, as a result, more than 50% of the Fund's net assets would
be required to be segregated liquid assets. The funds may not sell puts
other than a put that the fund previously purchased. Each of the funds
may purchase calls only on securities, broadly-based stock indices or
Stock Index Futures, or to terminate its obligation on a call a fund
previously wrote. A call or put may not be purchased if the value of all
of a fund's put and call options would exceed 5% of a fund's total assets.
Each fund may buy and sell futures contracts only if they relate to
broadly-based stock indices (these are referred to as "Stock Index
Futures"). The funds may purchase and sell puts and calls on foreign
currencies that are traded on a securities or commodities exchange or
over-the-counter market or quoted by major recognized dealers in such
options, for the purpose of protecting against declines in the dollar
value of foreign securities and against increases in the dollar cost of
securities to be acquired. The Fund may write and purchase both covered
and uncovered calls and puts on foreign currencies. The funds may also
enter into foreign currency exchange contracts ("Forward Contracts") in
order to "lock in" the U.S. dollar price of a security denominated in a
foreign currency which it has purchased or sold but which has not yet
settled, or to protect against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and a foreign currency.
Illiquid and Restricted Securities. The Fund will not purchase or
otherwise acquire any securities that may be illiquid by virtue of the
absence of a readily-available market or because their disposition would
be subject to legal restrictions ("restricted securities") if, as a
result, more than 10% of the Fund's net assets would be invested in
securities that are illiquid (including repurchase agreements maturing in
more than seven days). This policy does not limit the acquisition of
restricted securities eligible for resale to qualified institutional
buyers pursuant to Rule 144A under the Securities Act that are determined
to be liquid by the Fund's Board of Trustees or by the Manager under
Board-approved guidelines. Such guidelines take into account, among other
factors, trading activity for such securities and the availability of
reliable pricing information. If there is a lack of trading interest in
particular Rule 144A securities, the Fund's holdings of those securities
may be illiquid. There may be undesirable delays in selling such
securities at prices representing their fair value. Target Fund has an
identical policy with respect to investment in restricted and illiquid
securities.
Loans of Portfolio Securities. To attempt to increase income for
liquidity purposes, each fund may lend its portfolio securities (other
than in repurchase transactions) to brokers, dealers and other financial
institutions meeting specified credit conditions if the loan is
collateralized in accordance with applicable regulatory requirements and
if, after any loan, the value of the securities loaned does not exceed 25%
of the value of that fund's net assets. Each fund presently does not
intend that the value of securities loaned in the current fiscal year will
exceed 5% of the value of its total assets.
Repurchase Agreements. Each fund may acquire securities subject to
repurchase agreements to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from sales
of fund shares or settlement of purchases of portfolio investments. If
the vendor fails to pay the agreed-upon resale price on the delivery date,
the fund's risks may include any costs of disposing of such collateral,
and any loss from any delay in foreclosing on the collateral. Each fund's
repurchase agreements will be fully collateralized. There is no limit on
the amount of the fund's net assets that may be subject to repurchase
agreements having a maturity of seven days or less. Neither fund will
enter into a repurchase agreement which will cause more than 10% of its
net assets to be subject to repurchase agreements having a maturity beyond
seven days.
Warrants and Rights
Each of the funds may invest in warrants, which are the options to
purchase stock at set prices that are valid for a limited period of time.
The fund may invest up to 2% of its total assets in warrants or rights.
Target Fund may invest up to 5% of its total assets. These restrictions
do not include warrants or rights that have been acquired in units or are
attached to other securities. With respect to Target Fund no more than
2% of its assets may be invested in warrants that are not listed on the
New York or American Stock Exchanges.
Investment Restrictions
Each of the funds and Target Fund has certain investment restrictions
that, together with its investment objectives, are fundamental policies
changeable only by shareholder approval. Set forth below is a summary of
these investment restrictions, which summary is qualified in its entirety
by the investment policies and restrictions of the funds contained in
their respective Prospectuses and Statements of Additional Information.
The Fund and Target Fund cannot: (1) with respect to the Fund, invest
in securities of a single issuer (except the U.S. Government or its
agencies or instrumentalities) if immediately thereafter either: (a) more
than 5% of the Fund's total assets would be invested in securities of that
issuer, or (b) the Fund would then own more than 10% of that issuer's
voting securities (with respect to Target Fund, the above-mentioned
restrictions apply as to 75% of its assets); (2) invest, as to the Fund,
more than 25% of its total assets in securities of companies in any one
industry and as to Target Fund, invest more than 25% of its total assets
in securities of companies in any one industry; (3) invest in other open-
end investment companies or invest more than 5% of net assets in closed-
end investment companies, including small business investment companies,
nor make any such investments at commission rates in excess of normal
brokerage commissions; (4) with respect to the Fund, make short sales of
securities except "short sales against-the-box"; (5) with respect to the
Fund, deviate from the percentage restrictions listed under "Illiquid and
Restricted Securities" and "Writing Covered Calls;" (6) lend money, but
the funds may invest in a portion of a publicly distributed issue of
bonds, debentures, commercial paper, or other similar corporate
obligations; the fund may also make loans of portfolio securities provided
the loan is collateralized in accordance with applicable regulatory
requirements and provided that immediately after any such loan the value
of the securities loaned does not exceed 25% of net assets; (7) underwrite
securities of other companies, except insofar as it might be deemed to be
an underwriter for purposes of the Securities Act of 1933 in the resale
of any securities held in its own portfolio; (8) invest in or hold
securities of any issuer if those officers, directors and trustees of the
funds or its adviser owning individually more than 0.5% of the securities
of such issuer together own more than 5% of the securities of such issuer;
(9) invest in commodities or commodity contracts; however, the funds may
buy and sell any of the Hedging Instruments it may use, whether or not
such Hedging Instrument is considered to be a commodity or commodity
contract; (10) invest in real estate or interests in real estate, but may
purchase readily marketable securities of companies holding real estate
or interests therein; (11) purchase securities on margin; however, the
Fund may make margin deposits in connection with any of the Hedging
Instruments which it may use; or (12) mortgage, hypothecate or pledge any
of its assets; however, this does not prohibit the escrow arrangements
contemplated by the writing of covered call options or other collateral
or margin arrangements in connection with any of the Hedging Instruments
it may use; or (13) with respect to Target Fund, invest in interests in
oil, gas or mineral exploration or development programs.
Portfolio Turnover
The funds may engage frequently in short-term trading to try to
achieve their investment objectives. As a result the portfolio turnover
of each fund might be higher than other mutual funds, although neither
fund expects its portfolio turnover to be more than 100% each year. High
turnover and short-term trading may cause a fund to have relatively larger
commission expenses and transactions costs than funds that do not engage
in short-term trading. If a fund derives 30% or more of its gross income
from the sale of securities held less than three months, the fund may fail
to qualify under the Code as a regulated investment company and thereupon
would lose certain beneficial tax treatment of its income. The funds each
qualified in their last fiscal year and intend to qualify in the coming
year, although each reserves the right not to do so.
For the fiscal year ended June 30, 1994, the portfolio turnover rate for
the Fund was 67.7%. For the six months ended December 31, 1994, the
portfolio turnover rate for the Fund was 42.4%. For the fiscal year ended
December 31, 1994, the portfolio turnover rate for Target Fund with
respect to Class A shares was 34.7% and with respect to Class C shares was
34.7%.
Description of Brokerage Practices
Brokerage practices for the Fund and Target Fund are the same. Subject
to the provisions of the Fund's and Target Fund's respective investment
advisory agreements with the Manager, allocations of brokerage are made
by portfolio managers under the supervision of the Manager's executive
officers. Transactions in securities other than those for which an
exchange is the primary market are generally done with principals or
market makers. Brokerage commissions are paid primarily for effecting
transactions in listed securities and otherwise only if it appears likely
that a better price or execution can be obtained. When the fund engages
in an option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transactions in the securities to
which the option relates. When possible, concurrent orders to purchase
or sell the same security by more than one of the accounts managed by the
Manager or it affiliates are combined. Transactions effected pursuant to
such combined orders are averaged as to price and allocated in accordance
with the purchase or sale orders actually placed for each account. Option
commissions may be relatively higher than those which would apply to
direct purchases and sales of portfolio securities.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of the Manager and its affiliates,
and investment research received for the commissions of those other
accounts may be useful both to the fund and one or more of such other
accounts. Such research, which may be supplied by a third party at the
instance of a broker, includes information and analyses on particular
companies and industries as well as market or economic trends and
portfolio strategy, receipt of market quotations for portfolio
evaluations, information systems, computer hardware and similar products
and services. If a research service also assists the Manager in a non-
research capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to the
Manager in the investment decision-making process may be paid for in
commission dollars. The research services provided by brokers broaden the
scope and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and enabling
the Manager to obtain market information for the valuation of securities
held in the fund's portfolio or being considered for purchase. The Board
of Trustees, including the independent Trustees of the Fund and Target
Fund (those Trustees of the Fund and Target Fund who are not "interested
persons" as defined in the Investment Company Act, and who have no direct
or indirect financial interest in the operation of the investment advisory
agreements described below or the service plans described above), annually
reviews information furnished by the Manager relative to the commissions
paid to brokers furnishing such services in an effort to ascertain that
the amount of such commissions was reasonably related to the value or the
benefit of such services.
During the Fund's fiscal years ended June 30, 1992, 1993 and 1994,
total brokerage commissions paid by the Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $623,069,
$923,921 and $1,689,639, respectively. During the fiscal year ended June
30, 1994, $216,461 was paid to brokers as commissions in return for
research services (including special research, statistical information and
execution); the aggregate dollar amount of those transactions was
$109,841,151. The transactions giving rise to those commissions were
allocated in accordance with the internal allocation procedures described
above.
During Target Fund's fiscal years ended December 31, 1992, 1993 and 1994,
total brokerage commissions paid by Target Fund (not including spreads or
concessions on principal transactions on a net trade basis) were $493,589,
$319,608 and $564,504, respectively. During the fiscal year ended
December 31, 1994, $295,074 was paid to brokers as commissions in return
for research services (including special research, statistical information
and execution); the aggregate dollar amount of those transactions was
$138,265,540. The transactions giving rise to those commissions were
allocated in accordance with the Manager's internal allocation procedures.
Expense Ratios and Performance
The ratio of expenses to average net assets for the Fund for the
fiscal year ended June 30, 1994 and the six months ended December 31, 1994
were .94% and 1.29% (annualized), respectively. The ratio of expenses to
average net assets for Class A shares of Target Fund and for Class C
shares of Target Fund for the fiscal year ended December 31, 1994 were
1.16% and 2.18%. Further details are set forth under "Fund Expenses" and
"Financial Highlights" in Target Fund's Prospectus dated May 1, 1995,
which accompanies this Proxy Statement and Prospectus, and in the Fund's
Annual Report as of June 30, 1994 and Semi-Annual Report as of December
31, 1994, and Target Fund's Annual Report as of December 31, 1994 which
are included in the Additional Statement. The Fund's average annual total
returns for one, five and ten-year periods ended December 31, 1994 were
<12.81>%, 6.92% and 13.18%, respectively. Target Fund's average annual
total returns for the one, five and ten-year periods ended December 31,
1994 for Class A shares were <5.32>%, 8.46% and 10.49%, respectively.
Target Funds average annual total return for its Class C shares for the
one-year period ended December 31, 1994 was <1.38>% and from inception to
December 31, 1994 was <.60>%. See page 20 of Target Fund's Prospectus
dated May 1, 1995 under the section "Comparing the Fund's Performance to
the Market" for more information.
Shareholder Services
The policies of the Fund and Target Fund with respect to minimum initial
investments and subsequent investments by its shareholders are the same.
Both the Fund and Target Fund offer the following privileges: (i) Rights
of Accumulation, (ii) Letters of Intent, (iii) reinvestment of dividends
and distributions at net asset value, (iv) net asset value purchases by
certain individuals and entities, (v) Asset Builder (automatic investment)
Plans, (vi) Automatic Withdrawal and Exchange Plans for shareholders who
own shares of the fund valued at $5,000 or more (a shareholder may not
combine different classes of shares in order to qualify for privileges
under "Rights of Accumulation" and "Letter of Intent"), (vii) reinvestment
of net redemption proceeds at net asset value within six months of a
redemption, (viii) AccountLink and PhoneLink arrangements, (ix) exchanges
of shares for shares of certain other funds at net asset value, and (x)
telephone redemption and exchange privileges.
Rights of Shareholders
Shares of the Fund and Class A shares of Target Fund are redeemable at
their net asset value. The shares of each such fund entitle the holder
to one vote per share on the election of trustees and all other matters
submitted to shareholders of the fund. Shares of the Fund and the Class
A shares of Target Fund which Fund shareholders will receive in the
Reorganization participate equally in the fund's dividends and
distributions and in the fund's net assets on liquidation. All shares of
each, when issued, are fully paid and non-assessable (except as to Target
Fund, as described below) and have no preference, preemptive or conversion
rights. It is not contemplated that either the Fund or Target Fund will
hold regular annual meetings of shareholders. Under the Investment
Company Act, shareholders of the Fund do not have rights of appraisal as
a result of the transactions contemplated by the Reorganization Agreement.
However, they have the right at any time prior to the consummation of such
transaction to redeem their shares at net asset value. Shareholders of
the Fund and Target Fund have the right, under certain circumstances, to
remove a Trustee and will be assisted in communicating with other
shareholders for such purpose.
The Fund and Target Fund, organized as Massachusetts Business Trusts, are
governed principally by their Declaration of Trusts and by-laws. The
shareholders of the Fund and Target Fund have certain rights to call a
meeting of shareholders as described in their respective Statements of
Additional Information. Amendments to the Declaration of Trust require
the approval of a "majority" (as defined in the Investment Company Act)
of the fund's shareholders. However, the Board of Trustees, under the
provisions of the Declaration of Trust, have the power without shareholder
approval to divide unissued shares of each of the funds into two or more
classes. With respect to Target Fund, the Board has done so and Target
Fund has two classes of shares, Class A and Class C. Each class has its
own dividends and distributions and pays certain expenses which may be
different. Each class may have a different net asset value. Each share
has one vote at shareholder meetings, with fractional shares voting
proportionately. Only shares of a particular class vote together on
matters that affect that class alone. Under certain circumstances,
shareholders of the fund may be held personally liable as partners for the
fund's obligations, and under the Declaration of Trust such a shareholder
is entitled to indemnification rights by the fund; the risk of a
shareholder incurring any such loss is limited to the remote circumstances
in which the fund is unable to meet its obligations.
Management and Distribution Arrangements
The Manager, located at Two World Trade Center, New York, New York
10048-0203, acts as the investment adviser for the Fund pursuant to an
investment advisory agreement with the Fund dated June 20, 1991 (the "Fund
Advisory Agreement") and acts as the investment adviser to Target Fund
pursuant to an investment advisory agreement with Target Fund dated June
20, 1991 ("Target Fund Advisory Agreement"). The funds' Advisory
Agreements were submitted to and approved by the shareholders of the funds
at a meeting held June 20, 1991. The monthly management fee payable to
the Manager by each fund and the 12b-1 service plan fee paid by each fund
to the Distributor is set forth above under "Synopsis - Investment
Advisory and Service Plan Fees." The Fund and Target Fund have each
adopted a Service Plan for their Class A shares to reimburse the
Distributor for a portion of its costs incurred in connection with
personal service and maintenance of accounts that hold Class A shares.
As of July 1, 1994, Target Fund shareholders approved an amended Service
Plan for Class A shares that applies to all Class A shares of Target Fund,
regardless of the date on which the shares were purchased. The
Distributor uses all of those fees to compensate dealers, brokers, banks
and other financial institutions quarterly for providing personal service
and maintenance of accounts of their customers that hold Class A shares
and to reimburse itself (if each Fund's Board of Trustees authorizes such
reimbursements, which it has not yet done) for its other expenditures.
Services to be provided include, among others, answering customer
inquiries about each fund, assisting in establishing and maintaining
accounts in each fund, making each fund's investment plans available and
providing other services at the request of a fund or the Distributor.
Pursuant to the Fund Advisory Agreement and the Target Fund Advisory
Agreement, the Manager supervises the investment operations of the funds
and the composition of their portfolios and furnishes advice and
recommendations with respect to investments, investment policies and the
purchase and sale of securities. The Manager also provides the Fund and
Target Fund with adequate office space, facilities and equipment and
provides, and supervises the activities of, all administrative and
clerical personnel required to provide effective administration, including
the compilation and maintenance of records with respect to its operations,
the preparation and filing of specified reports, and composition of proxy
materials and registration statements for continuous public sale of shares
of each fund.
For the fiscal year ended June 30, 1994 and the six months ended December
31, 1994, the management fees paid by the Fund were $2,848,414 and
$1,212,078, respectively. For the fiscal year ended December 31, 1994,
the management fees paid by Target Fund were $2,471,942 for its Class A
shares and $3,549 for its Class C shares. The Fund Advisory Agreement
contains no expense limitation. However, independently of the agreement,
the Manager has undertaken that the total expenses of the Fund in any
fiscal year (including the management fee but exclusive of taxes,
interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses, including litigation) shall not
exceed the most stringent state regulatory limitation on fund expenses
applicable to the Fund. At present, that limitation is imposed by
California and limits expenses (with specified exclusions) to 2.5% of the
first $30 million of average annual net assets, 2% of the next $70 million
and 1.5% of average annual net assets in excess of $100 million. The
Manager has made the same undertaking with respect to Target Fund. The
Manager reserves the right to change or eliminate the expense limitation
at any time and there can be no assurance as to the duration of the
expense limitation.
The Manager is controlled by OAC, a holding company owned in part by
senior management of the Manager and ultimately controlled by
Massachusetts Mutual Life Insurance Company, a mutual life insurance
company that also advises pension plans and investment companies. The
Manager has operated as an investment company adviser since 1959. The
Manager and its affiliates currently advise investment companies with
combined net assets aggregating over $30 billion as of March 31, 1995,
with more than 2.4 million shareholder accounts. OSS, a division of the
Manager, acts as transfer and shareholder servicing agent on an at-cost
basis for the Fund and Target Fund and for certain other open-end funds
managed by the Manager and its affiliates.
The Distributor, a wholly-owned subsidiary of the Manager, acts as the
general distributor of each fund's shares under a General Distributor's
Agreement for each fund dated December 10, 1992. The General
Distributor's Agreement is subject to the same annual renewal requirements
and termination provisions as the investment advisory agreements. For the
fiscal years ended June 30, 1992, 1993 and 1994, selling charges on the
Fund's shares amounted to $990,171, $714,148 and $629,755, of which the
Distributor and an affiliated broker-dealer retained in the aggregate
$246,042, $189,859 and $168,109, respectively. For the fiscal years ended
December 31, 1992, 1993 and 1994, selling charges on Target Fund's Class
A shares amounted to $975,380, $698,109 and $351,806, of which the
Distributor and an affiliated broker-dealer retained, in the aggregate,
$421,079, $298,443 and $141,646, respectively. For the period ended
December 31, 1994, contingent deferred sales charges collected by the
Distributor on the redemption of Class C shares amounted to $1,185.
Target Fund does not maintain a fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
capital gains.
The performance graph set forth below depicts the performance of a
hypothetical investment of $10,000 in each class of shares of Target Fund
held until December 31, 1994: in the case of Class A shares, over a ten
year period, and in the case of Class C shares, a one year period, and
from inception of the Class on December 1, 1993, with all dividends and
capital gains distributions reinvested in additional shares as net asset
value on the reinvestment date, without sales charge. The graph reflects
the deduction of the 5.75% maximum initial sales charge on Class A shares
and the 1.0% contingent deferred sales charge and Class C shares. The
graph compares the average annual total return of Class A shares of Target
Fund's shares over that period with the performance of the Standard &
Poor's ("S&P") 500 Index, an unmanaged index of common stocks widely used
as a general measure of the performance of the U.S. equity securities
market. The performance of the S&P 500 Index includes a factor for the
reinvestment of dividend income but does not reflect reinvestment of
capital gains or take into account sales charges or other initial or
ongoing expenses of such stocks. None of the data below shows the effect
of taxes. Fund shareholders receiving Class A shares of Target Fund in
the Reorganization will not pay a sales charge on Class A shares of Target
Fund.
Purchase of Additional Shares
Shares of the Fund (consisting of Class A shares) and Class A shares
Target Fund are sold at net asset value plus a maximum sales charge of
5.75% of the offering price. The sales charge is reduced for purchases
of either fund's shares of $25,000 or more. On certain purchases of
shares of $1 million or more, a contingent deferred sales charge of 1% is
imposed when such shares are redeemed within 18 months of the end of the
calendar month of their purchase, subject to certain conditions. Class
C shares of Target Fund are sold at net asset value per share without an
initial sales charge. However, if Class C shares are redeemed within 12
months of their purchase, a contingent deferred sales charge of 1.0% will
be deducted from the redemption proceeds.
The sales charge on Class A shares of Target Fund will only affect
shareholders of the Fund to the extent that they desire to make additional
purchases of Class A shares of Target Fund in addition to the shares which
they will receive as a result of the Reorganization. The shares to be
issued under the Reorganization Agreement will be issued by Target Fund
at net asset value without a sales charge. Future dividends and capital
gain distributions of Target Fund, if any, may be reinvested without sales
charge into Class A shares. Any Fund shareholder who is entitled to a
reduced sales charge on additional purchases by reason of a Letter of
Intent or Right of Accumulation based upon holdings of shares of the Fund
will continue to be entitled to a reduced sales charge on any future
purchase of Class A shares of Target Fund.
METHOD OF CARRYING OUT THE REORGANIZATION
The consummation of the transactions contemplated by the Reorganization
Agreement is contingent upon the approval of the Reorganization by the
shareholders of the Fund and the receipt of the other opinions and
certificates set forth in Sections 10 and 11 of the Reorganization
Agreement and the occurrence of the events described in those Sections.
Under the Reorganization Agreement, all the assets of the Fund, excluding
the Cash Reserve, will be delivered to Target Fund in exchange for Class
A shares of Target Fund. The Cash Reserve to be retained by the Fund will
be sufficient in the discretion of the Board for the payment of the Fund's
liabilities, and the Fund's expenses of liquidation.
Assuming the shareholders of the Fund approve the Reorganization, the
actual exchange of assets is expected to take place as soon thereafter as
is practicable (the "Closing Date") on the basis of net asset values as
of the close of business on the business day preceding the Closing Date
(the "Valuation Date"). Under the Reorganization Agreement, all
redemptions of shares of the Fund shall be permanently suspended on the
Valuation Date; only redemption requests received in proper form on or
prior to the close of business on that date shall be fulfilled by it;
redemption requests received by the Fund after that date will be treated
as requests for redemptions of the Class A shares of Target Fund to be
distributed to the shareholders requesting redemption. The exchange of
assets for Class A shares will be done on the basis of the per share net
asset value of the Class A shares of Target Fund, and the value of the
assets of the Fund to be transferred as of the close of business on the
Valuation Date, in the manner used by Target Fund in the valuation of
assets. Target Fund is not assuming any of the liabilities of the Fund,
except for portfolio securities purchased which have not settled and
outstanding shareholder redemption and dividend checks.
The net asset value of the Class A shares transferred by Target Fund to
the Fund will be the same as the value of the net assets received by
Target Fund. For example, if, on the Valuation Date, the Fund were to
have securities with a market value of $95,000 and cash in the amount of
$10,000 (of which $5,000 was to be retained by it as the Cash Reserve),
the value of the assets which would be transferred to Target Fund would
be $100,000. If the net asset value per share of Target Fund were $10 per
share at the close of business on the Valuation Date, the number of shares
to be issued would be 10,000 ($100,000 divided by $10). These 10,000 shares
of Target Fund would be distributed to the former shareholders of the Fund.
This example is given for illustration purposes only and does not bear any
relationship to the dollar amounts or shares expected to be involved in
the Reorganization.
After the Closing Date, the Fund will distribute on a pro rata basis to
its shareholders of record on the Valuation Date the Class A shares of
Target Fund received by the Fund at the closing, in liquidation of the
outstanding shares of the Fund, and the outstanding shares of the Fund
will be cancelled. To assist the Fund in this distribution, Target Fund
will, in accordance with a shareholder list supplied by the Fund, cause
its transfer agent to credit and confirm an appropriate number of shares
of Target Fund to each shareholder of the Fund. Certificates for shares
of Target Fund will be issued upon written request of a former shareholder
of the Fund but only for whole shares with fractional shares credited to
the name of the shareholder on the books of Target Fund. Former
shareholders of the Fund who wish certificates representing their shares
of Target Fund must, after receipt of their confirmations, make a written
request to OSS, P.O. Box 5270, Denver, Colorado 80217. Shareholders of
the Fund holding certificates representing their shares will not be
required to surrender their certificates to anyone in connection with the
Reorganization. After the Reorganization, however, it will be necessary
for such shareholders to surrender such certificates in order to redeem,
transfer or exchange any shares of Target Fund.
Under the Reorganization Agreement, within one year after the Closing
Date, the Fund shall: (a) either pay or make provision for all of its
debts and taxes; and (b) either (i) transfer any remaining amount of the
Cash Reserve to Target Fund, if such remaining amount is not material (as
defined below) or (ii) distribute such remaining amount to the
shareholders of the Fund who were such on the Valuation Date. Such
remaining amount shall be deemed to be material if the amount to be
distributed, after deducting the estimated expenses of the distribution,
equals or exceeds one cent per share of the number of Fund shares
outstanding on the Valuation Date. Within one year after the Closing
Date, the Fund will complete its liquidation.
Under the Reorganization Agreement, either the Fund or Target Fund may
abandon and terminate the Reorganization Agreement without liability if
the other party breaches any material provision of the Reorganization
Agreement or, if prior to the closing, any legal, administrative or other
proceeding shall be instituted or threatened (i) seeking to restrain or
otherwise prohibit the transactions contemplated by the Reorganization
Agreement and/or (ii) asserting a material liability of either party,
which proceeding or liability has not been terminated or the threat
thereto removed prior to the Closing Date.
In the event that the Reorganization Agreement is not consummated for any
reason, the Board will consider and may submit to the shareholders other
alternatives.
MISCELLANEOUS
Financial Information
The Reorganization will be accounted for by the surviving fund in its
financial statements similar to a pooling without restatement. Further
financial information as to the Fund is contained in its current
Prospectus, which is available without charge from OSS, P.O. Box 5270,
Denver, Colorado 80217, and is incorporated herein, and in its audited
financial statements as of June 30, 1994 and unaudited financial
statements (semi-annual) as of December 31, 1994, which are included in
the Statement of Additional Information. Financial information for Target
Fund is contained in its current Prospectus accompanying this Proxy
Statement and Prospectus and incorporated herein, and in its audited
financial statements as of December 31, 1994, which are included in Target
Fund's Statement of Additional Information.
Public Information
Additional information about the Fund and Target Fund is available, as
applicable, in the following documents which are incorporated herein by
reference: (i) Target Fund's Prospectus dated May 1, 1995, accompanying
this Proxy Statement and Prospectus and incorporated herein; (ii) the
Fund's Prospectus dated October 21, 1994, supplemented April 13, 1995,
which may be obtained without charge by writing to OSS, P.O. Box 5270,
Denver, Colorado 80217; (iii) Target Fund's Annual Report as of December
31, 1994, which may be obtained without charge by writing to OSS at the
address indicated above; and (iv) the Fund's Annual Report as of June 30,
1994 and Semi-Annual Report as of December 31, 1994, which may be obtained
without charge by writing to OSS at the address indicated above. All of
the foregoing documents may be obtained by calling the toll-free number
on the cover of this Proxy Statement and Prospectus.
Additional information about the following matters is contained in the
Statement of Additional Information, which incorporates by reference the
Target Fund Additional Statement, and the Fund's Prospectus dated October
21, 1994, supplemented April 13, 1995 and Statement of Additional
Information dated October 21, 1994, supplemented January 3, 1995: the
organization and operation of Target Fund and the Fund; more information
on investment policies, practices and risks; information about the Fund's
and Target Fund's respective Boards of Trustees and their
responsibilities; a further description of the services provided by Target
Fund's and the Fund's investment adviser, distributor, and transfer and
shareholder servicing agent; dividend policies; tax matters; an
explanation of the method of determining the offering price of the shares
of Target Fund and the Fund; purchase, redemption and exchange programs;
and distribution arrangements.
The Fund and Target Fund are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and in accordance
therewith, file reports and other information with the SEC. Proxy
material, reports and other information about the Fund and Target Fund
which are of public record can be inspected and copied at public reference
facilities maintained by the SEC in Washington, D.C. and certain of its
regional offices, and copies of such materials can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer
Affairs and Information Services, SEC, Washington, D.C. 20549.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters not
known at the time of the solicitation may come before the Meeting, the
proxy as solicited confers discretionary authority with respect to such
matters as properly come before the Meeting, including any adjournment or
adjournments thereof, and it is the intention of the persons named as
attorneys-in-fact in the proxy to vote this proxy in accordance with their
judgment on such matters.
By Order of the Board of Trustees
Andrew J. Donohue, Secretary
______________, 1995 320
<PAGE>
Annex A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of
March 6, 1995, by and between Oppenheimer Time Fund (the "Fund"), a
Massachusetts business trust, and Oppenheimer Target Fund ("Target Fund"),
a Massachusetts business trust.
W I T N E S S E T H:
WHEREAS, the parties are each open-end investment companies of the
management type; and
WHEREAS, the parties hereto desire to provide for the reorganization
pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), of the Fund through the acquisition by Target Fund
of substantially all of the assets of the Fund in exchange for the Class
A voting shares of beneficial interest ("shares") of Target Fund and the
assumption by Target Fund of certain liabilities of the Fund, which shares
of Target Fund are thereafter to be distributed by the Fund pro rata to
its shareholders in complete liquidation of the Fund and complete
cancellation of its shares;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. The parties hereto hereby adopt a Plan of Reorganization pursuant
to Section 368(a)(1) of the Code as follows: The reorganization will be
comprised of the acquisition by Target Fund of substantially all of the
properties and assets of the Fund in exchange for shares of Target Fund
and the assumption by Target Fund of certain liabilities of the Fund,
followed by the distribution of such Target Fund shares to the
shareholders of the Fund in exchange for their shares of the Fund, all
upon and subject to the terms of the Agreement hereinafter set forth.
The share transfer books of the Fund will be permanently closed at the
close of business on the Valuation Date (as hereinafter defined) and only
redemption requests received in proper form on or prior to the close of
business on the Valuation Date shall be fulfilled by the Fund; redemption
requests received by the Fund after that date shall be treated as requests
for the redemption of the shares of Target Fund to be distributed to the
shareholder in question as provided in Section 5.
2. On the Closing Date (as hereinafter defined), all of the assets of
the Fund on that date, excluding a cash reserve (the "Cash Reserve") to
be retained by the Fund sufficient in its discretion for the payment of
the expenses of the Fund's dissolution and its liabilities, but not in
excess of the amount contemplated by Section 10E, shall be delivered as
provided in Section 8 to Target Fund, in exchange for and against delivery
to the Fund on the Closing Date of a number of shares of Target Fund
having an aggregate net asset value equal to the value of the assets of
the Fund so transferred and delivered.
3. The net asset value of the shares of Target Fund and the value of
the assets of the Fund to be transferred shall in each case be determined
as of the close of business of the New York Stock Exchange on the
Valuation Date. The computation of the net asset value of the Class A
shares of Target Fund and the Fund shall be done in the manner used by
Target Fund and the Fund, respectively, in the computation of such net
asset value per share as set forth in their respective prospectuses. The
methods used by Target Fund in such computation shall be applied to the
valuation of the assets of the Fund to be transferred to Target Fund.
The Fund shall declare and pay, immediately prior to the Valuation
Date, a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the Fund's
shareholders all of the Fund's investment company taxable income for
taxable years ending on or prior to the Closing Date (computed without
regard to any dividends paid) and all of its net capital gain, if any,
realized in taxable years ending on or prior to the Closing Date (after
reduction for any capital loss carry-forward).
4. The closing (the "Closing") shall be at the office of Oppenheimer
Management Corporation (the "Agent"), Two World Trade Center, Suite 3400,
New York, New York 10048, at 4:00 P.M. New York time on June 23, 1995, or
at such other time or place as the parties may designate or as provided
below (the "Closing Date"). The business day preceding the Closing Date
is herein referred to as the "Valuation Date."
In the event that on the Valuation Date either party has, pursuant to
the Investment Company Act of 1940, as amended (the "Act"), or any rule,
regulation or order thereunder, suspended the redemption of its shares or
postponed payment therefor, the Closing Date shall be postponed until the
first business day after the date when both parties have ceased such
suspension or postponement; provided, however, that if such suspension
shall continue for a period of 60 days beyond the Valuation Date, then the
other party to the Agreement shall be permitted to terminate the Agreement
without liability to either party for such termination.
5. As soon as practicable after the Closing, the Fund shall
distribute on a pro rata basis to the shareholders of the Fund on the
Valuation Date the shares of Target Fund received by the Fund on the
Closing Date in exchange for the assets of the Fund in complete
liquidation of the Fund; for the purpose of the distribution by the Fund
of such shares of Target Fund to its shareholders, Target Fund will
promptly cause its transfer agent to: (a) credit an appropriate number of
shares of Target Fund on the books of Target Fund to each shareholder of
the Fund in accordance with a list (the "Shareholder List") of its
shareholders received from the Fund; and (b) confirm an appropriate number
of Class A shares of Target Fund to each shareholder of the Fund;
certificates for shares of Target Fund will be issued upon written request
of a former shareholder of the Fund but only for whole shares with
fractional shares credited to the name of the shareholder on the books of
Target Fund.
The Shareholder List shall indicate, as of the close of business on the
Valuation Date, the name and address of each shareholder of the Fund,
indicating his or her share balance. The Fund agrees to supply the
Shareholder List to Target Fund not later than the Closing Date.
Shareholders of the Fund holding certificates representing their shares
shall not be required to surrender their certificates to anyone in
connection with the reorganization. After the Closing Date, however, it
will be necessary for such shareholders to surrender their certificates
in order to redeem, transfer or pledge the Class A shares of Target Fund
which they received.
6. Within one year after the Closing Date, the Fund shall (a) either
pay or make provision for payment of all of its liabilities and taxes,
and (b) either (i) transfer any remaining amount of the Cash Reserve to
Target Fund, if such remaining amount (as reduced by the estimated cost
of distributing it to shareholders) is not material (as defined below) or
(ii) distribute such remaining amount to the shareholders of the Fund on
the Valuation Date. Such remaining amount shall be deemed to be material
if the amount to be distributed, after deduction of the estimated expenses
of the distribution, equals or exceeds one cent per share of the Fund
outstanding on the Valuation Date.
7. Prior to the Closing Date, there shall be coordination between the
parties as to their respective portfolios so that, after the closing,
Target Fund will be in compliance with all of its investment policies and
restrictions. At the Closing, the Fund shall deliver to Target Fund two
copies of a list setting forth the securities then owned by the Fund.
Promptly after the Closing, the Fund shall provide Target Fund a list
setting forth the respective federal income tax bases thereof.
8. Portfolio securities or written evidence acceptable to Target Fund
of record ownership thereof by The Depository Trust Company or through the
Federal Reserve Book Entry System or any other depository approved by the
Fund pursuant to Rule 17f-4 under the Act shall be endorsed and delivered,
or transferred by appropriate transfer or assignment documents, by the
Fund on the Closing Date to Target Fund, or at its direction, to its
custodian bank, in proper form for transfer in such condition as to
constitute good delivery thereof in accordance with the custom of brokers
and shall be accompanied by all necessary state transfer stamps, if any.
The cash delivered shall be in the form of certified or bank cashiers'
checks or by bank wire or intra-bank transfer payable to the order of
Target Fund for the account of Target Fund. Class A shares of Target Fund
representing the number of Class A shares of Target Fund being delivered
against the assets of the Fund, registered in the name of the Fund, shall
be transferred to the Fund on the Closing Date. Such shares shall
thereupon be assigned by the Fund to its shareholders so that the shares
of Target Fund may be distributed as provided in Section 5.
If, at the Closing Date, the Fund is unable to make delivery under this
Section 8 to Target Fund of any of its portfolio securities or cash for
the reason that any of such securities purchased by the Fund, or the cash
proceeds of a sale of portfolio securities, prior to the Closing Date have
not yet been delivered to it or the Fund's custodian, then the delivery
requirements of this Section 8 with respect to said undelivered securities
or cash will be waived and the Fund will deliver to Target Fund by or on
the Closing Date and with respect to said undelivered securities or cash
executed copies of an agreement or agreements of assignment in a form
reasonably satisfactory to Target Fund, together with such other
documents, including a due bill or due bills and brokers' confirmation
slips as may reasonably be required by Target Fund.
9. Target Fund shall not assume the liabilities (except for portfolio
securities purchased which have not settled and for shareholder redemption
and dividend checks outstanding) of the Fund, but the Fund will,
nevertheless, use its best efforts to discharge all known liabilities, so
far as may be possible, prior to the Closing Date. The cost of printing
and mailing the proxies and proxy statements will be borne by the Fund.
The Fund and Target Fund will bear the cost of their respective tax
opinion. Any documents such as existing prospectuses or annual reports
that are included in that mailing will be a cost of the fund issuing the
document. Any other out-of-pocket expenses of Target Fund and the Fund
associated with this reorganization, including legal, accounting and
transfer agent expenses, will be borne by the Fund and Target Fund,
respectively, in the amounts so incurred by each.
10. The obligations of Target Fund hereunder shall be subject to the
following conditions:
A. The Board of Trustees of the Fund shall have authorized the
execution of the Agreement, and the shareholders of the Fund shall have
approved the Agreement and the transactions contemplated hereby, and the
Fund shall have furnished to Target Fund copies of resolutions to that
effect certified by the Secretary or an Assistant Secretary of the Fund;
such shareholder approval shall have been by the affirmative vote of "a
majority of the outstanding voting securities" (as defined in the Act) of
the Fund at a meeting for which proxies have been solicited by the Proxy
Statement and Prospectus (as hereinafter defined).
B. Target Fund shall have received an opinion dated the Closing Date
of counsel to the Fund, to the effect that (i) the Fund is a business
trust duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts with full powers to carry on its
business as then being conducted and to enter into and perform the
Agreement; and (ii) that all action necessary to make the Agreement,
according to its terms, valid, binding and enforceable on the Fund and to
authorize effectively the transactions contemplated by the Agreement have
been taken by the Fund.
C. The representations and warranties of the Fund contained herein
shall be true and correct at and as of the Closing Date, and Target Fund
shall have been furnished with a certificate of the President, or a Vice
President, or the Secretary or the Assistant Secretary or the Treasurer
of the Fund, dated the Closing Date, to that effect.
D. On the Closing Date, the Fund shall have furnished to Target Fund
a certificate of the Treasurer or Assistant Treasurer of the Fund as to
the amount of the capital loss carry-over and net unrealized appreciation
or depreciation, if any, with respect to the Fund as of the Closing Date.
E. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Fund at the close of
business on the Valuation Date.
F. A Registration Statement on Form N-14 filed by Target Fund under
the Securities Act of 1933, as amended (the "1933 Act"), containing a
preliminary form of the Proxy Statement and Prospectus, shall have become
effective under the 1933 Act not later than May 15, 1995.
G. On the Closing Date, Target Fund shall have received a letter of
Andrew J. Donohue or other senior executive officer of Oppenheimer
Management Corporation acceptable to Target Fund, stating that nothing has
come to his or her attention which in his or her judgment would indicate
that as of the Closing Date there were any material actual or contingent
liabilities of the Fund arising out of litigation brought against the Fund
or claims asserted against it, or pending or to the best of his or her
knowledge threatened claims or litigation not reflected in or apparent
from the most recent audited financial statements and footnotes thereto
of the Fund delivered to Target Fund. Such letter may also include such
additional statements relating to the scope of the review conducted by
such person and his or her responsibilities and liabilities as are not
unreasonable under the circumstances.
H. Target Fund shall have received an opinion, dated the Closing
Date, of KPMG Peat Marwick LLP, to the same effect as the opinion
contemplated by Section 11.E. of the Agreement.
I. Target Fund shall have received at the closing all of the assets
of the Fund to be conveyed hereunder, which assets shall be free and clear
of all liens, encumbrances, security interests, restrictions and
limitations whatsoever.
11. The obligations of the Fund hereunder shall be subject to the
following conditions:
A. The Board of Trustees of Target Fund shall have authorized the
execution of the Agreement, and the transactions contemplated hereby, and
Target Fund shall have furnished to the Fund copies of resolutions to that
effect certified by the Secretary or an Assistant Secretary of Target
Fund.
B. The Fund's shareholders shall have approved the Agreement and the
transactions contemplated hereby, by an affirmative vote of "a majority
of the outstanding voting securities" (as defined in the Act) of the Fund,
and the Fund shall have furnished Target Fund copies of resolutions to
that effect certified by the Secretary or an Assistant Secretary of the
Fund.
C. The Fund shall have received an opinion dated the Closing Date
of counsel to Target Fund, to the effect that (i) Target Fund is a
business trust duly organized, validly existing and in good standing under
the laws of the Commonwealth of Massachusetts with full powers to carry
on its business as then being conducted and to enter into and perform the
Agreement; (ii) all action necessary to make the Agreement, according to
its terms, valid, binding and enforceable upon Target Fund and to
authorize effectively the transactions contemplated by the Agreement have
been taken by Target Fund, and (iii) the Class A shares of Target Fund to
be issued hereunder are duly authorized and when issued will be validly
issued, fully-paid and non-assessable, except as set forth in Target
Fund's then current Prospectus and Statement of Additional Information.
D. The representations and warranties of Target Fund contained herein
shall be true and correct at and as of the Closing Date, and the Fund
shall have been furnished with a certificate of the President, a Vice
President or the Secretary or an Assistant Secretary or the Treasurer of
Target Fund to that effect dated the Closing Date.
E. The Fund shall have received an opinion of KPMG Peat Marwick LLP
to the effect that the Federal tax consequences of the transaction, if
carried out in the manner outlined in this Plan of Reorganization and in
accordance with (i) the Fund's representation that there is no plan or
intention by any Fund shareholder who owns 5% or more of the Fund's
outstanding shares, and, to the Fund's best knowledge, there is no plan
or intention on the part of the remaining Fund shareholders, to redeem,
sell, exchange or otherwise dispose of a number of Target Fund shares
received in the transaction that would reduce the Fund shareholders'
ownership of Target Fund shares to a number of shares having a value, as
of the Closing Date, of less than 50% of the value of all of the formerly
outstanding Fund shares as of the same date, (ii) the representation by
each of the Fund and Target Fund that, as of the Closing Date, the Fund
and Target Fund will qualify as regulated investment companies or will
meet the diversification test of Section 368(a)(2)(F)(ii) of the Code, and
(iii) the other representations by each of the Fund and Target Fund made
to KPMG Peat Marwick LLP and set forth in the opinion will generally be
as follows:
1. The transactions contemplated by the Agreement will qualify
as a tax-free "reorganization" within the meaning of Section 368(a)(1) of
the Code, and under the regulations promulgated thereunder.
2. The Fund and Target Fund will each qualify as a "party to
a reorganization" within the meaning of Section 368(b)(2) of the Code.
3. No gain or loss will be recognized by the shareholders of
the Fund upon the distribution of Class A shares of beneficial interest
in Target Fund to the shareholders of the Fund pursuant to Section 354 of
the Code.
4. Under Section 361(a) of the Code no gain or loss will be
recognized by the Fund by reason of the transfer of substantially all its
assets in exchange for Class A shares of Target Fund.
5. Under Section 1032 of the Code no gain or loss will be
recognized by Target Fund by reason of the transfer of substantially all
the Fund's assets in exchange for shares of Target Fund and Target Fund's
assumption of certain liabilities of the Fund.
6. The shareholders of the Fund will have the same tax basis
and holding period for the Class A shares of beneficial interest in Target
Fund that they receive as they had for the Fund shares that they
previously held, pursuant to Section 358(a) and 1223(1), respectively, of
the Code.
7. The securities transferred by the Fund to Target Fund will
have the same tax basis and holding period in the hands of Target Fund as
they had for the Fund, pursuant to Section 362(b) and 1223(1),
respectively, of the Code.
F. The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Fund at the close of
business on the Valuation Date.
G. A Registration Statement on Form N-14 filed by Target Fund under
the 1933 Act, containing a preliminary form of the Proxy Statement and
Prospectus, shall have become effective under the 1933 Act not later than
_______________, 1995.
H. On the Closing Date, the Fund shall have received a letter of
Andrew J. Donohue or other senior executive officer of Oppenheimer
Management Corporation acceptable to the Fund, stating that nothing has
come to his or her attention which in his or her judgment would indicate
that as of the Closing Date there were any material actual or contingent
liabilities of Target Fund arising out of litigation brought against
Target Fund or claims asserted against it, or pending or, to the best of
his or her knowledge, threatened claims or litigation not reflected in or
apparent by the most recent audited financial statements and footnotes
thereto of Target Fund delivered to the Fund. Such letter may also
include such additional statements relating to the scope of the review
conducted by such person and his or her responsibilities and liabilities
as are not unreasonable under the circumstances.
I. The Fund shall acknowledge receipt of the Class A shares of
Target Fund.
12. The Fund hereby represents and warrants that:
A. The financial statements of the Fund as at June 30, 1994 and
December 31, 1994 heretofore furnished to Target Fund, present fairly the
financial position, results of operations, and changes in net assets of
the Fund as of that date, in conformity with generally accepted accounting
principles applied on a basis consistent with the preceding year; and that
from June 30, 1994 through the date hereof there has not been, and through
the Closing Date there will not be, any material adverse change in the
business or financial condition of the Fund, it being agreed that a
decrease in the size of the Fund due to a diminution in the value of its
portfolio and/or redemption of its shares shall not be considered a
material adverse change;
B. Contingent upon approval of the Agreement and the transactions
contemplated hereby by the Fund's shareholders, the Fund has authority to
transfer all of the assets of the Fund to be conveyed hereunder free and
clear of all liens, encumbrances, security interests, restrictions and
limitations whatsoever;
C. The Prospectus, as amended and supplemented, contained in the
Fund's Registration Statement under the 1933 Act, as amended, is true,
correct and complete, conforms to the requirements of the 1933 Act and
does not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Registration Statement, as
amended, was, as of the date of the filing of the last Post-Effective
Amendment, true, correct and complete, conformed to the requirements of
the 1933 Act and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
D. There is no material contingent liability of the Fund and no
material claim and no material legal, administrative or other proceedings
pending or, to the knowledge of the Fund, threatened against the Fund, not
reflected in such Prospectus;
E. There are no material contracts outstanding to which the Fund is
a party other than those ordinary in the conduct of its business;
F. The Fund is a business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts; and
has all necessary and material Federal and state authorizations to own all
of its assets and to carry on its business as now being conducted; and the
Fund is duly registered under the Act and such registration has not been
rescinded or revoked and is in full force and effect;
G. All Federal and other tax returns and reports of the Fund
required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the
knowledge of the Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the
extent such tax returns with respect to the taxable year of the Fund ended
June 30, 1994 have not been filed, such returns will be filed when
required and the amount of tax shown as due thereon shall be paid when
due; and
H. The Fund has elected to be treated as a regulated investment
company and, for each fiscal year of its operations, the Fund has met the
requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and the Fund intends to meet such
requirements with respect to its current taxable year.
13. Target Fund hereby represents and warrants that:
A. The financial statements of Target Fund as at December 31, 1994
heretofore furnished to the Fund, present fairly the financial position,
results of operations, and changes in net assets of Target Fund, as of
that date, in conformity with generally accepted accounting principles
applied on a basis consistent with the preceding year; and that from
December 31, 1994 through the date hereof there has not been, and through
the Closing Date there will not be, any material adverse change in the
business or financial condition of Target Fund, it being understood that
a decrease in the size of Target Fund due to a diminution in the value of
its portfolio and/or redemption of its shares shall not be considered a
material or adverse change;
B. The Prospectus, as amended and supplemented, contained in Target
Fund's Registration Statement under the 1933 Act, is true, correct and
complete, conforms to the requirements of the 1933 Act and does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Registration Statement, as
amended, was, as of the date of the filing of the last Post-Effective
Amendment, true, correct and complete, conformed to the requirements of
the 1933 Act and did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
C. There is no material contingent liability of Target Fund and no
material claim and no material legal, administrative or other proceedings
pending or, to the knowledge of Target Fund, threatened against Target
Fund, not reflected in such Prospectus;
D. There are no material contracts outstanding to which Target Fund
is a party other than those ordinary in the conduct of its business;
E. Target Fund is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts;
has all necessary and material Federal and state authorizations to own all
its properties and assets and to carry on its business as now being
conducted; the shares of Target Fund which it issues to the Fund pursuant
to the Agreement will be duly authorized, validly issued, fully-paid and
non-assessable, except as otherwise set forth in Target Fund's
Registration Statement; and will conform to the description thereof
contained in Target Fund's Registration Statement, will be duly registered
under the 1933 Act and in the states where registration is required; and
Target Fund is duly registered under the Act and such registration has not
been revoked or rescinded and is in full force and effect;
F. All Federal and other tax returns and reports of Target Fund
required by law to be filed have been filed, and all Federal and other
taxes shown due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the
knowledge of Target Fund no such return is currently under audit and no
assessment has been asserted with respect to such returns and to the
extent such tax returns with respect to the taxable year of Target Fund
ended December 31, 1994 have not been filed, such returns will be filed
when required and the amount of tax shown as due thereon shall be paid
when due;
G. Target Fund has elected to be treated as a regulated investment
company and, for each fiscal year of its operations, Target Fund has met
the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and Target Fund intends to
meet such requirements with respect to its current taxable year;
H. Target Fund has no plan or intention (i) to dispose of any of the
assets transferred by the Fund, other than in the ordinary course of
business, or (ii) to redeem or reacquire any of the shares issued by it
in the reorganization other than pursuant to valid requests of
shareholders; and
I. After consummation of the transactions contemplated by the
Agreement, Target Fund intends to operate its business in a substantially
unchanged manner.
14. Each party hereby represents to the other that no broker or finder
has been employed by it with respect to the Agreement or the transactions
contemplated hereby. Each party also represents and warrants to the other
that the information concerning it in the Proxy Statement and Prospectus
will not as of its date contain any untrue statement of a material fact
or omit to state a fact necessary to make the statements concerning it
therein not misleading and that the financial statements concerning it
will present the information shown fairly in accordance with generally
accepted accounting principles applied on a basis consistent with the
preceding year. Each party also represents and warrants to the other that
the Agreement is valid, binding and enforceable in accordance with its
terms and that the execution, delivery and performance of the Agreement
will not result in any violation of, or be in conflict with, any provision
of any charter, by-laws, contract, agreement, judgment, decree or order
to which it is subject or to which it is a party. Target Fund hereby
represents to and covenants with the Fund that, if the reorganization
becomes effective, Target Fund will treat each shareholder of the Fund who
received any of Target Fund's shares as a result of the reorganization as
having made the minimum initial purchase of shares of Target Fund received
by such shareholder for the purpose of making additional investments in
shares of Target Fund, regardless of the value of the shares of Target
Fund received.
15. Target Fund agrees that it will prepare and file a Registration
Statement on Form N-14 under the 1933 Act which shall contain a
preliminary form of proxy statement and prospectus contemplated by Rule
145 under the 1933 Act. The final form of such proxy statement and
prospectus is referred to in the Agreement as the "Proxy Statement and
Prospectus." Each party agrees that it will use its best efforts to have
such Registration Statement declared effective and to supply such
information concerning itself for inclusion in the Proxy Statement and
Prospectus as may be necessary or desirable in this connection. Target
Fund covenants and agrees to deregister as an investment company under the
Investment Company Act of 1940, as amended, as soon as practicable and,
thereafter, to cause the cancellation of its outstanding shares.
16. The obligations of the parties under the Agreement shall be
subject to the right of either party to abandon and terminate the
Agreement without liability if the other party breaches any material
provision of the Agreement or if any material legal, administrative or
other proceeding shall be instituted or threatened between the date of the
Agreement and the Closing Date (i) seeking to restrain or otherwise
prohibit the transactions contemplated hereby and/or (ii) asserting a
material liability of either party, which proceeding has not been
terminated or the threat thereof removed prior to the Closing Date.
17. The Agreement may be executed in counterpart, each of which shall
be deemed an original, but taken together shall constitute one Agreement.
The rights and obligations of each party pursuant to the Agreement shall
not be assignable.
18. All prior or contemporaneous agreements and representations are
merged into the Agreement, which constitutes the entire contract between
the parties hereto. No amendment or modification hereof shall be of any
force and effect unless in writing and signed by the parties and no party
shall be deemed to have waived any provision herein for its benefit unless
it executes a written acknowledgement of such waiver.
19. The Fund understands that the obligations of Target Fund under the
Agreement are not binding upon any Trustee or shareholder of Target Fund
personally, but bind only Target Fund and Target Fund's property. The
Fund represents that it has notice of the provisions of the Declaration
of Trust of Target Fund disclaiming shareholder and Trustee liability for
acts or obligations of Target Fund.
20. Target Fund understands that the obligations of the Fund under the
Agreement are not binding upon any Trustee or shareholder of the Fund
personally, but bind only the Fund and the Fund's property. Target Fund
represents that it has notice of the provisions of the Declaration of
Trust of the Fund disclaiming shareholder and Trustee liability for acts
or obligations of the Fund.
IN WITNESS WHEREOF, each of the parties has caused the Agreement to be
executed and attested by its officers thereunto duly authorized on the
date first set forth above.
Attest: OPPENHEIMER TIME FUND
______________________________ By:_______________________
Robert G. Zack Andrew J. Donohue
Assistant Secretary Secretary
Attest: OPPENHEIMER TARGET FUND
______________________________ By:________________________
Robert G. Zack Andrew J. Donohue
Assistant Secretary Secretary
<PAGE>
OPPENHEIMER TIME FUND
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD JUNE 20, 1995
The undersigned shareholder of Oppenheimer Time Fund (the "Fund"), does
hereby appoint George C. Bowen, Robert Bishop, Scott Farrar and Andrew J.
Donohue, and each of them, as attorneys-in-fact and proxies of the
undersigned, with full power of substitution, to attend the Special
Meeting of Shareholders of the Fund to be held on _______________, 1995,
at 3410 South Galena Street, Denver, Colorado 80231 at 10:00 A.M., Denver
time, and at all adjournments thereof, and to vote the shares held in the
name of the undersigned on the record date for said meeting on the
Proposal specified on the reverse side. Said attorneys-in-fact shall vote
in accordance with their best judgment as to any other matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHO RECOMMENDS A VOTE
FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED HEREBY WILL
BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO CHOICE IS
INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization between the Fund
and Oppenheimer Target Fund, and the transactions contemplated
thereby, including the transfer of substantially all the assets of
the Fund in exchange for Class A shares of Oppenheimer Target Fund,
the distribution of such shares to the shareholders of the Fund in
complete liquidation of the Fund, the deregistration of the Fund as
an investment company under the Investment Company Act of 1940, as
amended, and the cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership or
other entity, a duly authorized individual must sign on its behalf and
give his or her title.
320
<PAGE>
OPPENHEIMER TARGET FUND
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
PART B
STATEMENT OF ADDITIONAL INFORMATION
May 15, 1995
___________________________________
This Statement of Additional Information of Oppenheimer Target Fund
consists of this cover page and the following documents:
1. Target Fund's Statement of Additional Information dated May 1, 1995,
which has been previously filed and is incorporated herein by reference.
2. Target Fund's Annual Report as of December 31, 1994, which has been
previously filed with the Registration Statement originally filed on April
13, 1995, and is incorporated herein by reference.
3. Prospectus of Oppenheimer Time Fund dated October 21, 1994,
supplemented January 3, 1995, which has been previously filed with the
Registration Statement originally filed on April 13, 1995, and is
incorporated herein by reference.
4. Statement of Additional Information of Time Fund dated October 21,
1994, supplemented April 13, 1995, which has been previously filed with
the Registration Statement originally filed on April 13, 1995, and is
incorporated herein by reference.
5. Time Fund's Annual Report as of June 30, 1994, which has been
previously filed with the Registration Statement originally filed on April
13, 1995, and is incorporated herein by reference.
6. Time Fund's Semi-Annual Report as of December 31, 1994, which has been
previously filed with the Registration Statement originally filed on April
13, 1995, and is incorporated herein by reference.
7. Pro Forma Financial Statements which has been previously filed with the
Registration Statement originally filed on April 13, 1995, and
incorporated herein by reference.
This Statement of Additional Information is not a Prospectus. This
Statement of Additional Information should be read in conjunction with the
Proxy Statement and Prospectus, which may be obtained by written request
to Oppenheimer Shareholder Services ("OSS"), P.O. Box 5270, Denver,
Colorado 80217, or by calling OSS at the toll-free number shown above.
