N-14 Cover Page, N-14, Part C
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. 1 / X /
-----------------
POST-EFFECTIVE AMENDMENT NO. __ / /
OPPENHEIMER CAPITAL APPRECIATION FUND
(Exact Name of Registrant as Specified in Charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of Principal Executive Offices)
303-768-3200
(Registrant's Area Code and Telephone Number)
Robert G. Zack, Esq.
Executive Vice President & General Counsel
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street
New York, New York 10148
(212) 323-0250
(Name and Address of Agent for Service)
As soon as practicable after the Registration Statement becomes effective.
(Approximate Date of Proposed Public Offering)
Title of Securities Being Registered: Class A, Class B, Class C, Class N
and Class Y shares of Oppenheimer Capital Appreciation Fund.
It is proposed that this filing will become effective on August 20, 2007
pursuant to Rule 488.
No filing fee is due because of reliance on Section 24(f) of the Investment
Company Act of 1940, as amended.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Part A
Combined Prospectus and Proxy Statement of Oppenheimer Capital Appreciation Fund
Part B
Statement of Additional Information
Part C
Other Information
Signatures
Exhibits
OPPENHEIMER GROWTH FUND
6803 South Tucson Way, Centennial, Colorado 80112
1.800.225.5677
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 2, 2007
To the Shareholders of Oppenheimer Growth Fund:
Notice is hereby given that a Special Meeting of the Shareholders of
Oppenheimer Growth Fund ("Growth Fund"), a registered open-end management
investment company, will be held at 6803 South Tucson Way, Centennial, Colorado
80112 at 1:00 p.m., Mountain time, on November 2, 2007, or any adjournments
thereof (the "Meeting"), for the following purposes:
1. To approve an Agreement and Plan of Reorganization between Growth Fund
and Oppenheimer Capital Appreciation Fund ("Capital Appreciation
Fund"), and the transactions contemplated thereby, including: (a) the
transfer of substantially all the assets of Growth Fund to Capital
Appreciation Fund in exchange for Class A, Class B, Class C, Class N
and Class Y shares of Capital Appreciation Fund; (b) the distribution
of shares of Capital Appreciation Fund to the corresponding Class A,
Class B, Class C, Class N and Class Y shareholders of Growth Fund in
complete liquidation of Growth Fund; and (c) the cancellation of the
outstanding shares of Growth Fund (all of the foregoing being referred
to as 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 July 25, 2007 are
entitled to notice of, and to vote at, the Meeting. The Proposal is more fully
discussed in the combined Prospectus and Proxy Statement. Please read it
carefully before telling us, through your proxy or in person, how you wish your
shares to be voted. The Board of Trustees of Growth Fund recommends a vote in
favor of the Proposal.
YOU CAN VOTE ON THE INTERNET, BY TELEPHONE OR BY MAIL.
WE URGE YOU TO VOTE PROMPTLY.
YOUR VOTE IS IMPORTANT.
By Order of the Board of Trustees,
Robert G. Zack, Secretary
September 6, 2007
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PLEASE VOTE THE ENCLOSED PROXY TODAY.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
OPPENHEIMER CAPITAL APPRECIATION FUND
6803 South Tucson Way, Centennial, Colorado 80112
1.800.225.5677
COMBINED PROSPECTUS AND PROXY STATEMENT
Dated September 6, 2007
SPECIAL MEETING OF SHAREHOLDERS OF
OPPENHEIMER GROWTH FUND
to be held on November 2, 2007
Acquisition of the Assets of
OPPENHEIMER GROWTH FUND
6803 South Tucson Way, Centennial, Colorado 80112
1.800.225.5677
By and in exchange for Class A, Class B, Class C,
Class N and Class Y shares of OPPENHEIMER
CAPITAL APPRECIATION FUND
This combined Prospectus and Proxy Statement solicits proxies from the
shareholders of Oppenheimer Growth Fund ("Growth Fund"), an open-end management
investment company, to be voted at a Special Meeting of Shareholders (the
"Meeting") to approve the Agreement and Plan of Reorganization (the
"Reorganization Agreement") and the transactions contemplated thereby (the
"Reorganization") between Growth Fund and Oppenheimer Capital Appreciation Fund
("Capital Appreciation Fund"), an open-end management investment company. This
combined Prospectus and Proxy Statement constitutes the Prospectus of Capital
Appreciation Fund and the Proxy Statement of Growth Fund filed on Form N-14 with
the Securities and Exchange Commission ("SEC"). If shareholders of Growth Fund
vote to approve the Reorganization Agreement and the Reorganization,
substantially all of the assets of Growth Fund will be transferred to Capital
Appreciation Fund in exchange for shares of Capital Appreciation Fund and the
assumption of certain liabilities, if any, described in the Reorganization
Agreement. The Meeting will be held at the offices of OppenheimerFunds, Inc.
(the "Manager") at 6803 South Tucson Way, Centennial, Colorado 80112 on November
2, 2007 at 1:00 p.m., Mountain Time. The Board of Trustees of Growth Fund is
soliciting these proxies on behalf of Growth Fund. This Prospectus and Proxy
Statement will first be sent to shareholders on or about September 6, 2007.
If the shareholders of Growth Fund vote to approve the Reorganization
Agreement and the Reorganization, shareholders will receive Class A shares of
Capital Appreciation Fund equal in value to the value as of the "Valuation
Date," which is the business day preceding the Closing Date (as such term is
defined in the Reorganization Agreement attached hereto as Exhibit A) of the
Reorganization, of their Class A shares of Growth Fund; Class B shares of
Capital Appreciation Fund equal in value to the value as of the Valuation Date
of their Class B shares of Growth Fund; Class C shares of Capital Appreciation
Fund equal in value to the value as of the Valuation Date of their Class C
shares of Growth Fund; Class N shares of Capital Appreciation Fund equal in
value to the value as of the Valuation Date of their Class N shares of Growth
Fund; and Class Y shares of Capital Appreciation Fund equal in value to the
value as of the Valuation Date of their Class Y shares of Growth Fund. Growth
Fund will subsequently be dissolved.
This combined Prospectus and Proxy Statement gives information about
the Class A, Class B, Class C, Class N and Class Y shares of Capital
Appreciation Fund that you should know before investing. You should retain it
for future reference. A Statement of Additional Information, dated September 6,
2007, relating to the Reorganization, has been filed with the SEC as part of the
Registration Statement on Form N-14 (the "Registration Statement") and is
incorporated herein by reference. You may receive a free copy by writing to
OppenheimerFunds Services (the "Transfer Agent") at P.O. Box 5270, Denver,
Colorado 80217, by visiting the OppenheimerFunds Internet website at
www.oppenheimerfunds.com or by calling toll-free 1.800.225.5677. The Prospectus
of Capital Appreciation Fund dated October 26, 2006, as supplemented May 30,
2007, is enclosed herewith and considered a part of this combined Prospectus and
Proxy Statement. It is intended to provide you with information about Capital
Appreciation Fund. For more information regarding Capital Appreciation Fund, in
addition to its Prospectus, see the Statement of Additional Information dated
October 26, 2006, as supplemented November 24, 2006 and December 15, 2006, which
includes audited financial statements of Capital Appreciation Fund for the
12-month period ended August 31, 2006 and the semi-annual report dated February
28, 2007 which includes unaudited financial statements of Capital Appreciation
Fund for the 6-month period ended February 28, 2007. These documents have been
filed with the SEC and are incorporated herein by reference. You may receive a
free copy of these documents by writing to the Transfer Agent at P.O. Box 5270,
Denver, Colorado 80217, by visiting the website at www.oppenheimerfunds.com or
by calling toll-free 1.800.225.5677.
For more information regarding Growth Fund, see the Prospectus of
Growth Fund dated November 24, 2006, as supplemented June 5, 2007 and June 18,
2007. In addition to its Prospectus, see the Statement of Additional Information
of Growth Fund dated November 24, 2006, as supplemented December 15, 2007, which
includes the audited financial statements of Growth Fund for the 12-month period
ended August 31, 2006 and the semi-annual report of Growth Fund dated February
28, 2007, which includes unaudited financial statements for the 6-month period
ended February 28, 2007. These documents have been filed with the SEC and are
incorporated herein by reference. The annual report of Growth Fund dated August
31, 2006 which includes audited financial statements of Growth Fund for the
12-month period ended August 31, 2006 will be made available no later than 60
days thereafter. You may receive a free copy of these documents by writing to
the Transfer Agent at P.O. Box 5270, Denver, Colorado 80217, by visiting the
website at www.oppenheimerfunds.com or by calling toll-free 1.800.225.5677.
Mutual fund shares are not deposits or obligations of any bank, and are not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
U.S. government agency. Mutual fund shares involve investment risks including
the possible loss of principal.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
Prospectus and Proxy Statement. Any representation to the contrary is a criminal
offense.
This combined Prospectus and Proxy Statement is dated September 6, 2007.
TABLE OF CONTENTS
COMBINED PROSPECTUS AND PROXY STATEMENT
Page
Synopsis..................................................................................................
What am I being asked to vote on?....................................................................
What are the general tax consequences of the Reorganization?.........................................
How do the investment objectives and policies of the Funds compare?..................................
What are the fees and expenses of each Fund and what are they expected to be after the Reorganization?.....
What are the capitalizations of the Funds and what would the capitalization be after the Reorganization?.....
How have the Funds performed?........................................................................
Management's Discussion of Capital Appreciation Fund's Performance...................................
How do the Account Features and Shareholder Services for the Funds Compare?................................
Purchases, Redemptions and Exchanges.............................................................
Dividends and Distributions......................................................................
Other Shareholder Services.......................................................................
How do the Principal Risks of Investing in the Funds Differ?..............................................
Information About the Reorganization......................................................................
How will the Reorganization be carried out? .........................................................
Who will pay the expenses of the Reorganization? ....................................................
What are the tax consequences of the Reorganization? ................................................
Reasons for the Reorganization............................................................................
Board Considerations ................................................................................
What should I know about Class A, Class B, Class C, Class N and Class Y Shares of
Capital Appreciation Fund?...........................................................................
What are the Fundamental Investment Restrictions of the Funds?............................................
Other Comparisons Between the Funds.......................................................................
Management of the Funds..........................................................................
Investment Management and Fees...................................................................
Distribution Services............................................................................
Transfer Agency and Custody Services.............................................................
Shareholder Rights...............................................................................
Voting Information .......................................................................................
How do I vote? ......................................................................................
Who is Entitled to Vote and How are Votes Counted?...................................................
Quorum and Required Vote.............................................................................
Solicitation of Proxies..............................................................................
Revoking a Proxy.....................................................................................
What other matters will be voted upon at the Meeting?................................................
Additional Information About the Funds....................................................................
Householding of Reports to Shareholders and Other Fund Documents.....................................
Principal Shareholders...............................................................................
Exhibit A: Agreement and Plan of Reorganization between Oppenheimer Growth Fund
and Oppenheimer Capital Appreciation Fund
Exhibit B: Principal Shareholders........................................................................
Exhibit C: Management's Discussion of Capital Appreciation Fund's Performance................................
Enclosures:
Prospectus of Oppenheimer Capital Appreciation Fund dated October 26, 2006,
as supplemented May 30, 2007.
SYNOPSIS
This is only a summary and is qualified in its entirety by the more
detailed information contained in or incorporated by reference in this combined
Prospectus and Proxy Statement and by the Reorganization Agreement which is
attached as Exhibit A. Shareholders should carefully review this Prospectus and
Proxy Statement and the Reorganization Agreement in their entirety and, in
particular, the Prospectus of Capital Appreciation Fund which accompanies this
Prospectus and Proxy Statement and is incorporated herein by reference.
What am I being asked to vote on?
You are being asked by the Board of Trustees ("the Board") of Growth
Fund to approve the reorganization of your Fund, Growth Fund, with and into
Capital Appreciation Fund (each individually a "Fund" and collectively the
"Funds"). If shareholders of Growth Fund approve the Reorganization,
substantially all of the assets of Growth Fund will be transferred to Capital
Appreciation Fund, in exchange for an equal value of shares of Capital
Appreciation Fund and the assumption of certain liabilities, if any, described
in the Reorganization Agreement. The shares of Capital Appreciation Fund will
then be distributed to Growth Fund shareholders, and Growth Fund will
subsequently be liquidated. If the Reorganization is approved by shareholders of
Growth Fund, you will no longer be a shareholder of Growth Fund, and, instead,
will become a shareholder of Capital Appreciation Fund. This exchange will occur
on the Closing Date of the Reorganization.
Approval of the Reorganization means that as a shareholder in Growth
Fund, you will receive Class A, Class B, Class C, Class N or Class Y shares of
Capital Appreciation Fund, as the case may be, equal in value to the value of
the net assets of your Growth Fund shares transferred to Capital Appreciation
Fund on the Closing Date. The shares you receive will be issued at net asset
value ("NAV") without a sales charge and will not be subject to any additional
contingent deferred sales charge ("CDSC"). However, any CDSC that applies to
Growth Fund shares as of the date of the exchange will carry over to Capital
Appreciation Fund shares received in the Reorganization.
In considering whether to approve the Reorganization, you should
consider, among other things:
(i) The number of similarities (as well as any differences)
between the Funds (as discussed herein) and the relative
advantages and disadvantages of each Fund.
(ii) That the Reorganization would allow you the ability to
continue your investment in a fund that closely resembles
the investment style you were seeking when you invested in
Growth Fund.
Capital Appreciation Fund is an open-end, diversified, management
investment company organized as a Massachusetts business trust in October 1987.
Growth Fund is an open-end, diversified management investment company originally
incorporated in Maryland in 1972 but reorganized as a Massachusetts business
trust in October 1985. Growth Fund commenced operations on March 15, 1973.
Capital Appreciation Fund commenced operations on January 22, 1981. As of May
31, 2007, Growth Fund had approximately $1.326 billion in net assets and Capital
Appreciation Fund had approximately $8.252 billion in net assets.
Shareholders of Growth Fund are expected to realize a number of
benefits from the proposed Reorganization. The assets of Growth Fund have been
decreasing significantly since 2000, resulting in the Fund spreading its
operating costs over a declining asset base. If the Reorganization is approved,
shareholders would get the benefit of a larger fund with lower operating
expenses, resulting in you paying significantly lower expenses as a shareholder
of Capital Appreciation Fund. Additionally, the Manager is the investment
adviser to both Funds and employs the same portfolio manager to manage both
Funds, which results in duplicative efforts with respect to tracking portfolio
positions, compliance with investment limits, preparation of reports and other
administrative functions. As a result, the Manager believes that merging the two
Funds also will allow the portfolio manager and his team to focus on managing
one, larger fund rather than two, smaller but similar funds. Furthermore,
although performance is not indicative of future results, the performance of
Capital Appreciation Fund has consistently outperformed the performance of
Growth Fund. Moreover, the Funds' investment objectives and overall strategy of
investing in growth stocks are the same. (See the discussion in "Reasons for the
Reorganization" beginning on page 20 for more details.)
The Board of Growth Fund reviewed and discussed with the Manager and
the Board's independent legal counsel the proposed Reorganization. Information
with respect to, but not limited to, each Fund's respective investment
objectives and policies, management fees, distribution fees and other operating
expenses, historical performance and asset size, was also considered by the
Board of Growth Fund.
Based on the considerations discussed above and the reasons more fully
described under "Reasons for the Reorganization" (beginning on page 20),
together with other relevant factors and information, at a meeting held on June
14, 2007, the Board of Growth Fund concluded that the Reorganization would be in
the best interests of shareholders of Growth Fund and that the Fund would not
experience any dilution as a result of the Reorganization. The Board of Growth
Fund voted to approve the proposed Reorganization and to recommend that
shareholders approve the proposed Reorganization.
The proposed Reorganization was also approved by the Board of Trustees
of Capital Appreciation Fund at a meeting held on June 14, 2007.
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE
TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION
What are the general tax consequences of the Reorganization?
It is expected that shareholders of Growth Fund will not recognize any
gain or loss for federal income tax purposes as a result of the exchange of
their shares for shares of Capital Appreciation Fund. You should, however,
consult your tax advisor regarding the effect, if any, of the Reorganization in
light of your individual circumstances. You should also consult your tax advisor
about state and local tax consequences.
For federal income tax purposes, the holding period of your Growth Fund
shares will be carried over to the holding period for Capital Appreciation Fund
shares you receive in connection with the Reorganization. This exchange will
occur on the Closing Date (as such term is defined in the Reorganization
Agreement) of the Reorganization.
One of the requirements to qualify as a tax-free reorganization under
the Internal Revenue Code is that a significant portion of the assets of Growth
Fund continue to be used by Capital Appreciation Fund after the Reorganization.
Due to common holdings in both Funds, it is expected that the assets of Growth
Fund will satisfy this requirement. As a result, prior to the Reorganization, it
is not expected to be necessary for Growth Fund to sell portfolio securities
that do not conform to the portfolio securities of Capital Appreciation Fund for
purposes of the Reorganization. However, Growth Fund may sell securities prior
to the Reorganization in the ordinary course of its business as an open-end
investment company.
For further information about the tax consequences of the
Reorganization, please see the "Information About the Reorganization--What are
the Tax Consequences of the Reorganization?"
How do the investment objectives and policies of the Funds compare?
The chart below compares the Funds' overall investment objectives,
investment strategies and other policies.
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GROWTH FUND CAPITAL APPRECIATION FUND
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Investment Objectives
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The Fund seeks capital appreciation. The Fund seeks capital appreciation.
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Investment Strategies
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Growth Fund invests mainly in common stocks of "growth Capital Appreciation Fund invests mainly in common
companies." The Fund currently focuses on stocks of stocks of "growth companies." These may be newer
companies having a large or mid-size market companies or established companies of any
capitalization, but this focus could change over time. capitalization range that the portfolio manager
The Fund can invest in domestic companies and foreign believes may appreciate in value over the long term.
companies, although most of its investments are in
stocks of U.S. companies.
The portfolio manager looks for stocks of companies The Manager looks for growth companies with stock
with growth potential, and normally invests in prices that it believes are reasonable in relation to
between 60 and 80 companies, to focus the portfolio. overall stock market valuations. The Manager focuses
Currently, the portfolio manager seeks to implement on factors that may vary in particular cases and over
that investment approach by looking for: time in seeking broad diversification of the Fund's
portfolio among industries and market sectors.
Currently, the Manager looks for:
o companies in businesses with above-average
o Companies that have strong revenue growth growth potential,
o Companies with above-average earnings growth o companies with growth rates that the
o Companies that we believe can sustain strong portfolio managers believe are sustainable over
revenue and earnings growth time,
o Companies that are well established as leaders o stocks with reasonable valuations relative to
in growth markets their growth potential.
o Stocks with attractive valuations relative to
their growth potential
The Manager may sell companies from the Fund that
it believes no longer meet the above criteria.
The Manager may sell companies from the Fund that it
believes no longer meet the above criteria.
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Who is the Fund Designed For?
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The Fund is designed for investors seeking capital The Fund is designed for investors seeking capital
appreciation in their investment over the long term. appreciation in their investment over the long term.
Those investors should be willing to assume the risks of Those investors should be willing to assume the risks
short-term share price fluctuations that are typical for of short-term share price fluctuations that are
a growth fund focusing on a limited number of growth typical for a growth fund focusing on stock
companies. Those investors should understand that the investments. Since the Fund does not seek income and
Fund's strategy of investing in relatively few companies its income from its investments will likely be small,
and industries may subject the Fund to greater risk and it is not designed for investors needing current
increased volatility than more broadly diversified income. Because of its focus on long-term growth, the
funds. Since the Fund does not seek income and its Fund may be appropriate for a portion of a retirement
income from investments, if any, will likely be small, plan investment. The Fund is not a complete investment
it is not designed for investors needing current income program.
or looking for preservation of capital. Because of its focus on long-term
growth, the Fund may be appropriate for a portion of a retirement plan
investment. The Fund is not a complete investment program.
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Manager
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OppenheimerFunds, Inc. OppenheimerFunds, Inc.
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Portfolio Managers
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Marc L. Baylin Marc L. Baylin
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As shown in the chart above, the Funds' investment objectives focus on
capital appreciation and each Fund uses a "growth" investment style to achieve
its objective. Capital Appreciation Fund can invest in common stocks of both
newer and established foreign and U.S. companies that the Manager believes may
be appreciate in value over time. Growth Fund can invest in domestic and foreign
companies, of mainly large or mid-capitalization, that the manager believes have
growth potential.
As of February 28, 2007, 99.9% of Growth Fund's portfolio consisted of
common stocks, with 0.2% invested in Oppenheimer Institutional Money Market
Fund. As of February 27, 2007, 99.2% of Capital Appreciation Fund's portfolio
consisted of common stocks. Each Fund's portfolio was allocated across the
following sectors:*
--------------------------------------------------- --------------------------------- --------------------------------
Growth Fund Allocation Capital Appreciation Fund
SECTOR (as of 2/28/07) Allocation
(as of 2/27/07)
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o Information Technology 38.5% 32.9%
Communications Equipment 8.2 7.9
Internet Software & Services 7.1 6.7
Software 7.6 5.8
IT Services 1.0 4.5
Semiconductors & Semiconductor 4.9 4.3
Equipment
Computers & Peripherals 9.7 3.7
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o Health Care 17.4 14.5
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o Consumer Discretionary 14.2 11.5
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o Financials 9.6 11.2
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o Industrials 5.0 9.7
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o Consumer Staples 6.6 7.1
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o Energy 5.0 6.6
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o Materials 2.9 3.5
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o Telecommunication Services 0.8 3.0
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* Unaudited
What are the fees and expenses of each Fund and what are they expected to be
after the Reorganization?
Each Fund pays a variety of expenses directly for management of their
respective assets, administration and/or distribution of shares and other
services. Those expenses are subtracted from each Fund's assets to calculate the
Fund's net asset value per share. Shareholders pay these expenses indirectly.
Shareholders pay other expenses directly, such as sales charges.
The tables below reflect the current contractual management fee
schedule for each of the Funds and the proposed "pro forma" management fee
schedule for the surviving Capital Appreciation Fund upon the successful
completion of the Reorganization. The tables are provided to help you understand
and compare the fees and expenses of investing in shares of each Fund. The pro
forma fees and expenses of the surviving Capital Appreciation Fund show what the
fees and expenses are expected to be after giving effect to the Reorganization.
"Other Expenses" in the tables include transfer agent fees, custodial
fees, and accounting and legal expenses that each Fund pays. The "Other
Expenses" in the tables are based on, among other things, the fees each Fund
would have paid if the transfer agent had not waived a portion of its fee under
a voluntary undertaking to the Funds to limit these fees to 0.35% of average
daily net assets per fiscal year for all classes. For each Fund, that
undertaking may be amended or withdrawn at any time.
CURRENT AND PRO FORMA FEE TABLES For Classes A, B, C, N and Y for the
12 month period ended May 31, 2007
-------------------------------------------------- ------------------- -------------------- ---------------------------
(CLASS A SHARES) Growth Fund Capital Growth/
("Growth") Appreciation Fund Cap App Combined
("Cap App") Pro Forma Expenses
-------------------------------------------------- ------------------- -------------------- ---------------------------
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Shareholder Transaction Expenses (charges paid directly from a shareholder's investment)
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-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Sales Charge (Load) on purchases (as a % 5.75% 5.75% 5.75%
of offering price)
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-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or None(1) None(1) None(1)
redemption proceeds)
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Annual Fund Operating Expenses (as a percentage of average daily net assets)
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-------------------------------------------------- ------------------- -------------------- ---------------------------
Management Fees 0.67% 0.57% 0.56%
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Distribution and/or Service (12b-1) Fees 0.23% 0.24% 0.24%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Other Expenses 0.27% 0.26% 0.26%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Total Fund Operating Expenses 1.17% 1.07% 1.06%
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After the waiver was applied to Growth Fund, the actual "Other Expenses" and
"Total Annual Operating Expenses" for Class A shares as percentages of average
daily net assets were the same as shown above. After the waiver was applied to
Capital Appreciation Fund, the actual "Other Expenses" and "Total Annual
Operating Expenses" for Class A shares as percentages of average daily net
assets were the same as shown above. Expenses may vary in future years.
-------------------------------------------------- ------------------- -------------------- ---------------------------
(CLASS B SHARES) Growth Fund Capital Growth/
("Growth") Appreciation Fund Cap App Combined
("Cap App") Pro Forma Expenses
-------------------------------------------------- ------------------- -------------------- ---------------------------
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Shareholder Transaction Expenses (charges paid directly from a shareholder's investment)
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-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Sales Charge (Load) on purchases (as a % None None None
of offering price)
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or 5%(2) 5%(2) 5%(2)
redemption proceeds)
-------------------------------------------------- ------------------- -------------------- ---------------------------
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Annual Fund Operating Expenses (as a percentage of average daily net assets)
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-------------------------------------------------- ------------------- -------------------- ---------------------------
Management Fees 0.67% 0.57% 0.56%
-------------------------------------------------- ------------------- -------------------- ---------------------------
Distribution and/or Service (12b-1) Fees 1.00% 1.00% 1.00%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Other Expenses 0.30% 0.31% 0.31%
-------------------------------------------------- ------------------- -------------------- ---------------------------
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Total Fund Operating Expenses 1.97% 1.88% 1.87%
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After the waiver was applied to Growth Fund, the actual "Other Expenses" and
"Total Annual Operating Expenses" for Class B shares as percentages of average
daily net assets were the same as shown above. After the waiver was applied to
Capital Appreciation Fund, the actual "Other Expenses" and "Total Annual
Operating Expenses" for Class B shares as percentages of average daily net
assets were the same as shown above. Expenses may vary in future years.
-------------------------------------------------- ------------------- -------------------- ---------------------------
(CLASS C SHARES) Growth Fund Capital Growth/
("Growth") Appreciation Fund Cap App Combined
("Cap App") Pro Forma Expenses
-------------------------------------------------- ------------------- -------------------- ---------------------------
-----------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's investment)
-----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Sales Charge (Load) on purchases (as a % None None None
of offering price)
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or 1%(3) 1%(3) 1%(3)
redemption proceeds)
-------------------------------------------------- ------------------- -------------------- ---------------------------
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Annual Fund Operating Expenses (as a percentage of average daily net assets)
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-------------------------------------------------- ------------------- -------------------- ---------------------------
Management Fees 0.67% 0.57% 0.56%
-------------------------------------------------- ------------------- -------------------- ---------------------------
Distribution and/or Service (12b-1) Fees 1.00% 1.00% 1.00%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Other Expenses 0.36% 0.26% 0.27%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Total Fund Operating Expenses 2.03% 1.83% 1.83%
-------------------------------------------------- ------------------- -------------------- ---------------------------
After the waiver was applied to Growth Fund, the actual "Other Expenses" and
"Total Annual Operating Expenses" as percentages of average daily net assets
were 0.35% and 2.02% for Class C shares. After the waiver was applied to Capital
Appreciation Fund, the actual "Other Expenses" and "Total Annual Operating
Expenses" for Class C shares as percentages of average daily net assets were the
same as shown above. Expenses may vary in future years.
-------------------------------------------------- ------------------- -------------------- ---------------------------
(CLASS N SHARES) Growth Fund Capital Growth/
("Growth") Appreciation Fund Cap App Combined
("Cap App") Pro Forma Expenses
-------------------------------------------------- ------------------- -------------------- ---------------------------
-----------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's investment)
-----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Sales Charge (Load) on purchases (as a % None None None
of offering price)
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or 1%(4) 1%(4) 1%(4)
redemption proceeds)
-------------------------------------------------- ------------------- -------------------- ---------------------------
-----------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (as a percentage of average daily net assets)
-----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Management Fees 0.67% 0.57% 0.56%
-------------------------------------------------- ------------------- -------------------- ---------------------------
Distribution and/or Service (12b-1) Fees 0.50% 0.50% 0.50%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Other Expenses 0.36% 0.34% 0.34%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Total Fund Operating Expenses 1.53% 1.41% 1.40%
-------------------------------------------------- ------------------- -------------------- ---------------------------
After the waiver was applied to Growth Fund, the actual "Other Expenses" and
"Total Annual Operating Expenses" as percentages of average daily net assets
were 0.35% and 1.52% for Class N shares. After the waiver was applied to Capital
Appreciation Fund, the actual "Other Expenses" and "Total Annual Operating
Expenses" for Class N shares as percentages of average daily net assets were the
same as shown above. Expenses may vary in future years.
-------------------------------------------------- ------------------- -------------------- ---------------------------
(CLASS Y SHARES) Growth Fund Capital Growth/
("Growth") Appreciation Fund Cap App Combined
("Cap App") Pro Forma Expenses
-------------------------------------------------- ------------------- -------------------- ---------------------------
-----------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses (charges paid directly from a shareholder's investment)
-----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Sales Charge (Load) on purchases (as a % None None None
of offering price)
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Maximum Deferred Sales Charge (Load) (as a % of
the lower of the original offering price or None None None
redemption proceeds)
-------------------------------------------------- ------------------- -------------------- ---------------------------
-----------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (as a percentage of average daily net assets)
-----------------------------------------------------------------------------------------------------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Management Fees 0.67% 0.57% 0.56%
-------------------------------------------------- ------------------- -------------------- ---------------------------
Distribution and/or Service (12b-1) Fees None None None
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Other Expenses 0.23% 0.10% 0.10%
-------------------------------------------------- ------------------- -------------------- ---------------------------
-------------------------------------------------- ------------------- -------------------- ---------------------------
Total Fund Operating Expenses 0.90% 0.67% 0.66%
-------------------------------------------------- ------------------- -------------------- ---------------------------
After the waiver was applied to Growth Fund, the actual "Other Expenses" and
"Total Annual Operating Expenses" for Class Y shares as percentages of average
daily net assets were the same as shown above. After the waiver was applied to
Capital Appreciation Fund, the actual "Other Expenses" and "Total Annual
Operating Expenses" for Class Y shares as percentages of average daily net
assets were the same as shown above. Expenses may vary in future years.
1. Class A contingent deferred sales charge may apply to redemptions of
investments of $1 million or more or to certain retirement plan
redemptions. See "How to Buy Shares" for details.
2. Applies to redemptions in first year after purchase. The contingent
deferred sales charge gradually declines from 5% to 1% in years one
through six and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of a retirement plan's first
purchase of Class N shares.
Examples
The examples below are intended to help you compare the cost of
investing in Growth Fund, Capital Appreciation Fund, and the surviving Capital
Appreciation Fund after the Reorganization. These examples assume an annual
return for each class of 5%, the operating expenses described in the tables
above and reinvestment of your dividends and distributions.
Your actual costs may be higher or lower because expenses will vary
over time. For each $10,000 investment, you would pay the following projected
expenses if you redeemed your shares after the number of years shown or held
your shares for the number of years shown without redeeming, according to the
following examples.
Growth Fund
---------------------------------- ------------------ --------------------- ------------------- ---------------------
If shares are redeemed(1): 1 Year 3 Years 5 Years 10 Years
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class A $688 $927 $1,185 $1,921
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class B $702 $924 $1,273 $1,915(2)
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class C $308 $643 $1,104 $2,382
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class N $257 $487 $840 $1,837
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class Y(3) $92 $288 $501 $1,113
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Growth Fund
---------------------------------- ------------------ --------------------- ------------------- ---------------------
If shares are not redeemed(4): 1 Year 3 Years 5 Years 10 Years
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class A $688 $927 $1,185 $1,921
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class B $202 $624 $1,073 $1,915(2)
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class C $208 $643 $1,104 $2,382
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class N $157 $487 $840 $1,837
---------------------------------- ------------------ --------------------- ------------------- ---------------------
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Class Y(3) $92 $288 $501 $1,113
---------------------------------- ------------------ --------------------- ------------------- ---------------------
Capital Appreciation Fund
---------------------------------- ------------------- -------------------- ------------------- ---------------------
If shares are redeemed(1): 1 Year 3 Years 5 Years 10 Years
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class A $678 $897 $1,134 $1,812
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class B $693 $896 $1,226 $1,810(2)
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class C $288 $581 $999 $2,167
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class N $245 $449 $776 $1,703
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class Y(3) $69 $215 $374 $837
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Capital Appreciation Fund
---------------------------------- ------------------- -------------------- ------------------- ---------------------
If shares are not redeemed(4): 1 Year 3 Years 5 Years 10 Years
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class A $678 $897 $1,134 $1,812
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class B $193 $596 $1,026 $1,810(2)
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class C $188 $581 $999 $2,167
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class N $145 $449 $776 $1,703
---------------------------------- ------------------- -------------------- ------------------- ---------------------
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Class Y(3) $69 $215 $374 $837
---------------------------------- ------------------- -------------------- ------------------- ---------------------
Pro Forma Surviving Capital Appreciation Fund (Post-Reorganization)
----------------------------------- ------------------ -------------------- ------------------- ---------------------
If shares are redeemed(1): 1 year 3 years 5 years 10 years
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class A $677 $894 $1,129 $1,801
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class B $692 $893 $1,220 $1,798(2)
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class C $288 $581 $999 $2,167
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class N $244 $446 $771 $1,691
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class Y(3) $68 $212 $369 $825
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Pro Forma Surviving Capital Appreciation Fund (Post-Reorganization)
----------------------------------- ------------------ -------------------- ------------------- ---------------------
If shares are not redeemed(4): 1 year 3 years 5 years 10 years
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class A $677 $894 $1,129 $1,801
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class B $192 $593 $1,020 $1,798(2)
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class C $188 $581 $999 $2,167
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class N $144 $446 $771 $1,691
----------------------------------- ------------------ -------------------- ------------------- ---------------------
----------------------------------- ------------------ -------------------- ------------------- ---------------------
Class Y(3) $68 $212 $369 $825
----------------------------------- ------------------ -------------------- ------------------- ---------------------
1. In the "If shares are redeemed" examples, expenses include the initial
sales charge for Class A and the applicable Class B, Class C and Class N
contingent deferred sales charges.
2. Class B expenses for years 7 through 10 are based on Class A expenses,
since Class B shares automatically convert to Class A 72 months after
purchase.
3. There is no sales charge on Class Y shares.
4. In the "If shares are not redeemed" examples, the Class A expenses include
the initial sales charge, but Class B, Class C and Class N expenses do not
include the contingent deferred sales charges.
What are the capitalizations of the Funds and what would the capitalization be
after the Reorganization?
The following tables set forth the existing capitalization (unaudited)
of Growth Fund and Capital Appreciation Fund as of May 31, 2007, the pro forma
combined capitalization of Capital Appreciation Fund as of May 31, 2007 as if
the Reorganization had occurred on that date.
--------------------------------------------------------------------------------------------------------------------
Growth Fund Net Assets Shares Net Asset Value
Outstanding Per Share
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class A $1,046,003,991 29,980,796 $34.89
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class B $145,225,553 4,602,189 $31.56
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class C $79,787,875 2,486,491 $32.09
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class N $16,094,846 467,281 $34.44
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class Y $38,925,338 1,103,461 $35.28
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
TOTAL $1,326,037,603 38,640,218 $34.32
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund Net Assets Shares Net Asset Value
Outstanding Per Share
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class A $5,489,990,576 108,602,491 $50.55
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class B $796,693,298 17,304,340 $46.04
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class C $701,984,216 15,371,738 $45.67
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class N $260,958,913 5,247,496 $49.73
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class Y $1,002,086,159 19,259,578 $52.03
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
TOTAL $8,251,713,162 165,785,643 $49.77
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund Net Assets Shares Net Asset Value
(Pro Forma Surviving Fund)* Outstanding Per Share
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class A $6,535,994,567 129,294,458 $50.55
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class B $941,918,851 20,458,669 $46.04
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class C $781,772,091 17,118,886 $45.67
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class N $277,053,759 5,571,139 $49.73
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
Class Y $1,041,011,497 20,007,703 $52.03
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
TOTAL $9,577,750,765 192,450,855 $49.69
--------------------------------------------------------------------------------------------------------------------
* Reflects the issuance of 20,691,972 Class A shares, 3,154,334 Class B
shares, 1,747,163 Class C shares, 323,644 Class N shares and 748,125 Class
Y shares of Capital Appreciation Fund in a tax-free exchange for the net
assets of Growth Fund, aggregating 26,641,498.
How have the Funds performed?
The following past performance information for each Fund is set forth
below: (i) a bar chart showing changes in each Fund's performance for Class A
shares from year to year for the last ten calendar years (or less, if
applicable) and (ii) tables detailing how the average annual total returns of
each Fund's shares, both before and after taxes, compared to those of
broad-based market indices. The after-tax returns are shown for Class A shares
only and are calculated using the historical highest individual federal marginal
income tax rates in effect during the periods shown and do not reflect the
impact of state or local taxes. The after-tax returns are calculated based on
certain assumptions mandated by regulation and your actual after-tax returns may
differ from those shown, depending on your individual tax situation. The
after-tax returns set forth below are not relevant to investors who hold their
fund shares through tax-deferred arrangements such as 401(k) plans or IRAs or to
institutional investors not subject to tax. The past investment performance of
either Fund, before and after taxes, is not necessarily an indication of how
either Fund will perform in the future.
Annual Total Returns for Growth Fund (Class A) as of 12/31 each year
[Graphic bar chart]
----------------------------------------------------------- ---------------------------------------------------------
Calendar Year Ended: Oppenheimer Capital Appreciation Fund
Annual Total Returns
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/97 26.33%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/98 24.04%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/99 42.09%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/00 -1.29%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/01 -12.69%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/02 -26.26%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/03 29.46%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/04 6.46%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/05 4.70%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/06 7.51%
----------------------------------------------------------- ---------------------------------------------------------
Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
For the period from April 1, 2007 through June 30, 2007, the cumulative return
(not annualized) before taxes for Class A shares was 7.11%. During the period
shown in the bar chart, the highest return (not annualized) before taxes for a
calendar quarter was 30.16% (4th Qtr `99) and the lowest return (not annualized)
before taxes for a calendar quarter was -25.55% (4th Qtr `00).
Annual Total Returns for Capital Appreciation Fund (Class A) as of 12/31 each year
[Graphic bar chart]
----------------------------------------------------------- ---------------------------------------------------------
Calendar Year Ended: Oppenheimer Growth Fund
Annual Total Returns
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/97 18.12%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/98 10.95%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/99 46.73%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/00 -11.16%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/01 -24.54%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/02 -25.70%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/03 16.90%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/04 4.84%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/05 8.88%
----------------------------------------------------------- ---------------------------------------------------------
----------------------------------------------------------- ---------------------------------------------------------
12/31/06 4.64%
----------------------------------------------------------- ---------------------------------------------------------
Sales charges and taxes are not included in the calculations of return in this
bar chart, and if those charges and taxes were included, the returns may be less
than those shown.
For the period from April 1, 2007 through June 30, 2007, the cumulative return
(not annualized) before taxes for Class A shares was 6.38%. During the period
shown in the bar chart, the highest return (not annualized) before taxes for a
calendar quarter was 28.86% (4th Qtr `99) and the lowest return (not annualized)
before taxes for a calendar quarter was -19.89% (3rd Qtr `01).
--------------------------------------------- ---------------------- ---------------------------- --------------------------
Growth Fund
--------------------------------------------- ---------------------- ---------------------------- --------------------------
--------------------------------------------- ---------------------- ---------------------------- --------------------------
Average Annual Total Returns 1 Year 5 Years 10 Years
(or life of class, if
for the periods ended December 31, 2006 less)
--------------------------------------------- ---------------------- ---------------------------- --------------------------
--------------------------------------------- ---------------------- ---------------------------- --------------------------
Class A Shares (inception 3/15/73)
Return Before Taxes -1.37% -0.45% 2.34%
Return After Taxes on Distributions -1.37% -0.45% 1.44%
Return After Taxes on Distributions and
Sale of Fund Shares -0.89% -0.38% 1.68%
--------------------------------------------- ---------------------- ---------------------------- --------------------------
--------------------------------------------- ---------------------- ---------------------------- --------------------------
Class B Shares (inception 8/17/93) -1.28% -0.53% 2.47%
--------------------------------------------- ---------------------- ---------------------------- --------------------------
--------------------------------------------- ---------------------- ---------------------------- --------------------------
Class C Shares (inception 11/01/95) 2.73% -0.12% 2.11%
--------------------------------------------- ---------------------- ---------------------------- --------------------------
--------------------------------------------- ---------------------- ---------------------------- --------------------------
Class N Shares (inception 3/01/01) 3.28% 0.64% -2.13%
--------------------------------------------- ---------------------- ---------------------------- --------------------------
--------------------------------------------- ---------------------- ---------------------------- --------------------------
Class Y Shares (inception 6/01/94) 4.91% 0.94% 3.19%
--------------------------------------------- ---------------------- ---------------------------- --------------------------
--------------------------------------------- ---------------------- ---------------------------- --------------------------
S&P 500 Index (reflects no deduction for 15.78% 6.19% 8.42%
fees, expenses or taxes) 4.10%(1)
1. From 2/28/01.
--------------------------------------------- ----------------------- -------------------------- --------------------------
Capital Appreciation Fund
--------------------------------------------- ----------------------- -------------------------- --------------------------
--------------------------------------------- ----------------------- -------------------------- --------------------------
5 Years 10 Years
Average Annual Total Returns 1 Year (or life of class, if (or life of class, if
for the periods ended December 31, 2006 less) less)
--------------------------------------------- ----------------------- -------------------------- --------------------------
--------------------------------------------- ----------------------- -------------------------- --------------------------
Class A Shares (inception 1/22/81)
Return Before Taxes 1.33% 1.51% 7.54%
Return After Taxes on Distributions 1.33% 1.47% 6.39%
Return After Taxes on Distributions and
Sale of Fund Shares 0.86% 1.27% 6.00%
--------------------------------------------- ----------------------- -------------------------- --------------------------
--------------------------------------------- ----------------------- -------------------------- --------------------------
Class B Shares (inception 11/01/95) 1.63% 1.50% 7.67%
--------------------------------------------- ----------------------- -------------------------- --------------------------
--------------------------------------------- ----------------------- -------------------------- --------------------------
Class C Shares (inception 12/01/93) 5.69% 1.94% 7.34%
--------------------------------------------- ----------------------- -------------------------- --------------------------
--------------------------------------------- ----------------------- -------------------------- --------------------------
Class N Shares (inception 3/01/01) 6.14% 2.40% 0.40%
--------------------------------------------- ----------------------- -------------------------- --------------------------
--------------------------------------------- ----------------------- -------------------------- --------------------------
Class Y Shares (inception 11/03/97) 7.93% 3.12% 6.44%
--------------------------------------------- ----------------------- -------------------------- --------------------------
--------------------------------------------- ----------------------- -------------------------- --------------------------
8.42%
S&P 500 Index (reflects no deduction for 15.78% 6.19% 4.10%(1)
fees, expenses or taxes) 6.57%(2)
--------------------------------------------- ----------------------- -------------------------- --------------------------
1. From 02/28/01
2. From 10/31/97
For each Fund, the average annual total returns include applicable sales
charges: for Class A, the current maximum initial sales charge of 5.75%; for
Class B, the contingent deferred sales charge of 5% (1-year) and 2% (5-years);
and for Class C and Class N, the 1% contingent deferred sales charge for the
1-year period. There is no sales charge for Class Y shares. Because Class B
shares convert to Class A shares 72 months after purchase, Class B
"life-of-class" performance does not include any contingent deferred sales
charge and uses Class A performance for the period after conversion. The returns
measure the performance of a hypothetical account and assume that all dividends
and capital gains distributions have been reinvested in additional shares.
The performance of each Fund's Class A shares is compared to the S&P 500 Index,
an unmanaged index of equity securities that is a measure of the general
domestic stock market. The index's performance includes reinvestment of income
but does not reflect transaction costs, fees, expenses or taxes. The Fund's
investments vary from those in the index.
Management's Discussion of Capital Appreciation Fund's Performance
A discussion of the performance of Capital Appreciation Fund taken from
its annual report dated August 31, 2006 is set forth in Exhibit C.
HOW DO THE ACCOUNT FEATURES AND SHAREHOLDER SERVICES FOR THE FUNDS COMPARE?
Purchases, Redemptions and Exchanges
The procedures for purchases, redemptions and exchanges of shares of
the Funds are the same. Shares of either Fund may be exchanged for shares of the
same class of certain other Oppenheimer funds offering such shares. Exchange
privileges are subject to amendment or termination at any time.
Both Funds have the same initial and subsequent minimum investment
amounts for the purchase of shares. These amounts are $1,000 and $50,
respectively. Both Funds have a maximum initial sales charge of 5.75% on Class A
shares for purchases of less than $25,000. The sales charge of 5.75% is reduced
for purchases of Class A shares of $25,000 or more. Investors who purchase $1
million or more of Class A shares pay no initial sales charge but may have to
pay a contingent deferred sales charge of up to 1% if the shares are sold within
18 calendar months from the beginning of the calendar month during which they
were purchased. Class B shares of the Funds are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge ("CDSC") upon
redemption depending on the length of time the shares are held. The CDSC begins
at 5% for shares redeemed in the first year and declines to 1% in the sixth year
and is eliminated after that. Class C shares may be purchased without an initial
sales charge, but if redeemed within 12 months of buying them, a CDSC of 1% may
be deducted. Class N shares are purchased without an initial sales charge, but
if redeemed within 18 months of the retirement plan's first purchase of N
shares, a CDSC of 1% may be deducted.
Class A, Class B, Class C, Class N and Class Y shares of Capital
Appreciation Fund received in the Reorganization will be issued at net asset
value, without a sales charge and no CDSC will be imposed on Growth Fund shares
exchanged for Capital Appreciation Fund shares as a result of the
Reorganization. However, any CDSC that applies to Growth Fund shares as of the
date of the exchange will carry over to Capital Appreciation Fund shares
received in the Reorganization.
Dividends and Distributions
Both Funds intend to declare dividends separately for each class of
shares from net investment income on an annual basis and pay them annually.
Dividends and distributions paid to Class A and Class Y shares will generally be
higher than dividends for Class B, Class C and Class N shares, which normally
have higher expenses than Class A and Class Y shares. The Funds have no fixed
dividend rate and cannot guarantee that they will pay any dividends or
distributions.
Either Fund may realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term or
long-term capital gains each year. Each Fund may make supplemental distributions
of dividends and capital gains following the end of its fiscal year. However,
there can be no assurance that either Fund will pay any capital gains
distributions in a particular year.
Other Shareholder Services
Both Funds also offer the following privileges: (i) the ability to
reduce your sales charge on purchases of Class A shares through rights of
accumulation or letters of intent, (ii) reinvestment of dividends and
distributions at net asset value, (iii) net asset value purchases by certain
individuals and entities, (iv) Asset Builder (automatic investment) Plans, (v)
Automatic Withdrawal and Exchange Plans for shareholders who own shares of the
Funds valued at $5,000 or more, (vi) AccountLink and PhoneLink arrangements,
(vii) exchanges of shares for shares of the same class of certain other funds at
net asset value, (viii) telephone and Internet redemption and exchange
privileges and (ix) wire redemptions of fund shares (for a fee). All of such
services and privileges are subject to amendment or termination at any time and
are subject to the terms of the Funds' respective prospectuses. For additional
information, please see the section in the current Prospectus of Capital
Appreciation Fund titled "ABOUT YOUR ACCOUNT," enclosed with this combined proxy
statement and prospectus.
Special Account Features. When your shares of Growth Fund are exchanged
for shares of Capital Appreciation Fund, any special account features (such as
an Asset Builder Plan or Automatic Withdrawal Plan) selected for your Growth
Fund account will be continued for your new Capital Appreciation Fund account
(if those features are available for Capital Appreciation Fund) unless you
instruct the Transfer Agent otherwise. If you currently own shares in both Funds
and have selected the same special account features for each Fund (such as an
Automatic Withdrawal Plan for both Funds) and the accounts have identical
account attributes (e.g., account holder's name, address, appropriate bank
accounts), the special account feature options you selected for your Growth Fund
account will be applied to the special account features selected for your
Capital Appreciation Fund account, unless you instruct the Transfer Agent
otherwise.
HOW DO THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS DIFFER?
The Funds' Overall Risk
Like all investments, an investment in either Fund involves risk. The
risks associated with an investment in each Fund are substantially similar.
There is no assurance that either Fund will meet its investment objective. The
achievement of the Funds' goals depends upon market conditions, generally, and
on the portfolio manager's analytical and portfolio management skills. The risks
described below collectively form the risk profiles of the Funds, and can affect
the value of the Funds' investments, investment performance and prices per
share. There is also the risk that poor securities selection by the Manager will
cause a Fund to underperform other funds having a similar objective. These risks
mean that you can lose money by investing in either Fund. When you redeem your
shares, they may be worth more or less than what you paid for them.
The allocation of each Fund's portfolio among different investments
will vary over time based upon the Manager's evaluation of economic and market
trends. In the OppenheimerFunds spectrum, both Growth Fund and Capital
Appreciation Fund are considered aggressive growth funds, designed for investors
willing to assume greater risks. Both Funds are generally more aggressive than
funds that invest in both stocks and bonds or in investment grade debt
securities, but may be less volatile than small-cap and emerging markets stock
funds.
For both Growth Fund and Capital Appreciation Fund, the Manager tries
to reduce risks by carefully researching securities before they are purchased
and in some cases by using hedging techniques. Each Fund attempts to reduce its
exposure to market risks by diversifying its investments, that is, by not
holding a substantial amount percentage of the stock of any one company and by
not investing too great a percentage of the Fund's assets in any one company.
Neither Fund concentrates 25% or more of its investments in companies in any one
industry. That limit does not apply to securities issued or guaranteed by the
U.S. government or its agencies and instrumentalities or securities issued by
investment companies.
An investment in either Fund is not a deposit of any bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
Risks of Investing in Stocks. Both Funds invest in stocks. Stocks
fluctuate in price and their short-term volatility at times may be great.
Because each Fund invests primarily in common stocks, the value of the Funds'
portfolios will be affected by changes in the stock markets. This market risk
will affect each Fund's net asset values per share, which will fluctuate as the
values of the Funds' portfolio securities change.
A variety of factors can affect the price of a particular stock and the
prices of individual stocks do not all move in the same direction uniformly or
at the same time. Different stock markets may also behave differently from each
other. Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer or
its industry.
Securities in the Funds ' portfolios may not increase as much as the
market as a whole. Some securities may not be actively traded, and therefore,
may not be readily bought or sold. Although at times each Fund's investments may
appreciate in value rapidly, investors should not expect that most of a Fund's
investments will appreciate rapidly. The Manager may increase the relative
emphasis of a Fund's investments in a particular industry from time to time.
Stocks of issuers in a particular industry may be affected by changes in
economic conditions, government regulations, availability of basic resources or
supplies, or other events that affect that industry more than others. To the
extent that either of the Funds increases the relative emphasis of its
investments in a particular industry, its share values may fluctuate in response
to events affecting that industry.
Risks of Foreign Investing. Although both Funds may invest in foreign
securities, Capital Appreciation Fund tends to have a higher percentage of the
Fund's assets invested in foreign securities, which have additional risks. As of
May 31, 2007, Capital Appreciation Fund had approximately 9.56% of its total
assets invested in foreign securities as compared to 0% of total assets for
Growth Fund. Growth Fund limits its investments in foreign securities to not
more than 10% of its total assets, although it has the ability to invest up to
25% of its total assets. Capital Appreciation Fund does not expect to have more
than 35% of its total assets invested in foreign securities, although it has the
ability to invest without limit. Capital Appreciation Fund can buy foreign debt
securities primarily for liquidity or defensive purposes.
While foreign securities may offer special investment opportunities,
there are also special risks. The change in value of a foreign currency against
the U.S. dollar will result in a change in the U.S. dollar value of securities
denominated in that foreign currency. Foreign issuers are not subject to the
same accounting and disclosure requirements applicable to U.S. companies. The
value of foreign investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign taxes, delays in
settlement of transactions, changes in governmental economic or monetary policy
in the U.S. or abroad, or other political and economic factors. Securities in
underdeveloped countries may be more difficult to sell and their prices may be
more volatile. These risks could cause the prices of foreign stocks to fall and
could therefore depress either Fund's share prices.
Additionally, if a Fund invests a significant amount of its assets in
foreign securities, it may be exposed to "time-zone arbitrage" attempts by
investors seeking to take advantage of the differences in value of foreign
securities that might result from events that occur after the close of the
foreign securities market on which a foreign security is traded and before the
close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net
asset value is calculated. If such time-zone arbitrage were successful, it might
dilute the interests of other shareholders. However, each Fund's use of "fair
value pricing" to adjust the closing market prices of foreign securities under
certain circumstances, to reflect what the Manager and the Board believe to be
their fair value, may help deter those activities.
Risks of Growth Stocks. For both the Growth and Capital Appreciation
Funds, growth stocks are selected for the Fund's portfolio because each Fund's
Manager believes the price of the stock will increase over time. Growth stocks
may at times be favored by the market and at other times may be out of favor.
Stocks of growth companies, particularly newer companies, may offer
opportunities for greater capital appreciation but may be more volatile than
stocks of larger, more established companies. These stocks may also have greater
risk of price volatility if the company's earnings growth or stock price fails
to increase as expected.
Some growth companies, including newer companies, tend to retain a
large part of their earnings for research, development or investment in capital
assets. Therefore, they do not emphasize paying dividends, and may not pay any
dividends for some time. Other stocks are considered "growth" stocks because the
company is experiencing growth in earnings or income.
Investments By "Funds of Funds." Class Y shares of both Funds are
offered as an investment to certain other Oppenheimer funds that act as "funds
of funds." Those funds of funds may invest significant portions of their assets
in shares of the Fund. From time to time, those investments may also represent a
significant portion of the Fund's outstanding shares or of its outstanding Class
Y shares. Those funds of funds typically use asset allocation strategies under
which they may increase or reduce the amount of their investment in the Fund
frequently, and may do so on a daily basis during volatile market conditions. If
the size of those purchases and redemptions of the Fund's shares by the funds of
funds were significant relative to the size of the Fund's assets, the Fund could
be required to purchase or sell portfolio securities, increasing its transaction
costs and possibly reducing its performance for all share classes.
Industry and Sector Focus. At times, each Fund may also increase the
relative emphasis of its investments in a particular technology industry or
sector. The prices of stocks of issuers in a particular industry or sector may
go up and down in response to changes in economic conditions, government
regulations, availability of basic resources or supplies, or other events that
affect that industry or sector more than others. To the extent that either Fund
increases the relative emphasis of its investments in a particular industry or
sector, its share values may fluctuate to a greater degree in response to events
affecting that industry or sector.
Other Investment Strategies
To seek its objective, each Fund may also use the investment techniques
and strategies described below. The Funds might not always use all of the
different types of techniques and investments described below. These techniques
have risks, although some are designed to help reduce overall investment or
market risks.
Other Equity Securities. While each Fund emphasizes investments in
common stocks, it can also buy preferred stocks and securities convertible into
common stock. These securities can be issued by domestic or foreign companies.
The Manager considers some convertible securities to be "equity equivalents"
because of the conversion feature and in that case their credit rating has less
impact on the investment decision than in the case of other debt securities.
Convertible securities are rated by nationally recognized statistical
rating organizations such as Moody's Investors Service or are given comparable
ratings by the Manager. "Investment grade" securities are debt securities in the
four highest ratings categories of ratings organizations or unrated securities
assigned a comparable rating by the Manager. Lower-grade securities may be
subject to greater market fluctuations and risks of loss of income and principal
and have less liquidity than investments in investment-grade securities. Debt
securities are subject to credit risk (the risk that the issuer will not make
timely payments of interest and principal) and interest rate risk (the risk that
the value of the security will fall if interest rates rise).
Small-Capitalization Stock Investments. Although each Fund focuses on
large- or mid-capitalization companies, each Fund may invest in
small-capitalization companies, including those that have been in operation for
a relatively short period. Small-cap companies tend to be companies that are
developing new products or services that the Manager believes have relatively
favorable prospects, or that are expanding into new and growing markets.
Emerging growth companies may offer new products or services that might enable
them to capture a dominant or important market position. They may have a special
area of expertise or the capability to take advantage of changes in demographic
factors in a more profitable way than larger, more established companies.
Illiquid and Restricted Securities. Investments may be illiquid because
they do not have an active trading market, making it difficult to value them or
dispose of them promptly at an acceptable price. Restricted securities may have
terms that limit their resale to other investors or may require registration
under applicable securities laws before they may be sold publicly.
Each Fund will not invest more than 10% of its net assets in illiquid
or restricted securities. The Board can increase that limit to 15%. Certain
restricted securities held by a Fund that are eligible for resale to qualified
institutional purchasers may not be subject to that Fund's respective investment
limit. The Manager monitors holdings of illiquid securities on an ongoing basis
to determine whether to sell any holdings to maintain adequate liquidity.
Derivative Investments. Both Funds can invest in a number of different
kinds of "derivative" investments. In general terms, a derivative investment is
an investment contract whose value depends on (or is derived from) the value of
an underlying asset, interest rate or index. In the broadest sense, options,
futures contracts, and other hedging instruments each Fund might use may be
considered "derivative" investments. Derivatives may increase the volatility of
each Fund's share prices or cause investment losses.
In addition to using derivatives for hedging, each Fund might use other
derivative investments because they offer the potential for increased value. The
Fund currently does not use derivatives to a significant degree and is not
required to use them in seeking its objective.
Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, a Fund can lose money on the investment. The underlying
security or investment on which a derivative is based, and the derivative
itself, may not perform the way the Manager expected it to. As a result of these
risks a Fund could realize less principal or income from the investment than
expected or its hedge might be unsuccessful. As a result, a Fund's share prices
could fall. Certain derivative investments held by a Fund might be illiquid.
Hedging. Both Funds can buy and sell certain kinds of futures
contracts, put and call options, and forward contracts for "hedging" purposes.
Neither Fund intends to use these instruments extensively and is not required to
do so to seek its objective. Growth Fund does not use hedging for speculative
purposes. It has limits on the extent of its use of hedging and the types of
hedging instruments that it can use.
Some of these strategies could be used to hedge a Fund's portfolio
against price fluctuations. Other hedging strategies, such as buying futures and
call options, could tend to increase a Funds' exposure to the securities market.
There are also special risks in particular hedging strategies. Options
trading involves the payment of premiums, can increase portfolio turnover, and
can have special tax effects on a Fund. If the Manager used a hedging instrument
at the wrong time or judged market conditions incorrectly, the strategy could
reduce a Fund's return. A Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other investments or
if it could not close out a position because of an illiquid market.
Loans of Portfolio Securities. Both Funds may make loans of its
portfolio securities, in each case with a value not to exceed 25% of its net
assets, in accordance with Securities Lending Guidelines adopted by the Board.
Capital Appreciation Fund has entered into a securities lending agreement with
JP Morgan Chase for that purpose. Growth Fund is not a party to that securities
lending agreement.
Under the JPMorgan Chase agreement, Capital Appreciation Fund's
portfolio securities may be loaned to brokers, dealers and financial
institutions, provided that such loans comply with the collateralization and
other requirements of the securities lending agreement, the Securities Lending
Guidelines and applicable government regulations. JP Morgan Chase has agreed to
bear the risk that a borrower may default on its obligation to return loaned
securities. However, Capital Appreciation Fund will be responsible for risks
associated with the investment of cash collateral, including the risk of a
default by the issuer of a security in which cash collateral has been invested.
If that occurs, Capital Appreciation Fund may incur additional costs in seeking
to obtain the collateral or may lose the amount of the collateral investment.
Capital Appreciation Fund may also lose money if the value of the cash
collateral decreases.
Investments in Oppenheimer Institutional Money Market Fund. Both Funds
can invest its free cash balances in the Class E shares of Oppenheimer
Institutional Money Market Fund, to seek current income while preserving
liquidity. The Oppenheimer Institutional Money Market Fund is a registered
open-end management investment company, regulated as a money market fund under
the Investment Company Act of 1940 ("Investment Company Act"). It invests in a
variety of short-term, high-quality, dollar-denominated money market instruments
issued by the U.S. government, domestic and foreign corporations and financial
institutions, and other entities. As a shareholder, a Fund will be subject to
its proportional share of the Oppenheimer Institutional Money Market Fund's
Class E expenses, including its advisory fee. However, the Manager will waive a
portion of a Fund's advisory fee to the extent of the Fund's share of the
advisory fee paid by the Oppenheimer Institutional Money Market Fund.
Temporary Defensive and Interim Investments. In times of unstable or
adverse market, economic or political conditions, each Fund can invest up to
100% of its assets in temporary investments that may be inconsistent with the
Fund's principal investment strategies. Generally they would be cash equivalents
(such as commercial paper), money market instruments, short-term debt
securities, U.S. government securities, or repurchase agreements. The Funds
could also hold these types of securities pending the investment of proceeds
from the sale of Fund shares or portfolio securities or to meet anticipated
redemptions of Fund shares. To the extent the Funds invest defensively in these
securities, it might not achieve its investment objective of capital
appreciation.
Portfolio Turnover. A change in the securities held by a Fund is known
as "portfolio turnover." Each Fund can engage in active and frequent short-term
trading while trying to achieve its objective. Both Funds may have a portfolio
turnover rate in excess of 100% annually. Increased portfolio turnover creates
higher brokerage and transaction costs for a Fund (and may reduce performance).
If a Fund realizes capital gains when it sells its portfolio investments, it
must generally pay those gains out to shareholders, increasing their taxable
distributions. The following table shows the portfolio turnover rates for both
funds over the last five fiscal years (for the year ended August 31):
----------------------------------------- -------------- --------------- -------------- --------------- --------------
2006 2005 2004 2003 2002
----------------------------------------- -------------- --------------- -------------- --------------- --------------
----------------------------------------- -------------- --------------- -------------- --------------- --------------
Growth Fund 63% 72% 104% 82% 60%
----------------------------------------- -------------- --------------- -------------- --------------- --------------
----------------------------------------- -------------- --------------- -------------- --------------- --------------
Capital Appreciation Fund 83% 38% 45% 42% 28%
----------------------------------------- -------------- --------------- -------------- --------------- --------------
The risks described above collectively form the expected overall risk
profile, respectively, of each Fund and can affect the value of a Fund's
investments, its investment performance and its prices per share. Particular
investments and investment strategies also have risks. These risks mean that you
can lose money by investing in either Fund. When you redeem your shares, they
may be worth more or less than what you paid for them. There is no assurance
that either Fund will achieve its investment objective.
INFORMATION ABOUT THE REORGANIZATION
This is only a summary of the Reorganization Agreement. You should read
the form of Reorganization Agreement, which is attached as Exhibit A.
How will the Reorganization be carried out?
If the shareholders of Growth Fund approve the Reorganization
Agreement, the Reorganization will take place after various conditions are
satisfied by Growth Fund and Capital Appreciation Fund, including delivery of
certain documents. The Closing Date is presently scheduled for on or about
November 9, 2007 and the "Valuation Date" (which is the business day preceding
the Closing Date of the Reorganization) is presently scheduled for on or about
November 8, 2007.
If the shareholders of Growth Fund vote to approve the Reorganization
Agreement, substantially all of the assets of Growth Fund will be transferred to
Capital Appreciation Fund in exchange for shares of Capital Appreciation Fund,
and you will receive Class A, Class B, Class C, Class N or Class Y shares of
Capital Appreciation Fund equal in value to the value as of the Valuation Date
of your shares of Growth Fund. Growth Fund will then be liquidated and its
outstanding shares will be cancelled. The stock transfer books of Growth Fund
will be permanently closed at the close of business on the Valuation Date.
Shareholders of Growth Fund who vote their Class A, Class B, Class C,
Class N and Class Y shares in favor of the Reorganization will be electing in
effect to redeem their shares of Growth Fund at net asset value on the Valuation
Date, after Growth Fund subtracts a cash reserve ("Cash Reserve"), and reinvest
the proceeds in Class A, Class B, Class C, Class N and Class Y shares of Capital
Appreciation Fund at net asset value. The Cash Reserve is an amount retained by
Growth Fund for the payment of Growth Fund's outstanding debts, taxes and
expenses of liquidation following the Reorganization. Capital Appreciation Fund
is not assuming any debts of Growth Fund except debts for unsettled securities
transactions and outstanding dividend and redemption checks. Any debts paid out
of the Cash Reserve will be those debts, taxes or expenses of liquidation
incurred by Growth Fund on or before the Closing Date. Growth Fund will
recognize capital gains or losses on any sales of portfolio securities made
prior to the Reorganization. The sales of portfolio securities contemplated in
the Reorganization are anticipated to be in the ordinary course of business of
Growth Fund's activities. Following the Reorganization, Growth Fund shall take
all necessary steps to complete its liquidation and affect a complete
dissolution of the Fund.
Under the Reorganization Agreement, either Growth Fund or Capital
Appreciation Fund may abandon and terminate the Reorganization Agreement for any
reason and there shall be no liability for damages or other recourse available
to the other Fund, provided, however, that in the event that one of the Funds
terminates the Reorganization Agreement without reasonable cause, it shall, upon
demand, reimburse the other Fund for all expenses, including reasonable
out-of-pocket expenses and fees incurred in connection with the Reorganization
Agreement.
To the extent permitted by law, the Funds may agree to amend the
Reorganization Agreement without shareholder approval. They may also agree to
terminate and abandon the Reorganization at any time before or, to the extent
permitted by law, after the approval of shareholders of Growth Fund.
Who will pay the expenses of the Reorganization?
Each Fund will be responsible for its respective out-of-pocket expenses
associated with the Reorganization, including outside legal and accounting fees,
the cost of the tax opinion, and shareholder communication costs. OFI has
estimated total merger related costs to be approximately $222,500 for Growth
Fund and $24,000 for Capital Appreciation Fund. OFI does not anticipate that
either Fund will experience a dilution as a result of the proposed
Reorganization.
What are the tax consequences of the Reorganization?
The Reorganization is intended to qualify as a tax-free reorganization
for federal income tax purposes under Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended. Based on certain assumptions and representations
received from Growth Fund and Capital Appreciation Fund, it is expected to be
the opinion of Mayer, Brown, Rowe & Maw LLP ("tax opinion") that; (i)
shareholders of Growth Fund should not recognize any gain or loss for federal
income tax purposes as a result of the exchange of their shares for shares of
Capital Appreciation Fund; (ii) shareholders of Capital Appreciation Fund should
not recognize any gain or loss upon receipt of Growth Fund's assets (iii) and
the holding period of Capital Appreciation Fund shares received in that exchange
should include the period that Growth Fund shares were held (provided such
shares were held as a capital asset on the Closing Date). In addition, neither
Fund is expected to recognize a gain or loss as a direct result of the
Reorganization. Please see the Agreement and Plan of Reorganization for more
details.
If the tax opinion is not received by the Closing Date, the Fund may
still pursue the Reorganization, pending re-solicitation of shareholders and
shareholder approval which would delay the reorganization by several months.
Although not likely, in the event the tax opinion is not received, the
Reorganization may not qualify as a tax-free reorganization. Prior to the
Valuation Date, Growth Fund may pay a dividend which would have the effect of
distributing to Growth Fund's shareholders all of Growth Fund's investment
company taxable income, if any, 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 gains, if any, realized in taxable years ending on or
prior to the Closing Date (after reduction for any available capital loss
carry-forward). As of Growth Fund's fiscal year ended August 31, 2006, the Fund
had $539,505,177 of net capital loss carry-forward available to offset any
realized capital gains and thereby reduce the capital gains distributions. Any
such dividends will be included in the taxable income of Growth Fund's
shareholders as ordinary income and capital gain, respectively.
You will continue to be responsible for tracking the purchase cost and
holding period of your shares and should consult your tax advisor regarding the
effect, if any, of the Reorganization in light of your individual circumstances.
You should also consult your tax advisor as to state and local and other tax
consequences, if any, of the Reorganization because this discussion only relates
to federal income tax consequences.
REASONS FOR THE REORGANIZATION
Board Considerations
At a meeting of the Boards of Trustees of Growth Fund and Capital
Appreciation Fund held June 14, 2007, the Board considered whether to approve
the proposed Reorganization on behalf of each Fund and reviewed and discussed
with the Manager and the Boards' independent legal counsel the proposed
Reorganization. Information with respect to, among other things, each Fund's
respective investment objective and policies, management fees, distribution fees
and other operating expenses, historical performance and asset size also was
considered by the Board.
The Board received information that demonstrated that from 2000 to the
end of May 2007, assets decreased from over $3.2 billion to approximately $1.256
billion. The Board also considered that OppenheimerFunds Distributor, Inc.
("OFDI") does not believe, based on the Fund's performance, that the assets of
the Fund will increase significantly from any sales efforts.
The Board also considered the relative smaller size of Growth Fund and
the Manager's view that the corresponding management fee is higher for Growth
Fund because the Fund has not reached the same management fee breakpoint levels
as Capital Appreciation Fund. The Board considered the Manager's expectation
that by merging Growth Fund into Capital Appreciation Fund, shareholders of
Growth Fund would benefit from significantly reduced fees and expenses.
The Board considered that the procedures for purchases, redemptions and
exchanges of shares of both Funds are the same and that both Funds offer the
same investor services and options.
The Board also considered the terms and conditions of the
Reorganization, including that there would be no sales charge imposed in
effecting the Reorganization and that the Reorganization is expected to be a
tax-free reorganization. The Board concluded that Growth Fund's participation in
the transaction was in the best interests of Growth Fund and that the
Reorganization would not result in a dilution of the interests of existing
shareholders of Growth Fund.
After consideration of the above factors, other considerations, and
such information as the Board of Growth Fund deemed relevant, the Board,
including the Trustees who are not "interested persons" (as defined in the
Investment Company Act) of Capital Appreciation Fund, Growth Fund or the Manager
(the "Independent Trustees"), unanimously approved the Reorganization and the
Reorganization Agreement and voted to recommend its approval by the shareholders
of Growth Fund.
The Board also determined that the Reorganization was in the best
interests of Capital Appreciation Fund and its shareholders and that no dilution
would result to those shareholders. Capital Appreciation Fund shareholders do
not vote on the Reorganization. The Board on behalf of Capital Appreciation
Fund, including the Independent Trustees, unanimously approved the
Reorganization and the Reorganization Agreement.
Neither Fund's Board members are required to attend the meeting nor do
they plan to attend the meeting.
For the reasons discussed above, the Board, on behalf of Growth Fund,
recommends that you vote FOR the Reorganization Agreement. If shareholders of
Growth Fund do not approve the Reorganization Agreement, the Reorganization will
not take place.
What should I know about Class A, Class B, Class C, Class N and Class Y Shares
of Capital Appreciation Fund?
Upon consummation of the Reorganization, Class A, Class B, Class C,
Class N, and Class Y shares of Capital Appreciation Fund will be distributed to
shareholders of Class A, Class B, Class C, Class N and Class Y shares of Growth
Fund, respectively, in connection with the Reorganization. The shares of Capital
Appreciation Fund will be recorded electronically in each shareholder's account.
Capital Appreciation Fund will then send a confirmation to each shareholder.
Shareholders of Growth Fund holding certificates representing their shares will
not be required to surrender their certificates in connection with the
Reorganization. However, former shareholders of Growth Fund whose shares are
represented by outstanding share certificates will not be allowed to redeem or
exchange shares of Capital Appreciation Fund they receive in the Reorganization
until the exchanged Growth Fund certificates have been returned to the Transfer
Agent.
The rights of shareholders of both Funds are substantially the same as
are their governing documents. Each share will be fully paid and non-assessable
when issued. Both Funds' Declarations of Trust contain an express disclaimer of
shareholder or Trustee liability for the Fund's obligations, and provides for
indemnification of any loss and expenses out of its property for any shareholder
held personally liable for its obligations. Neither Fund permits cumulative
voting.
WHAT ARE THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS?
Both Growth Fund and Capital Appreciation Fund have certain additional
fundamental investment restrictions that can only be changed with shareholder
approval. Generally, these investment restrictions are the same between the
Funds. Please see the Statements of Additional Information for each Fund for
descriptions of those investment restrictions, which is incorporated by
reference into the Statement of Additional Information dated September 6, 2007
related to this Reorganization.
OTHER COMPARISONS BETWEEN THE FUNDS
The description of certain other key features of the Funds is set forth
below. More detailed information is available in each Fund's Prospectus and
Statement of Additional Information, which are incorporated by reference.
Management of the Funds
Each Fund is governed by the same Board of Trustees, which is
responsible for protecting the interests of each Fund's shareholders under
Massachusetts law and other applicable laws. For a listing of the Capital
Appreciation Fund's Board of Trustees and biographical information, please refer
to the Statement of Additional Information to this Prospectus and Proxy
Statement, which are incorporated by reference into the Statement of Additional
Information dated September 6, 2007 related to this Reorganization.
Investment Management and Fees
The day-to-day management of the business and affairs of each Fund is
the responsibility of the Manager. Pursuant to each Fund's investment advisory
agreement, the Manager acts as the investment adviser for both Funds, manages
the assets of both Funds and makes each Fund's investment decisions. The Manager
employs the Funds' portfolio managers. Both Funds are managed by Marc L. Baylin,
CFA, who is primarily responsible for the day-to-day management of each Fund's
investments.
Both Funds obtain investment management services from the Manager
according to the terms of management agreements that are substantially similar.
The advisory agreements require the Manager, at its expense, to provide each
Fund with adequate office space, facilities and equipment. The agreements also
require the Manager to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
administration for the Funds. Those responsibilities include the compilation and
maintenance of records with respect to their operations, the preparation and
filing of specified reports, and composition of proxy materials and registration
statements for continuous public sale of shares of the Funds.
Each Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The advisory agreements list examples of expenses paid by
each Fund. The major categories relate to interest, taxes, brokerage
commissions, fees to Independent Trustees, legal and audit expenses, custodian
bank and transfer agent expenses, share issuance costs, certain printing and
registration costs, and non-recurring expenses, including litigation costs.
Both investment advisory agreements generally provide that in the
absence of willful misfeasance, bad faith, gross negligence in the performance
of its duties or reckless disregard of its obligations and duties under the
investment advisory agreement, the Manager is not liable for any loss sustained
by reason of good faith errors or omissions in connection with any matters to
which the agreement(s) relate.
The Manager is controlled by Oppenheimer Acquisition Corp., a holding
company owned in part by senior officers 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 been an investment adviser since January 1960. The Manager
(including subsidiaries and an affiliate) managed more than $250 billion in
assets as of June 30, 2007, including other Oppenheimer funds with more than 6
million shareholder accounts. The Manager is located at 225 Liberty Street, 11th
Floor, New York, New York 10281-1008.
Fee and Expense Comparison (Class A Shares). Capital Appreciation Fund
offers a significantly more favorable advisory fee and overall expense ratio
than Growth Fund due to its size.
The table below shows the current contractual management fee schedule
for each of the Funds. As shown in the table, the effective management fee for
Capital Appreciation Fund is 0.57%, versus 0.67% for Growth Fund. Capital
Appreciation Fund's fee schedule would be the fee schedule for the combined
Funds upon successful completion of the Reorganization.
------------------------------------------------------------- -------------------------------------------------------
Capital Appreciation Fund
Growth Fund
------------------------------------------------------------- -------------------------------------------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
Assets (in $ million of average annual Fee Assets (in $ million of average Fee
net assets) annual net assets)
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
Up to 200 0.75% Up to 200 0.75%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
200 - 400 0.72% 200 - 400 0.72%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
400 - 600 0.69% 400 - 600 0.69%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
600 - 800 0.66% 600 - 800 0.66%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
800 - 1,500 0.60% 800 - 1,500 0.60%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
1,500 - 2,500 0.58% 1,500 - 2,500 0.58%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
2,500 - 4,500 0.56% 2,500 - 4,500 0.56%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
Over 4,500 0.54% 4,500 - 6,500 0.54%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
6,500 - 8,500 0.52%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
8,500 - 11,000 0.50%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
Over 11,000 0.48%
---------------------------------------- -------------------- ------------------------------------ ------------------
---------------------------------------- -------------------- ------------------------------------ ------------------
Effective Fee (as of 5/31/07) 0.67% 0.57%
---------------------------------------- -------------------- ------------------------------------ ------------------
Distribution Services
OppenheimerFunds Distributor, Inc. (the "Distributor") acts as the
principal underwriter in a continuous public offering of shares of the Funds,
but is not obligated to sell a specific number of shares. Both Funds have
adopted Service Plans for Class A shares. The plans reimburse the Distributor
for a portion of its costs incurred for services provided to accounts that hold
Class A shares. Reimbursement is made quarterly at an annual rate of up to 0.25%
of the average annual net assets of Class A shares of each Fund. The Distributor
currently uses all of those fees to pay dealers, brokers, banks and other
financial institutions periodically for providing personal service and
maintenance of accounts of their customers that hold Class A shares.
Both Funds have adopted Distribution and Service Plans for Class B,
Class C and Class N shares to pay the Distributor for its services and costs in
distributing Class B, Class C and Class N shares and servicing accounts. Under
each Fund's plan, the Fund pays the Distributor an annual asset-based sales
charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The
Distributor also receives a service fee of 0.25% per year under the Class B,
Class C and Class N plans.
The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.00% and increase Class N expenses by 0.50% of the net
assets per year of the respective class. Because these fees are paid out of each
Fund's assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than other types of sales charges.
The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B, Class C or Class N
shares. The Distributor normally pays the 0.25% service fees to dealers in
advance for the first year after the shares are sold by the dealer. After the
shares have been held for a year, the Distributor pays the service fees to
dealers periodically.
The Manager and the Distributor, in their discretion, also may pay
dealers or other financial intermediaries and service providers for distribution
and/or shareholder servicing activities. These payments are made out of the
Manager's and/or the Distributor's own resources, including from the profits
derived from the advisory fees the Manager receives from a Fund. These cash
payments, which may be substantial, are paid to many firms having business
relationships with the Manager and Distributor. These payments are in addition
to any distribution fees, servicing fees, or transfer agency fees paid directly
or indirectly by the Funds to these financial intermediaries and any commissions
the Distributor pays to these firms out of the sales charges paid by investors.
These payments by the Manager or Distributor from their own resources are not
reflected in the Fee Tables contained in the Prospectus and Proxy Statement
because they are not paid by the Funds.
"Financial intermediaries" are firms that offer and sell shares of the
Funds to their clients, or provide shareholder services to the Funds, or both,
and receive compensation for doing so. Your securities dealer or financial
adviser, for example, is a financial intermediary, and there are other types of
financial intermediaries that receive payments relating to the sale or servicing
of the Funds' shares. In addition to dealers, the financial intermediaries that
may receive payments include sponsors of fund "supermarkets," sponsors of
fee-based advisory or wrap fee programs, sponsors of college and retirement
savings programs, banks and trust companies offering products that hold Fund
shares, and insurance companies that offer variable annuity or variable life
insurance products.
In general, these payments to financial intermediaries can be categorized
as "distribution-related" or "servicing" payments. Payments for
distribution-related expenses, such as marketing or promotional expenses, are
often referred to as "revenue sharing." Revenue sharing payments may be made on
the basis of the sales of shares attributable to that dealer, the average net
assets of a Fund and other Oppenheimer funds attributable to the accounts of
that dealer and its clients, negotiated lump sum payments for distribution
services provided, or sales support fees. In some circumstances, revenue sharing
payments may create an incentive for a dealer or financial intermediary or its
representatives to recommend or offer shares of a Fund or other Oppenheimer
funds to its customers. These payments also may give an intermediary an
incentive to cooperate with the Distributor's marketing efforts. A revenue
sharing payment may, for example, qualify a Fund for preferred status with the
intermediary receiving the payment or provide representatives of the Distributor
with access to representatives of the intermediary's sales force, in some cases
on a preferential basis over funds of competitors. Additionally, as firm
support, the Manager or Distributor may reimburse expenses related to
educational seminars and "due diligence" or training meetings (to the extent
permitted by applicable laws or the rules of the NASD) designed to increase
sales representatives' awareness about Oppenheimer funds, including travel and
lodging expenditures. However, the Manager does not consider a financial
intermediary's sale of shares of the Funds or other Oppenheimer funds when
selecting brokers or dealers to effect portfolio transactions for the funds.
Various factors are used to determine whether to make revenue sharing
payments. Possible considerations include, without limitation, the types of
services provided by the intermediary, sales of Fund shares, the redemption
rates on accounts of clients of the intermediary or overall asset levels of
Oppenheimer funds held for or by clients of the intermediary, the willingness of
the intermediary to allow the Distributor to provide educational and training
support for the intermediary's sales personnel relating to the Oppenheimer
funds, the availability of the Oppenheimer funds on the intermediary's sales
system, as well as the overall quality of the services provided by the
intermediary and the Manager or Distributor's relationship with the
intermediary. The Manager and Distributor have adopted guidelines for assessing
and implementing each prospective revenue sharing arrangement. To the extent
that financial intermediaries receiving distribution-related payments from the
Manager or Distributor sell more shares of the Oppenheimer funds or retain more
shares of the funds in their client accounts, the Manager and Distributor
benefit from the incremental management and other fees they receive with respect
to those assets.
Payments may also be made by the Manager, the Distributor or the Transfer
Agent to financial intermediaries to compensate or reimburse them for
administrative or other client services provided such as sub-transfer agency
services for shareholders or retirement plan participants, omnibus accounting or
sub-accounting, participation in networking arrangements, account set-up,
recordkeeping and other shareholder services. Payments may also be made for
administrative services related to the distribution of Fund shares through the
intermediary. Firms that may receive servicing fees include retirement plan
administrators, qualified tuition program sponsors, banks and trust companies,
and others. These fees may be used by the service provider to offset or reduce
fees that would otherwise be paid directly to them by certain account holders,
such as retirement plans.
Each Fund's Statement of Additional Information contains more
information about revenue sharing and service payments made by the Manager or
the Distributor. Your dealer may charge you fees or commissions in addition to
those disclosed in this combined proxy statement and prospectus.
Transfer Agency and Custody Services
Both Funds receive shareholder accounting and other clerical services
from OppenheimerFunds Services, a division of the Manager, in its capacity as
transfer agent and dividend paying agent. It acts on an annual per-account fee
basis for both Funds. The terms of the transfer agency agreement for both Funds,
and of a voluntary undertaking to limit transfer agent fees (to 0.35% of average
daily net assets per fiscal year for each class of both Funds) are substantially
similar. JPMorgan Chase Bank, located at 4 Chase Metro Tech Center, Brooklyn, NY
11245, acts as custodian of Capital Appreciation Fund. Brown Brothers Harriman &
Co., located at 40 Water Street, Boston, MA 02109-3661, acts as custodian of
Growth Fund. Prior to May 11, 2007, Citibank, N.A. served as the custodian for
Growth Fund.
Shareholder Rights
Both Funds are Massachusetts business trusts. The Funds are not
required to, and do not, hold annual meetings of shareholders and have no
current intention to hold such meetings, except as required by the Investment
Company Act.
Under the Investment Company Act, the Funds are required to hold a
shareholder meeting if, among other reasons, the numbers of Trustees elected by
shareholders is less than a majority of the total number of Trustees, or if they
seek to change a fundamental investment policy. The Trustees of Capital
Appreciation Fund will call a meeting of shareholders to vote on the removal of
a Trustee upon the written request of the record holders of 10% of its
outstanding shares. If the Trustees receive a request from at least 10
shareholders stating that they wish to communicate with other shareholders to
request a meeting to remove a Trustee, the Trustees will then either make the
Fund's shareholder list available to the applicants or mail their communication
to all other shareholders at the applicants' expense. The shareholders making
the request must have been shareholders for at least six months and must hold in
the aggregate the lesser of (1) shares of the Fund valued at $25,000 or more at
current offering price, (2) or shares constituting at least 1% of the Fund's
outstanding shares. The Trustees may also take other action as permitted by the
Investment Company Act.
VOTING INFORMATION
How do I vote?
Please take a few moments to complete your proxy ballot promptly. You
may vote your shares by completing and signing the enclosed proxy ballot(s) and
mailing the proxy ballot(s) in the postage paid envelope provided. You also may
vote your shares by telephone or via the internet by following the instructions
on the attached proxy ballot(s) and accompanying materials. You may cast your
vote by attending the Meeting in person if you are a record owner.
If you need assistance, have any questions regarding the Proposal or
need a replacement proxy ballot, you may contact us toll-free at 1-800-225-5677
(1-800-CALL-OPP). Any proxy given by a shareholder, whether in writing, by
telephone or via the internet, is revocable as described below under the
paragraph titled "Revoking a Proxy".
If you simply sign and date the proxy but give no voting instructions,
your shares will be voted in favor of the Reorganization Agreement.
o Telephone Voting. Please have the proxy ballot available and call the
number on the enclosed materials and follow the instructions. After you
provide your voting instructions, those instructions will be read back
to you and you must confirm your voting instructions before ending the
telephone call. The voting procedures used in connection with telephone
voting are designed to reasonably authenticate the identity of
shareholders, to permit shareholders to authorize the voting of their
shares in accordance with their instructions and to confirm that their
instructions have been properly recorded.
As the Meeting date approaches, certain shareholders may receive
telephone calls from a representative of the solicitation firm (if
applicable) if their vote has not yet been received. Authorization to
permit the solicitation firm to execute proxies may be obtained by
telephonic instructions from shareholders of Growth Fund. Proxies that
are obtained telephonically will be recorded in accordance with the
procedures discussed herein. These procedures have been designed to
reasonably ensure that the identity of the shareholder providing voting
instructions is accurately determined and that the voting instructions
of the shareholder are accurately recorded.
In all cases where a telephonic proxy is solicited, the solicitation
firm representative is required to ask for each shareholder's full
name, address, title (if the shareholder is authorized to act on behalf
of an entity, such as a corporation) and to confirm that the
shareholder has received the Proxy Statement and ballot. If the
information solicited agrees with the information provided to the
solicitation firm, the solicitation firm representative has the
responsibility to explain the process, read the proposal listed on the
proxy ballot, and ask for the shareholder's instructions on such
proposal. The solicitation firm representative, although he or she is
permitted to answer questions about the process, is not permitted to
recommend to the shareholder how to vote. The solicitation firm
representative may read any recommendation set forth in the Proxy
Statement. The solicitation firm representative will record the
shareholder's instructions. Within 72 hours, the shareholder will be
sent a confirmation of his or her vote asking the shareholder to call
the solicitation firm immediately if his or her instructions are not
correctly reflected in the confirmation. For additional information,
see also the section below titled "Solicitation of Proxies".
o Internet Voting. You also may vote over the internet by following the
instructions in the enclosed materials. You will be prompted to enter
the control number on the enclosed proxy ballot. Follow the
instructions on the screen, using your proxy ballot as a guide.
Who is entitled to vote and how are votes counted?
Shareholders of record of Growth Fund at the close of business on July
25, 2007 (the "Record Date") will be entitled to vote at the Meeting. On July
25, 2007, there were 37,946,457.92 outstanding shares of Growth Fund, consisting
of 29,618,201.163 Class A shares, 4,446,197.984 Class B shares, 2,362,536.469
Class C shares, 457,714.619 Class N shares and 1,061,807.685 Class Y shares.
Each shareholder will be entitled to one vote for each full share, and a
fractional vote for each fractional share of Growth Fund held on the Record
Date.
The individuals named as proxies on the proxy ballots (or their
substitutes) will vote according to your directions if your proxy ballot is
received and properly executed, or in accordance with the instructions you
provide if you vote by telephone, internet or mail. You may direct the proxy
holders to vote your shares on the proposal by checking the appropriate box
"FOR" or "AGAINST", or instruct them not to vote those shares on the proposal by
checking the "ABSTAIN" box.
Quorum and Required Vote
The presence in person or by proxy of a majority of Growth Fund's
shares outstanding and entitled to vote constitutes a quorum. Shares whose
proxies reflect an abstention on the proposal are counted as shares present and
entitled to vote for purposes of determining whether the required quorum of
shares exists for the Proposal. However, because of the need to obtain a vote of
a majority of the shares outstanding and entitled to vote, abstentions will have
the same effect as a vote "against" the Proposal. In the absence of a quorum,
the shareholders present or represented by proxy and entitled to vote thereat
have the power to adjourn the meeting from time to time but no longer than six
months from the date of the meeting without further notice.
The affirmative vote of the holders of a majority (as that term is
defined in the Investment Company Act) of the shares of Growth Fund outstanding
and entitled to vote is necessary to approve the Reorganization Agreement and
the transactions contemplated thereby. Under the Investment Company Act, such a
"majority" vote is defined as the vote of the holders of the lesser of 67% or
more of the shares present or represented by proxy at a shareholder meeting, if
the holders of more than 50% of the outstanding shares are present or
represented by proxy, or more than 50% of the outstanding shares. Capital
Appreciation Fund shareholders do not vote on the Reorganization.
In absence of a quorum or if a quorum is present but sufficient votes
to approve the Proposal are not received by the date of the Meeting, the persons
named in the enclosed proxy (or their substitutes) may propose and approve one
or more adjournments of the Meeting to permit further solicitation of proxies.
All such adjournments will require the affirmative vote of a majority of the
shares present in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies on the proxy ballots (or their
substitutes) will vote the Shares present in person or by proxy (including
broker non-votes and abstentions) in favor of such an adjournment if they
determine additional solicitation is warranted and in the interests of the
Funds' shareholders.
Solicitation of Proxies
Broker-dealer firms, banks, custodians, nominees and other fiduciaries
may be required to forward soliciting material to the beneficial owners of the
shares of record on behalf of Growth Fund and to obtain authorization for the
execution of proxies. For those services, they will be reimbursed by the Growth
Fund for their reasonable expenses incurred in connection with the proxy
solicitation to the extent the Fund would have directly borne those expenses.
In addition to solicitations by mail, solicitations may be conducted by
telephone or email including by a proxy solicitation firm hired at Growth Fund's
expense. It is expected that a proxy solicitation firm will be hired. It is
estimated that the cost to Growth Fund of engaging a proxy solicitation firm
would not exceed $115,845, plus any additional costs which would be incurred in
connection with contacting those shareholders who have not voted, in the event
of a need for re-solicitation of votes. These costs are included in the
estimated total merger related costs discussed earlier. Currently, if the
Manager determines to retain the services of a proxy solicitation firm on behalf
of the Fund, the Manager anticipates retaining The Altman Group, Inc. Any proxy
solicitation firm engaged by the Fund, among other things, will be: (i) required
to maintain the confidentiality of all shareholder information; (ii) prohibited
from selling or otherwise disclosing shareholder information to any third party;
and (iii) required to comply with applicable telemarketing laws.
o Voting By Broker-Dealers. Shares owned of record by broker-dealers (or
record owners) 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 does not have discretionary power ("broker non-vote") to
vote such street account shares on the Proposal under applicable stock
exchange rules. Broker non-votes will not be counted as present nor
entitled to vote for purposes of determining a quorum nor will they be
counted as votes "for" or "against" the Proposal. Beneficial owners of
street account shares cannot vote at the meeting. Only record owners
may vote at the meeting.
o Voting by the Trustee for OppenheimerFunds-Sponsored Retirement Plans.
Shares held in OppenheimerFunds-sponsored retirement accounts for which
votes are not received as of the last business day before the Meeting
Date, will be voted by the trustee for such accounts in the same
proportion as Shares for which voting instructions from the Fund's
other shareholders have been timely received.
Revoking a Proxy
You may revoke a previously granted proxy at any time before it is
exercised by: (1) delivering a written notice to the Fund expressly revoking
your proxy, (2) signing and sending to the Fund a later-dated proxy, (3)
telephone or internet or (4) attending the Meeting and casting your votes in
person if you are a record owner. Please be advised that the deadline for
revoking your proxy by telephone or the internet is 3:00 p.m., Eastern Time, on
the last business day before the Meeting.
What other matters will be voted upon at the Meeting?
The Board of Trustees of Growth Fund does not intend to bring any
matters before the Meeting other than those described in this Prospectus and
Proxy Statement. Neither the Board nor the Manager is aware of any other matters
to be brought before the Meeting by others. 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 that might 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 (or their
substitutes) to vote the proxy in accordance with their judgment on such
matters.
o Shareholder Proposals. The Funds are not required and do not intend to
hold shareholder meetings on a regular basis. Special meetings of shareholders
may be called from time to time by either a Fund or the shareholders (for
certain matters and under special conditions described in the Funds' Statements
of Additional Information). Under the proxy rules of the SEC, shareholder
proposals that meet certain conditions may be included in a fund's proxy
statement for a particular meeting. Those rules currently require that for
future meetings, the shareholder must be a record or beneficial owner of Fund
shares either (i) with a value of at least $2,000 or (ii) in an amount
representing at least 1% of the Fund's securities to be voted, at the time the
proposal is submitted and for one year prior thereto, and must continue to own
such shares through the date on which the meeting is held. Another requirement
relates to the timely receipt by a Fund of any such proposal. Under those rules,
a proposal must have been submitted a reasonable time before the Fund began to
print and mail this Proxy Statement in order to be included in this Proxy
Statement. A proposal submitted for inclusion in a Fund's proxy material for the
next special meeting after the meeting to which this Proxy Statement relates
must be received by the Fund a reasonable time before the Fund begins to print
and mail the proxy materials for that meeting. Notice of shareholder proposals
to be presented at the Meeting must have been received within a reasonable time
before the Fund began to mail this Proxy Statement. The fact that the Fund
receives a proposal from a qualified shareholder in a timely manner does not
ensure its inclusion in the proxy materials because there are other requirements
under the proxy rules for such inclusion.
o Shareholder Communications to the Board. Shareholders who desire to
communicate generally with the Board should address their
correspondence to the Board of Trustees of the applicable Fund and may
submit their correspondence by mail to the Fund at 6803 South Tucson
Way, Centennial, CO 80112, attention Secretary of the Fund; and if the
correspondence is intended for a particular Trustee, the shareholder
should so indicate.
ADDITIONAL INFORMATION ABOUT THE FUNDS
Both Funds also file proxy materials, proxy voting reports and other
information with the SEC in accordance with the informational requirements of
the Securities and Exchange Act of 1934 and the Investment Company Act. These
materials can be inspected and copied at: the SEC's Public Reference Room in
Washington, D.C. (Phone: 1.202.942.8090) or the EDGAR database on the SEC's
website at www.sec.gov. Copies may be obtained upon payment of a duplicating fee
by electronic request at the SEC's e-mail address: publicinfo@sec.gov or by
writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
Householding of Reports to Shareholders and Other Funds' Documents
To avoid sending duplicate copies of materials to households, the Funds
mail only one copy of each report to shareholders having the same last name and
address on the Funds' records. The consolidation of these mailings, called
householding, benefits the Funds through reduced mailing expenses. If you want
to receive multiple copies of these materials or request householding in the
future, you may call the transfer agent at 1.800.647.7374. You may also notify
the transfer agent in writing at 6803 South Tucson Way, Centennial, Colorado
80112. Individual copies of prospectuses and reports will be sent to you within
30 days after the transfer agent receives your request to stop householding.
Principal Shareholders
As of July 25, 2007, the officers and Directors of Growth Fund as a
group, and of Capital Appreciation Fund as a group, owned less than 1% of the
outstanding voting shares of any class of their respective Fund. As of July 25,
2007, the only persons who owned of record or were known by Growth Fund or
Capital Appreciation Fund to own beneficially 5% or more of any class of the
outstanding shares of that respective Fund are listed in Exhibit B.
EXHIBITS TO THE COMBINED PROXY
STATEMENT AND PROSPECTUS
Exhibits
A. Form of Agreement and Plan of Reorganization between Oppenheimer Growth Fund
and Oppenheimer Capital Appreciation Fund
B. Principal Shareholders
C. Management's Discussion of Capital Appreciation Fund's Performance
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") dated as of June
14, 2007, by and between Oppenheimer Growth Fund ("Growth Fund"), a
Massachusetts business trust and Oppenheimer Capital Appreciation Fund ("Capital
Appreciation Fund"), a Massachusetts business trust.
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 Growth Fund through the acquisition by Capital Appreciation
Fund of substantially all of the assets of Growth Fund in exchange for the
voting shares of beneficial interest ("shares") of Class A, Class B, Class C,
Class N and Class Y shares of Capital Appreciation Fund and the assumption by
Capital Appreciation Fund of certain liabilities of Growth Fund, which Class A,
Class B, Class C, Class N and Class Y shares of Capital Appreciation Fund are to
be distributed by Growth Fund pro rata to its shareholders in complete
liquidation of Growth 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 this Agreement and Plan of
Reorganization (the "Agreement") pursuant to Section 368(a)(1) of the Code as
follows: The reorganization will be comprised of the acquisition by Capital
Appreciation Fund of substantially all of the assets of Growth Fund in exchange
for Class A, Class B, Class C, Class N and Class Y shares of Capital
Appreciation Fund and the assumption by Capital Appreciation Fund of certain
liabilities of Growth Fund, followed by the distribution of such Class A, Class
B, Class C, Class N and Class Y shares of Capital Appreciation Fund to the Class
A, Class B, Class C, Class N and Class Y shareholders of Growth Fund in exchange
for their Class A, Class B, Class C, Class N and Class Y shares of Growth Fund,
all upon and subject to the terms of the Agreement hereinafter set forth.
The share transfer books of Growth 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 Growth Fund; redemption requests
received by Growth Fund after that date shall be treated as requests for the
redemption of the shares of Capital Appreciation Fund to be distributed to the
shareholder in question as provided in Section 5 hereof.
2. On the Closing Date (as hereinafter defined), all of the assets of
Growth Fund on that date, excluding a cash reserve (the "Cash Reserve") to be
retained by Growth Fund sufficient in its discretion for the payment of the
expenses of Growth 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 Capital Appreciation Fund, in exchange for and against delivery to
Growth Fund on the Closing Date of a number of Class A, Class B, Class C, Class
N and Class Y shares of Capital Appreciation Fund, having an aggregate net asset
value equal to the value of the assets of Growth Fund so transferred and
delivered.
3. The net asset value of Class A, Class B, Class C, Class N and Class Y
shares of Capital Appreciation Fund and the value of the assets of Growth 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, Class B, Class C, Class N and Class Y shares of
Capital Appreciation Fund and the Class A, Class B, Class C, Class N and Class Y
shares of Growth Fund shall be done in the manner used by Capital Appreciation
Fund and Growth Fund, respectively, in the computation of such net asset value
per share as set forth in their respective prospectuses. The methods used by
Capital Appreciation Fund in such computation shall be applied to the valuation
of the assets of Growth Fund to be transferred to Capital Appreciation Fund.
Growth Fund shall declare and pay, immediately prior to the Valuation
Date, a dividend or dividends which, together with all previous such dividends,
would have the effect of distributing to Growth Fund's shareholders all of
Growth 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 offices of OppenheimerFunds,
Inc. (the "Agent"), 6803 S. Tucson Way, Centennial, CO 80112, on such time or
such other 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 therefore, 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. In conjunction with the Closing, Growth Fund shall distribute on a pro
rata basis to the shareholders of Growth Fund as of the Valuation Date Class A,
Class B, Class C, Class N and Class Y shares of Capital Appreciation Fund
received by Growth Fund on the Closing Date in exchange for the assets of Growth
Fund in complete liquidation of Growth Fund; for the purpose of the distribution
by Growth Fund of Class A, Class B, Class C, Class N and Class Y shares of
Capital Appreciation Fund to Growth Fund's shareholders, Capital Appreciation
Fund will promptly cause its transfer agent to: (a) credit an appropriate number
of Class A, Class B, Class C, Class N and Class Y shares of Capital Appreciation
Fund on the books of Capital Appreciation Fund to each Class A, Class B, Class
C, Class N and Class Y shareholder of Growth Fund in accordance with a list (the
"Shareholder List") of Growth Fund shareholders received from Growth Fund; and
(b) confirm an appropriate number of Class A, Class B, Class C, Class N and
Class Y shares of Capital Appreciation Fund to each Class A, Class B, Class C,
Class N and Class Y shareholder of Growth Fund.
The Shareholder List shall indicate, as of the close of business on the
Valuation Date, the name and address of each shareholder of Growth Fund,
indicating his or her share balance. Growth Fund agrees to supply the
Shareholder List to Capital Appreciation Fund not later than the Closing Date.
Shareholders of Growth 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 shares of Capital Appreciation Fund which they received.
6. Within one year after the Closing Date, Growth 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 Capital
Appreciation 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 Growth 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 Growth Fund outstanding on
the Valuation Date.
7. Prior to the Closing Date, Growth Fund's portfolio shall be analyzed to
ensure that the requisite percentage of Growth Fund's portfolio meets Capital
Appreciation Fund's investment policies and restrictions so that, after the
Closing, Capital Appreciation Fund will be in compliance with all of its
investment policies and restrictions. At the Closing, Growth Fund shall deliver
to Capital Appreciation Fund two copies of a list setting forth the securities
then owned by Growth Fund. Promptly after the Closing, Growth Fund shall provide
Capital Appreciation Fund a list setting forth the respective federal income tax
bases thereof.
8. Portfolio securities or written evidence acceptable to Capital
Appreciation Fund of record ownership thereof by The Depository Trust Company or
through the Federal Reserve Book Entry System or any other depository approved
by Growth Fund pursuant to Rule 17f-4 and Rule 17f-5 under the Act shall be
endorsed and delivered, or transferred by appropriate transfer or assignment
documents, by Growth Fund on the Closing Date to Capital Appreciation 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 Capital
Appreciation Fund for the account of Capital Appreciation Fund. Class A, Class
B, Class C, Class N and Class Y shares of Capital Appreciation Fund representing
the number of Class A, Class B, Class C, Class N and Class Y shares of Capital
Appreciation Fund being delivered against the assets of Growth Fund, registered
in the name of Growth Fund, shall be transferred to Growth Fund on the Closing
Date. Such shares shall thereupon be assigned by Growth Fund to its shareholders
so that the shares of Capital Appreciation Fund may be distributed as provided
in Section 5.
If, at the Closing Date, Growth Fund is unable to make delivery under
this Section 8 to Capital Appreciation Fund of any of its portfolio securities
or cash for the reason that any of such securities purchased by Growth Fund, or
the cash proceeds of a sale of portfolio securities, prior to the Closing Date
have not yet been delivered to it or Growth Fund's custodian, then the delivery
requirements of this Section 8 with respect to said undelivered securities or
cash will be waived and Growth Fund will deliver to Capital Appreciation Fund by
or on the Closing Date with respect to said undelivered securities or cash
executed copies of an agreement or agreements of assignment in a form reasonably
satisfactory to Capital Appreciation Fund, together with such other documents,
including a due bill or due bills and brokers' confirmation slips as may
reasonably be required by Capital Appreciation Fund.
9. Capital Appreciation Fund shall not assume the liabilities (except for
portfolio securities purchased which have not settled and for shareholder
redemption and dividend checks outstanding) of Growth Fund, but Growth 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 Growth Fund. Growth
Fund and Capital Appreciation 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 Capital Appreciation Fund and Growth Fund
associated with this reorganization, including legal, accounting and transfer
agent expenses, will be borne by Growth Fund and Capital Appreciation Fund,
respectively, in the amounts so incurred by each.
10. The obligations of Capital Appreciation Fund hereunder shall be subject
to the following conditions:
A. The Board of Trustees of Growth Fund shall have authorized the
execution of the Agreement, and the shareholders of Growth Fund shall have
approved the Agreement and the transactions contemplated hereby, and Growth Fund
shall have furnished to Capital Appreciation Fund copies of resolutions to that
effect certified by the Secretary or the Assistant Secretary of Growth Fund;
such shareholder approval shall have been by the affirmative vote required by
the Massachusetts Law and its charter documents at a meeting for which proxies
have been solicited by the Proxy Statement and Prospectus (as hereinafter
defined).
B. Capital Appreciation Fund shall have received an opinion dated as of
the Closing Date from counsel to Growth Fund, to the effect that (i) Growth Fund
is a business trust duly organized, validly existing and in good standing under
the laws of the State of Massachusetts with full corporate 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 Growth Fund and to authorize
effectively the transactions contemplated by the Agreement have been taken by
Growth Fund. Massachusetts counsel may be relied upon for this opinion.
C. The representations and warranties of Growth Fund contained herein shall
be true and correct at and as of the Closing Date, and Capital Appreciation 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 or the
Assistant Treasurer of Growth Fund, dated as of the Closing Date, to that
effect.
D. On the Closing Date, Growth Fund shall have furnished to Capital
Appreciation Fund a certificate of the Treasurer or Assistant Treasurer of
Growth Fund as to the amount of the capital loss carry-over and net unrealized
appreciation or depreciation, if any, with respect to Growth 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 Growth Fund at the close of
business on the Valuation Date.
F. A Registration Statement on Form N-14 filed by Capital Appreciation 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.
G. On the Closing Date, Capital Appreciation Fund shall have received a
letter from a senior officer in the Legal Department of OppenheimerFunds, Inc.
acceptable to Capital Appreciation 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 Growth Fund
arising out of litigation brought against Growth 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 Growth Fund delivered to Capital
Appreciation 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. Capital Appreciation Fund shall have received an opinion, dated as
of the Closing Date, of Mayer, Brown, Rowe and Maw LLP, to the same effect as
the opinion contemplated by Section 11.E. of the Agreement.
I. Capital Appreciation Fund shall have received at the Closing all of the
assets of Growth 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 Growth Fund hereunder shall be subject to the
following conditions:
A. The Board of Trustees of Capital Appreciation Fund shall have
authorized the execution of the Agreement, and the transactions contemplated
thereby, and Capital Appreciation Fund shall have furnished to Growth Fund
copies of resolutions to that effect certified by the Secretary or the Assistant
Secretary of Capital Appreciation Fund.
B. Growth Fund's shareholders shall have approved the Agreement and the
transactions contemplated hereby, by an affirmative vote required by the
Massachusetts Law and its charter documents and Growth Fund shall have furnished
Capital Appreciation Fund copies of resolutions to that effect certified by the
Secretary or an Assistant Secretary of Growth Fund.
C. Growth Fund shall have received an opinion dated as of the Closing
Date from counsel to Capital Appreciation Fund, to the effect that (i) Capital
Appreciation 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 actions necessary to make the Agreement,
according to its terms, valid, binding and enforceable upon Capital Appreciation
Fund and to authorize effectively the transactions contemplated by the Agreement
have been taken by Capital Appreciation Fund, and (iii) the shares of Capital
Appreciation Fund to be issued hereunder are duly authorized and when issued
will be validly issued, fully-paid and non-assessable, except as set forth under
"Shareholder and Trustee Liability" in Capital Appreciation Fund's Statement of
Additional Information. Massachusetts counsel may be relied upon for this
opinion.
D. The representations and warranties of Capital Appreciation Fund
contained herein shall be true and correct at and as of the Closing Date, and
Growth Fund shall have been furnished with a certificate of the President, a
Vice President or the Secretary or the Assistant Secretary or the Treasurer or
the Assistant Treasurer of the Trust to that effect dated as of the Closing
Date.
E. Growth Fund shall have received an opinion of Mayer, Brown, Rowe &
Maw, LLP to the effect that the federal tax consequences of the transaction, if
carried out in the manner outlined in the Agreement and in accordance with (i)
Growth Fund's representation that there is no plan or intention by any Growth
Fund shareholder who owns 5% or more of Growth Fund's outstanding shares, and,
to Growth Fund's best knowledge, there is no plan or intention on the part of
the remaining Growth Fund shareholders, to redeem, sell, exchange or otherwise
dispose of a number of Capital Appreciation Fund shares received in the
transaction that would reduce Growth Fund shareholders' ownership of Capital
Appreciation 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 Growth
Fund shares as of the same date, and (ii) the representation by each of Growth
Fund and Capital Appreciation Fund that, as of the Closing Date, Growth Fund and
Capital Appreciation Fund should qualify as regulated investment companies or
should meet the diversification test of Section 368(a)(2)(F)(ii) of the Code,
will be as follows:
a. The transactions contemplated by the Agreement should qualify as a
tax-free "reorganization" within the meaning of Section 368(a)(1) of the Code,
and under the regulations promulgated thereunder.
b. Growth Fund and Capital Appreciation Fund should each qualify as a
"party to a reorganization" within the meaning of Section 368(b)(2) of the Code.
c. No gain or loss should be recognized by the shareholders of Growth Fund
upon the distribution of Class A, Class B, Class C, Class N and Class Y shares
of beneficial interest in Capital Appreciation Fund to the shareholders of
Growth Fund pursuant to Section 354 of the Code.
d. Under Section 361(a) of the Code no gain or loss should be recognized by
Growth Fund by reason of the transfer of substantially all its assets in
exchange for Class A, Class B, Class C, Class N and Class Y shares of Capital
Appreciation Fund.
e. Under Section 1032 of the Code no gain or loss should be recognized by
Capital Appreciation Fund by reason of the transfer of substantially all of
Growth Fund's assets in exchange for Class A, Class B, Class C, Class N and
Class Y shares of Capital Appreciation Fund and Capital Appreciation Fund's
assumption of certain liabilities of Growth Fund.
f. The shareholders of Growth Fund should have the same tax basis and
holding period for the Class A, Class B, Class C, Class N and Class Y shares of
beneficial interest in Capital Appreciation Fund that they receive as they had
for Growth Fund shares that they previously held, pursuant to Section 358(a) and
1223(1), respectively, of the Code.
g. The securities transferred by Growth Fund to Capital Appreciation Fund
should have the same tax basis and holding period in the hands of Capital
Appreciation Fund as they had for Growth 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 Growth Fund at the close of
business on the Valuation Date.
G. A Registration Statement on Form N-14 filed by Capital Appreciation
Fund under the 1933 Act, containing a preliminary form of the Proxy Statement
and Prospectus, shall have become effective under the 1933 Act.
H. On the Closing Date, Growth Fund shall have received a letter from a
senior officer in the Legal Department of OppenheimerFunds, Inc. acceptable to
Growth 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 Capital Appreciation Fund arising
out of litigation brought against Capital Appreciation 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 Capital Appreciation Fund
delivered to Growth 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. Growth Fund shall acknowledge receipt of the Class A, Class B, Class C,
Class N and Class Y shares of Capital Appreciation Fund.
12. Growth Fund hereby represents and warrants that:
A. The audited financial statements of Growth Fund as of August 31, 2006
and unaudited financial statements as of February 28, 2007 heretofore furnished
to Capital Appreciation Fund, present fairly the financial position, results of
operations, and changes in net assets of Growth Fund as of that date, in
conformity with generally accepted accounting principles applied on a basis
consistent with the preceding year; and that from February 28, 2007 through the
date hereof there have not been, and through the Closing Date there will not be,
any material adverse change in the business or financial condition of Growth
Fund, it being agreed that a decrease in the size of Growth 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 thereby by Growth Fund's shareholders, Growth Fund has authority to
transfer all of the assets of Growth 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 Growth 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 Growth Fund and no material
claim and no material legal, administrative or other proceedings pending or, to
the knowledge of Growth Fund, threatened against Growth Fund, not reflected in
such Prospectus;
E. Except for the Agreement, there are no material contracts outstanding to
which Growth Fund is a party other than those ordinary in the conduct of its
business;
F. Growth Fund is a Massachusetts business trust duly organized, validly
existing and in good standing under the laws of the State 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 Growth Fund
that 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 Growth 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 Growth Fund no such
return is currently under audit and no assessment has been asserted with respect
to such returns; and
H. Growth Fund has elected that Growth Fund be treated as a regulated
investment company and, for each fiscal year of its operations, Growth Fund has
met the requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and Growth Fund intends to meet such
requirements with respect to its current taxable year.
13. Capital Appreciation Fund hereby represents and warrants that:
A. The audited financial statements of Capital Appreciation Fund as of
August 31, 2006 and unaudited financial statements as of February 28, 2007
heretofore furnished to Growth Fund, present fairly the financial position,
results of operations, and changes in net assets of Capital Appreciation Fund,
as of that date, in conformity with generally accepted accounting principles
applied on a basis consistent with the preceding year; and that from February
28, 2007 through the date hereof there have not been, and through the Closing
Date there will not be, any material adverse changes in the business or
financial condition of Capital Appreciation Fund, it being understood that a
decrease in the size of Capital Appreciation 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 Capital
Appreciation 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. Except for this Agreement, there is no material contingent liability of
Capital Appreciation Fund and no material claim and no material legal,
administrative or other proceedings pending or, to the knowledge of Capital
Appreciation Fund, threatened against Capital Appreciation Fund, not reflected
in such Prospectus;
D. There are no material contracts outstanding to which Capital
Appreciation Fund is a party other than those ordinary in the conduct of its
business;
E. Capital Appreciation Fund is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts; Capital Appreciation Fund 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 Class A, Class B, Class C, Class N and
Class Y shares of Capital Appreciation Fund which it issues to Growth Fund
pursuant to the Agreement will be duly authorized, validly issued, fully-paid
and non-assessable, except as set forth under "Shareholder & Trustee
Liability" in Capital Appreciation Fund's Statement of Additional Information,
will conform to the description thereof contained in Capital Appreciation Fund's
Registration Statement and will be duly registered under the 1933 Act and in the
states where registration is required; and Capital Appreciation 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 Capital Appreciation
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
Capital Appreciation 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 Capital Appreciation Fund ended
September 30, 2006 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. Capital Appreciation Fund has elected to be treated as a regulated
investment company and, for each fiscal year of its operations, Capital
Appreciation Fund has met the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company and Capital
Appreciation Fund intends to meet such requirements with respect to its current
taxable year;
H. Capital Appreciation Fund has no plan or intention (i) to dispose of
any of the assets transferred by Growth Fund, other than in the ordinary course
of business, or (ii) to redeem or reacquire any of the Class A, Class B, Class
C, Class N and Class Y 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, Capital Appreciation 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. Capital Appreciation
Fund hereby represents to and covenants with Growth Fund that, if the
reorganization becomes effective, Capital Appreciation Fund will treat each
shareholder of Growth Fund who received any of Capital Appreciation Fund's
shares as a result of the reorganization as having made the minimum initial
purchase of shares of Capital Appreciation Fund received by such shareholder for
the purpose of making additional investments in shares of Capital Appreciation
Fund, regardless of the value of the shares of Capital Appreciation Fund
received.
15. Capital Appreciation 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. Growth Fund covenants and agrees to liquidate and dissolve
under the laws of the State of Massachusetts, following the Closing, and, upon
Closing, to cause the cancellation of its outstanding shares.
16. The obligations of the parties shall be subject to the right of either
party to abandon and terminate the Agreement for any reason and there shall be
no liability for damages or other recourse available to a party not so
terminating this Agreement, provided, however, that in the event that a party
shall terminate this Agreement without reasonable cause, the party so
terminating shall, upon demand, reimburse the party not so terminating for all
expenses, including reasonable out-of-pocket expenses and fees incurred in
connection with this Agreement.
17. The Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all 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
acknowledgment of such waiver.
19. Capital Appreciation Fund understands that the obligations of Growth
Fund under the Agreement are not binding upon any Trustee or shareholder of
Growth Fund personally, but bind only Growth Fund and Growth Fund's property.
Capital Appreciation Fund represents that it has notice of the provisions of the
Declaration of Trust of Growth Fund disclaiming shareholder and trustee
liability for acts or obligations of Growth Fund.
20. Growth Fund understands that the obligations of Capital Appreciation
Fund under the Agreement are not binding upon any trustee or shareholder of
Capital Appreciation Fund personally, but bind only Capital Appreciation Fund
and Capital Appreciation Fund's property. Growth Fund represents that it has
notice of the provisions of the Declaration of Trust of Capital Appreciation
Fund disclaiming shareholder and trustee liability for acts or obligations of
Capital Appreciation 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.
OPPENHEIMER GROWTH FUND
By: /s/ Robert G. Zack
------------------
Robert G. Zack
Secretary
OPPENHEIMER CAPITAL APPRECIATION FUND
By: /s/ Robert G. Zack
------------------
Robert G. Zack
Secretary
EXHIBIT B
PRINCIPAL SHAREHOLDERS
Principal Shareholders of Growth Fund. As of June 30, 2007, the only
persons who owned of record or were known by Growth Fund to own beneficially 5%
or more of any class of the outstanding shares of Growth Fund were:
Orchard Trust Company LLC, FBO Oppen RecordkeeperPro, 8515 E. Orchard
Road, Greenwood Village, CO 80111-5002, which owned 44,676.101 Class N
shares (9.76% of the Class N shares then outstanding).
Mass Mutual Life Insurance Co, Separate Investment Acct, Attn: N225,
1295 State Street, Springfield, MA 01111-0001, who owned 840,111.162
Class Y shares (79.12%of the then outstanding Class Y shares).
Taynik & Co, C/O Investors Bank & Trust, FPG90, P.O. Box 9130, Boston,
MA 02117-9130, which owned 191,521.914 Class Y shares (18.03% of the
then outstanding Class Y shares).
Principal Shareholders of Capital Appreciation Fund. As of July 25,
2007, the only persons who owned of record or were known by Capital Appreciation
Fund to own beneficially 5% or more of any class of the outstanding shares of
Capital Appreciation Fund were:
MLPF&S for the sole benefit of its customers, Attn. Fund Admin., #98756,
4800 Deer Lake Dr. E. Floor 3, Jacksonville, FL 32246-6484, which owned
8,212,067.012 Class A shares (7.60% of the Class A shares then outstanding).
Great-West Life & Annuity Insurance Company, Attn. Mutual Fund Trading 2T2,
8515 E. Orchard Rd., Greenwood Village, CO 80111-500, which owned 7,055,410.988
Class A shares (6.53% of the Class A shares then outstanding).
MLPF&S for the sole benefit of its customers, Attn. Fund Admin., #97C27,
4800 Deer Lake Dr. E. Floor 3, Jacksonville, FL 32246-6484, which owned
1,799,340.031 Class C shares (11.82% of the Class C shares then outstanding).
MLPF&S for the sole benefit of its customers, Attn. Fund Admin., 4800 Deer
Lake Dr. E. Floor 3, Jacksonville, FL 32246-6484, which owned 409,537.211 Class
N shares (8.41% of the Class N shares then outstanding).
Oppenheimer Portfolio Series Active Allocation, Attn. FPA Trade Settle
(2-FA), 6803 South Tucson Way, Centennial, CO 80112-3924, which owned
4,615,542.986 Class Y shares (23.18% of the Class Y shares then outstanding).
MLPF&S for the sole benefit of its customers, Attn. Fund Admin., 4800 Deer
Lake Dr. E. Floor 3, Jacksonville, FL 32246-6484, which owned 2,957,275.087
Class Y shares (14.85% of the Class Y shares then outstanding).
Taynik & Co., c/o Investors Bank & Trust, FPG90, P.O. Box 9130, Boston, MA
02117-9130, which owned 1,926,012.790 Class Y shares (9.67% of the Class Y
shares then outstanding).
Oppenheimer Portfolio Series Active Allocation Tact Comp, Attn. FPA Trade
Settle (2-FA)., 6803 South Tucson Way, Centennial, CO 80112-3924, which owned
1,829,981.453 Class Y shares (9.19% of the Class Y shares then outstanding).
Oppenheimer Portfolio Series Equity Investor Fund, Attn. FPA Trade Settle
(2-FA), 6803 South Tucson Way, Centennial, CO 80112-3924, which owned
1,812,684.872 Class Y shares (9.10% of the Class Y shares then outstanding).
Oppenheimer Portfolio Series Moderate Investor, Attn. FPA Trade Settle
(2-FA), 6803 South Tucson Way, Centennial, CO 80112-3924, which owned
1,597,799.108 Class Y shares (8.02% of the Class Y shares then outstanding).
Vanguard Fiduciary Trust Co TR, Vanguard Fiduciary Trust Co, PO Box 9130,
Valley Forge, PA 19482-2600, which owned 1,018,920.756 Class Y shares (5.11% of
the Class Y shares then outstanding).
EXHIBIT C
MANAGEMENT'S DISCUSSION OF CAPITAL APPRECIATION FUND'S PERFORMANCE
The following discussion is included in Capital Appreciation Fund's
annual report dated August 31, 2006, the most recent annual report to
shareholders (and therefore the most recent management's discussion of fund
performance) available. (Although not a part of the Management's Discussion of
Fund Performance, more current information on the Fund's performance is
available in Capital Appreciation Fund's semi-annual report dated February 28,
2007 which includes an interview with the Fund's portfolio manager regarding the
Fund's performance for the 6-month period ended February 28, 2007. )
Management's Discussion of Fund's Performance (as of August 31, 2006)
The Fund's Class A shares (without sales charge) underperformed its
benchmark, the S&P 500 Index, which returned 8.87% for the 12-month period
ending August 31, 2006, but outperformed the Russell 1000 Growth Index, which
returned 3.68% over the same period, and significantly outperformed the Lipper
Large Cap Growth Fund category, which returned an average of 1.86%. Compared to
its Large Cap Growth competitors, the Fund did quite well, performing well above
the group median. The Fund lagged the broad market in an investment climate that
was generally less favorable for growth companies than value companies.
Individual stock performance was the primary influence--both positive and
negative--on the portfolio's returns. On a sector basis, our investments in the
technology and consumer discretionary areas were the largest detractors. The
Fund's best-performing sectors during the period were financials and consumer
staples.
Regardless of the broader market backdrop, the portfolio manager
regularly follows a consistent management strategy. The Manager's goal continued
to be to conservatively manage a "core" large-cap growth portfolio diversified
across a wide variety of sectors. The portfolio management team members do no
consider themselves to be short-term investors The portfolio manager strives to
own companies believed to have the potential to meaningfully grow earnings
faster than the broader market over a three- to five-year time horizon. In
particular, the portfolio manager looks for businesses with sustainable
earnings, strong earnings growth and sound capital management. The portfolio
manager also pays close attention to company valuations to avoid paying too much
for growth opportunities. Although the investment approach is
"bottom-up"--meaning that the portfolio manager selects stocks based on their
individual fundamentals-- also considered are broad-based secular trends when
deciding whether or not to make a purchase. In general, the portfolio manager
buys into businesses that are believed to be expanding as a share of the
economy, rather than shrinking.
Over the reporting period, the portfolio manager looked to "flatten"
the portfolio, reducing some of the Fund's previous concentrations in larger,
more mature companies, while reinvesting the proceeds across a variety of
sectors in companies believed to offer more dynamic growth potential. Another
significant theme was to reduce the Fund's stake in "old" media and increase its
weighting in new media companies--businesses that the portfolio manager believes
are changing the rules of advertising through the use of new technologies. For
example, the portfolio manager favored Google, Inc., and Yahoo!, Inc., two
companies that have benefited from the Internet's continued rapid growth.
Spending on online advertising--a market category that barely existed five years
ago--has increased in recent years. The portfolio manager further believes this
trend is still in its relatively early stages, and that such companies may be
well-positioned to take advantage of the worldwide move toward digital media.
In the energy sector, the portfolio manager reduced exposure to
integrated energy companies while adding to the Fund's weighting in energy
services stocks. As oil prices remain at historically high levels, integrated
energy firms now have some of the strongest balance sheets in their history. In
our view, this balance-sheet strength is likely to translate into increased
capital investment, which in turn could directly benefit service companies such
as Halliburton Co. and Schlumberger Ltd.--two names to which were added to the
Fund's existing holdings during the period.
Two financial stocks--Goldman Sachs Group, Inc. (The) and Chicago
Mercantile Exchange (The) (CME)--were two of the Fund's strongest performers
during the past year. Goldman Sachs was helped by rising merger and acquisition
activity as well as its profitable lending business to hedge funds. CME, the
world's largest futures exchange, continued to benefit from the enormous growth
in the use of sophisticated strategies to hedge risk in a volatile market
environment. Also performing well were two non-U.S.-based consumer-oriented
names--Reckitt Benckiser plc, a household cleaning products company based in the
United Kingdom, and Nestle SA, the well-known food company located in
Switzerland. Both stocks were beneficiaries of the uncertain market backdrop,
which increasingly has driven investors toward businesses whose performance
tends to be relatively insensitive to a slower economy.
On the negative side, the Fund's biggest detractor was eBay, Inc. This
leading online auction house fell in response to increasing competition and
slowing earnings growth. Despite its recent poor performance, the portfolio
manager remains optimistic about the company's prospects and maintain a large
weighting in the stock. Another underperformer was XM Satellite Radio Holdings,
Inc., one of two major players in the burgeoning satellite radio market. XM's
shares fell on fears of increasing competition from rival Sirius as well as some
slowdown in subscriber growth. Also lagging was computer manufacturer and
retailer Dell, Inc., which has been hurt by rising competition,
weaker-than-expected earnings and quality-control problems. The portfolio
manager concluded that these problems were serious enough to warrant selling our
position in Dell. Also in technology, software giant Microsoft Corp. saw its
shares fall in response to competitive pressures as well as further delays in
Vista, the company's long-anticipated update to its Windows operating system.
The fund's portfolio holdings, allocations and strategies are subject
to change.
Comparing the Fund's Performance to the Market
The graphs that follow show the performance of a hypothetical $10,000
investment in each class of shares of Capital Appreciation held until August 31,
2006. In the case of Class A, Class B and Class C shares, performance is
measured over a ten-fiscal-year period. In the case of Class N shares,
performance is measured from inception of the Class on March 1, 2001, and in the
case of Class Y shares, from the inception of the class on November 3, 1997. The
Fund's performance reflects the deduction of the maximum initial sales charge on
Class A shares, the applicable contingent deferred sales charge on Class B,
Class C, and Class N shares, and reinvestments of all dividends and capital
gains distributions. Past performance cannot guarantee future results.
The Fund's performance is compared to the performance of the S&P 500
Index, a broad-based index of equity securities widely regarded as a general
measure of the performance of the U.S. equity securities market. Index
performance reflects the reinvestment of income but does not consider the effect
of transaction costs, and none of the data in the graphs shows the effect of
taxes. The Fund's performance reflects the effects of the Fund's business and
operating expenses. While index comparisons may be useful to provide a benchmark
for the Fund's performance, it must be noted that the Fund's investments are not
limited to the investments in the index.
[Insert Graph from Capital Appreciation Fund Annual Report]
CLASS A SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class A)
S&P 500 Index
[Insert Graph from Capital Appreciation Fund Annual Report]
CLASS B SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class B)
S&P 500 Index
[Insert Graph from Capital Appreciation Fund Annual Report]
CLASS C SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class C)
S&P 500 Index
[Insert Graph from Capital Appreciation Fund Annual Report]
CLASS N SHARES
COMPARISON OF CHANGE IN VALUE OF $10,000 HYPOTHETICAL INVESTMENTS IN:
Oppenheimer Capital Appreciation Fund (Class N)
S&P 500 Index
The performance data quoted represents past performance, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance quoted. For performance
data current to the most recent month end, visit us at www.oppenheimerfunds.com,
or call us at 1.800.525.7048. Fund returns include changes in share price,
reinvested distributions, and the applicable sales charge: for Class A shares,
the current maximum initial sales charge of 5.75%; for Class B shares, the
contingent deferred sales charge of 5% (1-year) and 2% (5-year); and for Class C
and N shares, the contingent 1% deferred sales charge for the 1-year period.
There is no sales charge for Class Y shares. Because Class B shares convert to
Class A shares 72 months after purchase, since-inception return for Class B
shares uses Class A performance for the period after conversion.
Total returns and the ending account values in the graphs include
changes in share price and reinvestment of dividends and capital gains
distributions in a hypothetical investment for the periods shown. The Fund's
total returns shown do not reflect the deduction of income taxes on an
individual's investment. Taxes may reduce your actual investment returns on
income or gains paid by the Fund or any gains you may realize if you sell your
shares.
The Fund's investment strategy and focus can change over time. The
mention of specific fund holdings does not constitute a recommendation by
OppenheimerFunds, Inc.
Class A shares of the Fund were first publicly offered on 1/22/81.
Unless otherwise noted, Class A returns include the current maximum initial
sales charge of 5.75%.
Class B shares of the Fund were first publicly offered on 11/1/95. Class B
returns include the applicable contingent deferred sales charge of 5% (1-year)
and 2% (5-year). Because Class B shares convert to Class A shares 72 months
after purchase, the 10-year return for Class B uses Class A performance for the
period after conversion. Class B shares are subject to an annual 0.75%
asset-based sales charge.
Class C shares of the Fund were first publicly offered on 12/1/93.
Class C returns include the contingent deferred sales charge of 1% for the
1-year period. Class C shares are subject to an annual 0.75% asset-based sales
charge.
Class N shares of the Fund were first publicly offered on 3/1/01.
Class N shares are offered only through retirement plans. Unless otherwise
noted, Class N returns include the contingent deferred sales charge of 1% for
the 1-year period. Class N shares are subject to an annual 0.25% asset-based
sales charge.
Class Y shares of the Fund were first publicly offered on 11/3/97.
Class Y shares are offered only to certain institutional investors under special
agreements with the Distributor.
An explanation of the calculation of performance is in the Fund's
Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
TO PROSPECTUS AND PROXY STATEMENT
OF
OPPENHEIMER CAPITAL APPRECIATION FUND
PART B
Acquisition of the Assets of
OPPENHEIMER GROWTH FUND
By and in exchange for Shares of
OPPENHEIMER CAPITAL APPRECIATION FUND
This Statement of Additional Information to this Prospectus and Proxy
Statement (the "SAI") relates specifically to the proposed delivery of
substantially all of the assets of Oppenheimer Growth Fund ("Growth Fund") for
Class A, Class B, Class C, Class N and Class Y shares of Oppenheimer Capital
Appreciation Fund ("Capital Appreciation Fund") (the "Reorganization").
This SAI consists of this Cover Page and the following documents which
are incorporated into this SAI by reference: (i) the Statement of Additional
Information of Growth Fund dated November 24, 2006, as supplemented May 21, 2007
; (ii) the Statement of Additional Information of Capital Appreciation Fund
dated October 26, 2006, as supplemented November 24, 2006 and December 15, 2006,
which includes audited financial statements of Capital Appreciation Fund for the
12-month period ended August 31, 2006; (iii) the annual report of Growth Fund
which includes audited financial statements of Growth Fund for the 12-month
period ended August 31, 2006.
This SAI is not a Prospectus; you should read this SAI in conjunction
with the combined Prospectus and Proxy Statement dated September 6, 2007
relating to the Reorganization. You can request a copy of the Prospectus and
Proxy Statement by calling 1.800.647.1963, by visiting the website at
www.oppenheimerfunds.com or by writing OppenheimerFunds Services at P.O. Box
5270, Denver, Colorado 80217. The date of this SAI is September 6, 2007.
PRO FORMA FINANCIAL STATEMENTS
Shown below are unaudited pro forma financial statements for the
combined Capital Appreciation Fund, assuming the Reorganization had been
consummated as of March 31, 2007. The first table presents pro forma Statements
of Assets and Liabilities for the combined Capital Appreciation Fund. The second
table presents pro forma Statements of Operations for the combined Capital
Appreciation Fund. The third table presents a pro forma Statement of Investments
for the combined Capital Appreciation Fund.
The unaudited pro forma statement of investments and statement of
assets and liabilities reflect the financial position of Growth and Capital
Appreciation Funds at March 31, 2007. The unaudited pro forma statement of
operations reflects the results of operations of Growth and Capital Appreciation
Funds for the year ended March 31, 2007. The unaudited pro forma combined
financial statements may not necessarily be representative of what the actual
combined financial statements would have been had the Reorganization occurred at
March 31, 2007. The historical cost of investment securities will be carried
forward to the surviving entity and results of operations of Growth Fund for
pre-combination periods will not be restated. The unaudited pro forma statement
of investments, and statements of assets and liabilities and operations should
be read in conjunction with the historical financial statements of the Funds
incorporated by reference in the Statements of Additional Information for each
Fund.
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES MAY 31, 2007
(UNAUDITED)
OPPENHEIMER CAPITAL APPRECIATION FUND AND OPPENHEIMER GROWTH FUND
OPPENHEIMER OPPENHEIMER
CAPITAL APPRECIATION GROWTH
FUND FUND
----------------------------------------------------------
ASSETS:
Investments, at value - see accompanying statement of investments:
Unaffiliated Companies (cost $6,104,353,746 and $1,085,051,418) $ 8,173,586,220 $ 1,325,715,325
Affiliated Companies (cost $61,553,901 and $557,986) 61,553,901 557,986
Unrealized appreciation on foreign currency contracts 1,444 -
Receivables and other assets:
Investments sold 60,278,659 5,876,568
Shares of beneficial interest sold 3,399,456 130,695
Interest and dividends 3,289,582 442,462
Other 2,301,632 820,127
----------------------------------------------------------
Total assets 8,304,410,894 1,333,543,163
----------------------------------------------------------
LIABILITIES:
Bank overdraft 6,774,054 391,803
Bank overdraft - foreign currencies (cost $2,700,876 and $0) 2,703,328 -
Options written, at value (premiums received $0 and $348,928) -
see accompanying statement of investments - 1,186,080
Unrealized depreciation on foreign currency contracts 2,062 -
Payables and other liabilities:
Investments purchased 32,657,631 3,751,613
Shares of beneficial interest redeemed 4,262,440 913,880
Distributions and service plan fees 2,927,053 491,144
Trustees' and Directors' fees 1,060,979 263,919
Shareholder reports 682,258 213,159
Transfer and shareholder servicing agent fees 1,461,217 248,425
Other 166,710 45,537
----------------------------------------------------------
Total liabilities 52,697,732 7,505,560
----------------------------------------------------------
NET ASSETS $ 8,251,713,162 $ 1,326,037,603
==========================================================
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest $ 165,786 $ 38,640
Additional paid-in capital 6,288,330,215 1,518,814,682
Undistributed net investment loss (21,588,563) (8,442,783)
Accumulated net realized loss from investments and
foreign currency transactions (84,382,598) (424,199,692)
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 2,069,188,322 239,826,756
----------------------------------------------------------
NET ASSETS $ 8,251,713,162 $ 1,326,037,603
==========================================================
PRO FORMA
COMBINED
PROFORMA OPPENHEIMER
ADJUSTMENTS CAPITAL APPRECIATION FUND
-----------------------------------------------------------
ASSETS:
Investments, at value - see accompanying statement of investments:
Unaffiliated Companies (cost $6,104,353,746 and $1,085,051,418) $ 9,499,301,545
Affiliated Companies (cost $61,553,901 and $557,986) 62,111,887
Unrealized appreciation on foreign currency contracts 1,444
Receivables and other assets:
Investments sold 66,155,227
Shares of beneficial interest sold 3,530,151
Interest and dividends 3,732,044
Other 3,121,759
-----------------------------------------------------------
Total assets 9,637,954,057
-----------------------------------------------------------
LIABILITIES:
Bank overdraft 7,165,857
Bank overdraft - foreign currencies (cost $2,700,876 and $0) 2,703,328
Options written, at value (premiums received $0 and $348,928) -
see accompanying statement of investments 1,186,080
Unrealized depreciation on foreign currency contracts 2,062
Payables and other liabilities:
Investments purchased 36,409,244
Shares of beneficial interest redeemed 5,176,320
Distributions and service plan fees 3,418,197
Trustees' and Directors' fees 1,324,898
Shareholder reports 895,417
Transfer and shareholder servicing agent fees 1,709,642
Other 212,247
-----------------------------------------------------------
Total liabilities - 60,203,292
-----------------------------------------------------------
NET ASSETS - $ 9,577,750,765
===========================================================
COMPOSITION OF NET ASSETS:
Par value of shares of beneficial interest (11,975) (1) $ 192,451
Additional paid-in capital 11,975 (1) 7,807,156,872
Undistributed net investment loss (30,031,346)
Accumulated net realized loss from investments and
foreign currency transactions (508,582,290)
Net unrealized appreciation on investments and translation
of assets and liabilities denominated in foreign currencies 2,309,015,078
-----------------------------------------------------------
NET ASSETS - $ 9,577,750,765
===========================================================
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES MAY 31, 2007
(UNAUDITED)
OPPENHEIMER CAPITAL APPRECIATION FUND AND OPPENHEIMER GROWTH FUND
OPPENHEIMER OPPENHEIMER
CAPITAL APPRECIATION GROWTH
FUND FUND
-------------------------------------------------
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$5,489,990,576, $1,046,003,991, and $6,535,994,567 and 108,602,491, 29,980,796,
and 129,294,458 shares of beneficial interest outstanding for Oppenheimer
Capital Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $50.55 $34.89
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $53.63 $37.02
Class B Shares:
Net asset value and redemption price per share (based on net assets of
$796,693,298, $145,225,553, and $941,918,851 and 17,304,340, 4,602,189 and
20,458,669 shares of beneficial interest outstanding for Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $46.04 $31.56
Class C Shares:
Net asset value and redemption price per share (based on net assets of
$701,984,216, $79,787,875, and $781,772,091 and 15,371,738, 2,486,491 and
17,118,886 shares of beneficial interest outstanding for Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $45.67 $32.09
Class N Shares:
Net asset value and redemption price per share (based on net assets of
$260,958,913, $16,094,846, and $277,053,759 and 5,247,496, 467,281 and 5,571,139
shares of beneficial interest outstanding for Oppenheimer Capital Appreciation
Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $49.73 $34.44
Class Y Shares:
Net asset value and redemption price per share (based on net assets of
$1,002,086,159, $38,925,338, and $1,041,011,497 and 19,259,578, 1,103,461 and
20,007,703 shares of beneficial interest outstanding for Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $52.03 $35.28
PRO FORMA
COMBINED
PROFORMA OPPENHEIMER
ADJUSTMENTS CHAMPION INCOME FUND
------------------------------------------------
NET ASSET VALUE PER SHARE
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$5,489,990,576, $1,046,003,991, and $6,535,994,567 and 108,602,491, 29,980,796,
and 129,294,458 shares of beneficial interest outstanding for Oppenheimer
Capital Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $50.55 (2)
Maximum offering price per share (net asset value plus sales charge of 5.75%
of offering price) $53.63 (2)
Class B Shares:
Net asset value and redemption price per share (based on net assets of
$796,693,298, $145,225,553, and $941,918,851 and 17,304,340, 4,602,189 and
20,458,669 shares of beneficial interest outstanding for Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $46.04 (2)
Class C Shares:
Net asset value and redemption price per share (based on net assets of
$701,984,216, $79,787,875, and $781,772,091 and 15,371,738, 2,486,491 and
17,118,886 shares of beneficial interest outstanding for Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $45.67 (2)
Class N Shares:
Net asset value and redemption price per share (based on net assets of
$260,958,913, $16,094,846, and $277,053,759 and 5,247,496, 467,281 and 5,571,139
shares of beneficial interest outstanding for Oppenheimer Capital Appreciation
Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $49.73 (2)
Class Y Shares:
Net asset value and redemption price per share (based on net assets of
$1,002,086,159, $38,925,338, and $1,041,011,497 and 19,259,578, 1,103,461 and
20,007,703 shares of beneficial interest outstanding for Oppenheimer Capital
Appreciation Fund, Oppenheimer Growth Fund
and combined Oppenheimer Capital Appreciation Fund, respectively) $52.03 (2)
(1) Represents the issuance of shares of Capital Appreciation Fund in a
tax-free exchange.
(2) Oppenheimer Growth Fund Class A shares will be exchanged for Oppenheimer
Capital Appreciation Fund Class A shares. Oppenheimer Growth Fund Class B
shares will be exchanged for Oppenheimer Capital Appreciation Fund Class B
shares. Oppenheimer Growth Fund Class C shares will be exchanged for
Oppenheimer Capital Appreciation Fund Class C shares. Oppenheimer Growth
Fund Class N shares will be exchanged for Oppenheimer Capital Appreciation
Fund Class N shares. Oppenheimer Growth Fund Class Y shares will be
exchanged for Oppenheimer Capital Appreciation Fund Class Y shares.
PRO FORMA COMBINING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MAY 31, 2007
(UNAUDITED)
OPPENHEIMER CAPITAL APPRECIATION FUND AND OPPENHEIMER GROWTH FUND
OPPENHEIMER OPPENHEIMER
CAPITAL APPRECIATION GROWTH
FUND FUND
----------------------------------------------------------
INVESTMENT INCOME:
Dividends:
Unaffiliated companies (net of foreign withholding taxes
of $1,834,603, $70,637 and $1,905,240 $ 59,970,313 $ 5,619,240
Affiliated companies 2,061,830 72,892
Interest 1,853,989 156,268
Portfolio lending fees 123,271 -
Other income 205,526 103,694
----------------------------------------------------------
Total income 64,214,929 5,952,094
----------------------------------------------------------
EXPENSES:
Management fees 44,572,491 8,452,625
Distribution and service plan fees:
Class A 12,805,749 2,281,755
Class B 8,321,546 1,498,137
Class C 6,646,077 735,105
Class N 1,283,299 71,172
Transfer and shareholder servicing agent fees:
Class A 12,639,803 2,375,002
Class B 2,235,346 408,232
Class C 1,533,530 258,014
Class N 833,582 50,361
Class Y 717,812 114,279
Shareholder communications:
Class A 790,532 321,952
Class B 360,744 110,358
Class C 132,203 30,392
Class N 17,999 3,449
Trustees' compensation 367,892 56,105
Custodian fees and expenses 161,453 9,359
Other 253,246 87,284
----------------------------------------------------------
Total Expenses 93,673,304 16,863,581
Less reduction to custodian expenses (5,184) -
Less waivers and reimbursements of expenses (39,046) (16,653)
----------------------------------------------------------
Net Expenses 93,629,074 16,846,928
----------------------------------------------------------
PRO FORMA
COMBINED
PROFORMA OPPENHEIMER
ADJUSTMENTS CAPITAL APPRECIATION FUND
-------------------------------------------------------------
INVESTMENT INCOME:
Dividends:
Unaffiliated companies (net of foreign withholding taxes
of $1,834,603, $70,637 and $1,905,240 $ 65,589,553
Affiliated companies 2,134,722
Interest 2,010,257
Portfolio lending fees 123,271
Other income 309,220
-------------------------------------------------------------
Total income 70,167,023
-------------------------------------------------------------
EXPENSES:
Management fees (1,993,334) (1) 51,031,782
Distribution and service plan fees:
Class A 15,087,504
Class B 9,819,683
Class C 7,381,182
Class N 1,354,471
Transfer and shareholder servicing agent fees:
Class A 15,014,805
Class B 2,643,578
Class C 1,791,544
Class N 883,943
Class Y 832,091
Shareholder communications:
Class A 1,112,484
Class B 471,102
Class C 162,595
Class N 21,448
Trustees' compensation 423,997
Custodian fees and expenses 170,812
Other 340,530
-------------------------------------------------------------
Total Expenses (1,993,334) 108,543,551
Less reduction to custodian expenses (5,184)
Less waivers and reimbursements of expenses (55,699)
-------------------------------------------------------------
Net Expenses (1,993,334) 108,482,668
-------------------------------------------------------------
(1) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
(2) Change due to an estimate of the elimination of duplicative expenses
achieved by merging the funds.
PRO FORMA COMBINING STATEMENTS OF OPERATIONS FOR THE YEAR ENDED MAY 31, 2007
(UNAUDITED)
OPPENHEIMER OPPENHEIMER
CAPITAL APPRECIATION GROWTH
FUND FUND
--------------------------------------------------------------
NET INVESTMENT INCOME $ (29,414,145) $ (10,894,834)
--------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments:
Unaffiliated companies 431,323,083 112,257,720
Foreign currency transactions 4,953,343 -
--------------------------------------------------------------
Net realized loss 436,276,426 112,257,720
--------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 943,128,079 124,001,360
Translation of assets and liabilities denominated
in foreign currencies (4,849,769) -
--------------------------------------------------------------
Net change in unrealized appreciation 938,278,310 124,001,360
--------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,345,140,591 $ 225,364,246
==============================================================
PRO FORMA
COMBINED
PROFORMA OPPENHEIMER
ADJUSTMENTS CAPITAL APPRECIATION FUND
--------------------------------------------------------------
NET INVESTMENT INCOME $ (40,308,979)
--------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments:
Unaffiliated companies 543,580,803
Foreign currency transactions 4,953,343
--------------------------------------------------------------
Net realized loss 548,534,146
--------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 1,067,129,439
Translation of assets and liabilities denominated
in foreign currencies (4,849,769)
--------------------------------------------------------------
Net change in unrealized appreciation 1,062,279,670
--------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,570,504,837
==============================================================
PRO FORMA COMBINING STATEMENTS OF CHANGES FOR THE YEAR ENDED MAY 31, 2007
(UNAUDITED)
OPPENHEIMER CAPITAL APPRECIATION FUND AND OPPENHEIMER GROWTH FUND
OPPENHEIMER OPPENHEIMER
CAPITAL APPRECIATION GROWTH
OPERATIONS FUND FUND
--------------------------------------------------------------
Net investment loss $ (29,414,145) $ (10,894,834)
Net realized gain 436,276,426 112,257,720
Net unrealized change in unrealized appreciation 938,278,310 124,001,360
--------------------------------------------------------------
Net increase in net assets resulting from operations 1,345,140,591 225,364,246
BENEFICIAL INTEREST TRANSACTIONS
Class A (821,938,267) (122,577,016)
Class B (239,860,843) (47,685,883)
Class C (68,314,864) (5,752,793)
Class N (37,837,738) (87,125)
Class Y 314,009,331 (12,096,203)
--------------------------------------------------------------
(853,942,381) (188,199,020)
NET ASSETS
Total increase 491,198,210 37,165,226
--------------------------------------------------------------
Beginning of period 7,760,514,952 1,288,872,377
End of period $ 8,251,713,162 $ 1,326,037,603
==============================================================
PRO FORMA
COMBINED
PROFORMA OPPENHEIMER
OPERATIONS ADJUSTMENTS CAPITAL APPRECIATION FUND
--------------------------------------------------------------
Net investment loss $ (40,308,979)
Net realized gain 548,534,146
Net unrealized change in unrealized appreciation 1,062,279,670
--------------------------------------------------------------
Net increase in net assets resulting from operations 1,570,504,837
BENEFICIAL INTEREST TRANSACTIONS
Class A (944,515,283)
Class B (287,546,726)
Class C (74,067,657)
Class N (37,924,863)
Class Y 301,913,128
--------------------------------------------------------------
(1,042,141,401)
NET ASSETS
Total increase 528,363,436
--------------------------------------------------------------
Beginning of period 9,049,387,329
End of period $ 9,577,750,765
==============================================================
PRO FORMA COMBINING STATEMENTS OF INVESTMENTS MAY 31, 2007 (UNAUDITED)
OPPENHEIMER CAPITAL APPRECIATION FUND AND OPPENHEIMER GROWTH FUND
OPPENHEIMER OPPENHEIMER
CAPITAL OPPENHEIMER CAPITAL OPPENHEIMER
APPRECIATION GROWTH COMBINED APPRECIATION GROWTH COMBINED
FUND FUND PROFORMA FUND FUND PROFORMA
SHARES SHARES SHARES VALUE VALUE VALUE
-------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS--99.2%
-------------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--10.5%
-------------------------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.7%
International Game Technology 0 303,200 303,200 $ 0 $ 12,185,608 $ 12,185,608
-------------------------------------------------------------------------------------------------------------------------------
Las Vegas Sands Corp. 1 1,007,910 0 1,007,910 78,637,138 0 78,637,138
-------------------------------------------------------------------------------------------------------------------------------
Starbucks Corp. 1 2,053,300 347,800 2,401,100 59,155,573 10,020,118 69,175,691
-------------------------------------------
137,792,711 22,205,726 159,998,437
-------------------------------------------------------------------------------------------------------------------------------
MEDIA--1.9%
Comcast Corp., Cl. A 1 0 618,700 618,700 0 16,958,567 16,958,567
-------------------------------------------------------------------------------------------------------------------------------
Comcast Corp., Cl. A Special, Non-Vtg. 1 4,188,753 0 4,188,753 113,850,293 0 113,850,293
-------------------------------------------------------------------------------------------------------------------------------
XM Satellite Radio Holdings, Inc., Cl. A 1 4,576,630 0 4,576,630 52,997,375 0 52,997,375
-------------------------------------------
166,847,668 16,958,567 183,806,235
-------------------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--3.1%
J.C. Penney Co., Inc. (Holding Co.) 1,345,360 157,900 1,503,260 108,274,573 12,707,792 120,982,365
-------------------------------------------------------------------------------------------------------------------------------
Kohl's Corp. 1 615,690 159,000 774,690 46,373,771 11,975,880 58,349,651
-------------------------------------------------------------------------------------------------------------------------------
Target Corp. 1,534,220 302,700 1,836,920 95,781,355 18,897,561 114,678,916
-------------------------------------------
250,429,699 43,581,233 294,010,932
-------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--2.7%
Staples, Inc. 4,304,400 1,184,500 5,488,900 107,868,264 29,683,570 137,551,834
-------------------------------------------------------------------------------------------------------------------------------
Tiffany & Co. 926,780 208,200 1,134,980 48,720,825 10,945,074 59,665,899
-------------------------------------------------------------------------------------------------------------------------------
TJX Cos., Inc. (The) 2,152,440 0 2,152,440 60,203,747 0 60,203,747
-------------------------------------------------------------------------------------------------------------------------------
Williams Sonoma, Inc. 0 153,700 153,700 0 5,208,893 5,208,893
-------------------------------------------
216,792,836 45,837,537 262,630,373
-------------------------------------------------------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--1.1%
Polo Ralph Lauren Corp., Cl. A 900,890 211,900 1,112,790 87,863,802 20,666,607 108,530,409
-------------------------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--7.2%
-------------------------------------------------------------------------------------------------------------------------------
BEVERAGES--1.6%
Fomento Economico Mexicano SA de CV, UBD 9,569,500 0 9,569,500 38,137,213 0 38,137,213
-------------------------------------------------------------------------------------------------------------------------------
PepsiCo, Inc. 1,316,010 321,100 1,637,110 89,922,963 21,940,763 111,863,726
-------------------------------------------
128,060,176 21,940,763 150,000,939
-------------------------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.0%
Costco Wholesale Corp. 2,044,810 0 2,044,810 115,470,421 0 115,470,421
-------------------------------------------------------------------------------------------------------------------------------
Kroger Co. (The) 0 444,000 444,000 0 13,462,080 13,462,080
-------------------------------------------------------------------------------------------------------------------------------
Ruddick Corp. 0 221,500 221,500 0 6,930,735 6,930,735
-------------------------------------------------------------------------------------------------------------------------------
Sysco Corp. 1,765,940 0 1,765,940 58,487,933 0 58,487,933
-------------------------------------------
173,958,354 20,392,815 194,351,169
-------------------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--2.0%
Cadbury Schweppes plc 3,587,490 0 3,587,490 50,471,499 0 50,471,499
-------------------------------------------------------------------------------------------------------------------------------
Nestle SA 327,863 0 327,863 127,686,684 0 127,686,684
-------------------------------------------------------------------------------------------------------------------------------
Wm. Wrigley Jr. Co. 0 247,100 247,100 0 14,480,060 14,480,060
-------------------------------------------
178,158,183 14,480,060 192,638,243
-------------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.6%
Colgate-Palmolive Co. 0 240,000 240,000 0 16,070,400 16,070,400
-------------------------------------------------------------------------------------------------------------------------------
Procter & Gamble Co. (The) 0 505,200 505,200 0 32,105,460 32,105,460
-------------------------------------------------------------------------------------------------------------------------------
Reckitt Benckiser plc 1,884,099 0 1,884,099 102,446,158 0 102,446,158
-------------------------------------------
102,446,158 48,175,860 150,622,018
-------------------------------------------------------------------------------------------------------------------------------
ENERGY--7.2%
-------------------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--3.6%
National Oilwell Varco, Inc. 1 0 155,000 155,000 0 14,639,750 14,639,750
-------------------------------------------------------------------------------------------------------------------------------
Schlumberger Ltd. 2,320,610 283,100 2,603,710 180,705,901 22,044,997 202,750,898
-------------------------------------------------------------------------------------------------------------------------------
Smith International, Inc. 2,231,180 0 2,231,180 123,852,802 0 123,852,802
-------------------------------------------
304,558,703 36,684,747 341,243,450
-------------------------------------------------------------------------------------------------------------------------------
OIL & GAS--3.6%
Apache Corp. 0 230,000 230,000 0 18,572,500 18,572,500
-------------------------------------------------------------------------------------------------------------------------------
Kinder Morgan Management LLC 1 895,214 0 895,214 45,861,813 0 45,861,813
-------------------------------------------------------------------------------------------------------------------------------
Occidental Petroleum Corp. 1,918,670 382,100 2,300,770 105,469,290 21,004,037 126,473,327
-------------------------------------------------------------------------------------------------------------------------------
Range Resources Corp. 1,720,910 276,500 1,997,410 66,668,053 10,711,610 77,379,663
-------------------------------------------------------------------------------------------------------------------------------
XTO Energy, Inc. 1,292,710 0 1,292,710 74,990,107 0 74,990,107
-------------------------------------------
292,989,263 50,288,147 343,277,410
-------------------------------------------------------------------------------------------------------------------------------
FINANCIALS--11.4%
-------------------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--5.3%
Franklin Resources, Inc. 446,830 0 446,830 60,652,704 0 60,652,704
-------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The) 477,340 62,400 539,740 110,179,619 14,403,168 124,582,787
-------------------------------------------------------------------------------------------------------------------------------
Legg Mason, Inc. 955,400 149,300 1,104,700 96,524,062 15,083,779 111,607,841
-------------------------------------------------------------------------------------------------------------------------------
Nomura Securities Co. Ltd. 675,740 0 675,740 13,888,329 0 13,888,329
-------------------------------------------------------------------------------------------------------------------------------
Northern Trust Corp. 999,630 0 999,630 65,055,920 0 65,055,920
-------------------------------------------------------------------------------------------------------------------------------
TD Ameritrade Holding Corp. 1 0 675,000 675,000 13,857,750 13,857,750
-------------------------------------------------------------------------------------------------------------------------------
UBS AG 1,736,200 0 1,736,200 113,261,251 0 113,261,251
-------------------------------------------
459,561,885 43,344,697 502,906,582
-------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--0.1%
Wachovia Corp. 0 236,600 236,600 0 12,821,354 12,821,354
-------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--1.4%
Chicago Mercantile Exchange (The) 232,500 23,900 256,400 123,457,500 12,690,900 136,148,400
-------------------------------------------------------------------------------------------------------------------------------
INSURANCE--3.8%
American International Group, Inc. 1,684,400 746,000 2,430,400 121,849,496 53,965,640 175,815,136
-------------------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc.
(The) 610,050 0 610,050 62,938,859 0 62,938,859
-------------------------------------------------------------------------------------------------------------------------------
Prudential Financial, Inc. 1,239,560 0 1,239,560 126,459,911 0 126,459,911
-------------------------------------------
311,248,266 53,965,640 365,213,906
-------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--0.8%
CB Richard Ellis Group, Inc., Cl. A 1 1,774,840 0 1,774,840 66,059,545 0 66,059,545
-------------------------------------------------------------------------------------------------------------------------------
Jones Lang LaSalle, Inc. 0 50,700 50,700 0 5,916,690 5,916,690
-------------------------------------------
66,059,545 5,916,690 71,976,235
-------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE--13.8%
-------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY--2.8%
BioMarin Pharmaceutical, Inc. 1 0 244,400 244,400 0 4,360,096 4,360,096
-------------------------------------------------------------------------------------------------------------------------------
Celgene Corp. 1 1,095,830 256,800 1,352,630 67,108,629 15,726,432 82,835,061
-------------------------------------------------------------------------------------------------------------------------------
Genentech, Inc. 1 1,040,630 177,500 1,218,130 83,011,055 14,159,175 97,170,230
-------------------------------------------------------------------------------------------------------------------------------
Gilead Sciences, Inc. 1 776,850 227,700 1,004,550 64,299,875 18,846,729 83,146,604
-------------------------------------------
214,419,559 53,092,432 267,511,991
-------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--1.6%
Bard (C.R.), Inc. 0 165,000 165,000 0 13,927,650 13,927,650
-------------------------------------------------------------------------------------------------------------------------------
St. Jude Medical, Inc. 1 1,549,240 0 1,549,240 66,137,056 0 66,137,056
-------------------------------------------------------------------------------------------------------------------------------
Varian Medical Systems, Inc. 1 1,214,770 667,100 1,881,870 48,955,231 26,884,130 75,839,361
-------------------------------------------
115,092,287 40,811,780 155,904,067
-------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--2.9%
Cardinal Health, Inc. 0 164,400 164,400 0 11,912,424 11,912,424
-------------------------------------------------------------------------------------------------------------------------------
Medco Health Solutions, Inc. 1 1,119,120 145,000 1,264,120 87,022,771 11,275,200 98,297,971
-------------------------------------------------------------------------------------------------------------------------------
Schein (Henry), Inc. 1 844,080 0 844,080 45,183,602 0 45,183,602
-------------------------------------------------------------------------------------------------------------------------------
UnitedHealth Group, Inc. 0 294,500 294,500 0 16,129,765 16,129,765
-------------------------------------------------------------------------------------------------------------------------------
WellPoint, Inc. 1 1,334,460 0 1,334,460 108,638,389 0 108,638,389
-------------------------------------------
240,844,762 39,317,389 280,162,151
-------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE TECHNOLOGY--0.1%
Allscripts Healthcare Solutions, Inc. 1 0 276,300 276,300 0 6,785,928 6,785,928
-------------------------------------------------------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES--2.4%
Covance, Inc. 1 1,106,140 0 1,106,140 73,613,617 0 73,613,617
-------------------------------------------------------------------------------------------------------------------------------
Thermo Fisher Scientific, Inc. 1 2,413,780 326,000 2,739,780 131,792,388 17,799,600 149,591,988
-------------------------------------------
205,406,005 17,799,600 223,205,605
-------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--4.0%
Allergan, Inc. 429,080 0 429,080 53,433,332 0 53,433,332
-------------------------------------------------------------------------------------------------------------------------------
Medicis Pharmaceutical Corp., Cl. A 0 207,000 207,000 0 6,831,000 6,831,000
-------------------------------------------------------------------------------------------------------------------------------
Merck & Co., Inc. 0 265,000 265,000 0 13,899,250 13,899,250
-------------------------------------------------------------------------------------------------------------------------------
Novartis AG 1,386,330 0 1,386,330 77,930,128 0 77,930,128
-------------------------------------------------------------------------------------------------------------------------------
Roche Holding AG 660,696 0 660,696 121,264,256 0 121,264,256
-------------------------------------------------------------------------------------------------------------------------------
Schering Plough Corp. 334,500 334,500 10,951,530 10,951,530
-------------------------------------------------------------------------------------------------------------------------------
Shionogi & Co. Ltd. 1,878,000 0 1,878,000 32,251,602 0 32,251,602
-------------------------------------------------------------------------------------------------------------------------------
Shire Pharmaceuticals Group plc 1,842,800 0 1,842,800 43,156,630 0 43,156,630
-------------------------------------------------------------------------------------------------------------------------------
Shire Pharmaceuticals Group plc, ADR 0 352,900 352,900 0 24,614,775 24,614,775
-------------------------------------------
328,035,948 56,296,555 384,332,503
-------------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--9.2%
-------------------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--5.8%
Boeing Co. 1,423,210 172,800 1,596,010 143,160,694 17,381,952 160,542,646
-------------------------------------------------------------------------------------------------------------------------------
Empresa Brasileira de Aeronautica SA, ADR 1,200,900 0 1,200,900 58,219,632 0 58,219,632
-------------------------------------------------------------------------------------------------------------------------------
General Dynamics Corp. 986,820 143,100 1,129,920 79,182,437 11,482,344 90,664,781
-------------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp. 629,770 0 629,770 61,780,437 0 61,780,437
-------------------------------------------------------------------------------------------------------------------------------
Precision Castparts Corp. 0 135,700 135,700 0 16,224,292 16,224,292
-------------------------------------------------------------------------------------------------------------------------------
Rockwell Collins, Inc. 521,710 0 521,710 36,869,246 0 36,869,246
-------------------------------------------------------------------------------------------------------------------------------
United Technologies Corp. 1,891,880 0 1,891,880 133,472,134 0 133,472,134
-------------------------------------------
512,684,580 45,088,588 557,773,168
-------------------------------------------------------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--0.1%
Expeditors International of Washington,
Inc. 0 230,700 230,700 0 10,072,362 10,072,362
-------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.8%
Corporate Executive Board Co. (The) 1,080,862 0 1,080,862 71,888,132 0 71,888,132
-------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--0.2%
Quanta Services, Inc. 1 0 450,000 450,000 0 13,504,500 13,504,500
-------------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.7%
ABB Ltd. 3,234,565 0 3,234,565 69,191,381 0 69,191,381
-------------------------------------------------------------------------------------------------------------------------------
MACHINERY--0.7%
Bucyrus International, Inc., Cl. A 0 89,700 89,700 0 6,364,215 6,364,215
-------------------------------------------------------------------------------------------------------------------------------
Joy Global, Inc. 845,180 0 845,180 47,862,543 0 47,862,543
-------------------------------------------------------------------------------------------------------------------------------
Oshkosh Truck Corp. 0 198,800 198,800 0 12,263,972 12,263,972
-------------------------------------------
47,862,543 18,628,187 66,490,730
-------------------------------------------------------------------------------------------------------------------------------
TRADING COMPANIES & DISTRIBUTORS--0.9%
Fastenal Co. 1,803,090 217,300 2,020,390 78,145,921 9,417,782 87,563,703
-------------------------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--33.5%
-------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--9.0%
Cisco Systems, Inc. 1 9,686,150 1,644,400 11,330,550 260,751,158 44,267,248 305,018,406
-------------------------------------------------------------------------------------------------------------------------------
Corning, Inc. 1 5,865,490 1,525,000 7,390,490 146,637,250 38,125,000 184,762,250
-------------------------------------------------------------------------------------------------------------------------------
F5 Networks, Inc. 1 652,570 121,000 773,570 53,027,838 9,832,460 62,860,298
-------------------------------------------------------------------------------------------------------------------------------
QUALCOMM, Inc. 2,070,580 287,700 2,358,280 88,931,411 12,356,715 101,288,126
-------------------------------------------------------------------------------------------------------------------------------
Research in Motion Ltd. 1 656,400 103,900 760,300 109,014,912 17,255,712 126,270,624
-------------------------------------------------------------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson,
Sponsored ADR 2,208,100 0 2,208,100 83,863,638 0 83,863,638
-------------------------------------------
742,226,207 121,837,135 864,063,342
-------------------------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--4.9%
Apple, Inc. 1, 4 1,377,300 423,500 1,800,800 167,424,588 51,480,660 218,905,248
-------------------------------------------------------------------------------------------------------------------------------
EMC Corp. 1 6,921,880 2,625,000 9,546,880 116,910,553 44,336,250 161,246,803
-------------------------------------------------------------------------------------------------------------------------------
Network Appliance, Inc. 1 2,119,860 428,100 2,547,960 68,238,293 13,780,539 82,018,832
-------------------------------------------------------------------------------------------------------------------------------
Sun Microsystems, Inc. 1 0 2,257,100 2,257,100 0 11,511,210 11,511,210
-------------------------------------------
352,573,434 121,108,659 473,682,093
-------------------------------------------------------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--5.8%
Akamai Technologies, Inc. 1 0 145,700 145,700 0 6,441,397 6,441,397
-------------------------------------------------------------------------------------------------------------------------------
eBay, Inc. 1 4,140,240 599,200 4,739,440 134,806,214 19,509,952 154,316,166
-------------------------------------------------------------------------------------------------------------------------------
Google, Inc., Cl. A 1 545,070 85,000 630,070 271,308,593 42,308,750 313,617,343
-------------------------------------------------------------------------------------------------------------------------------
Yahoo!, Inc. 1 2,448,770 458,200 2,906,970 70,279,699 13,150,340 83,430,039
-------------------------------------------
476,394,506 81,410,439 557,804,945
-------------------------------------------------------------------------------------------------------------------------------
IT SERVICES--3.5%
Affiliated Computer Services, Inc., Cl.
A 1 2,156,050 0 2,156,050 125,805,518 0 125,805,518
-------------------------------------------------------------------------------------------------------------------------------
Alliance Data Systems Corp. 1 509,300 0 509,300 39,684,656 0 39,684,656
-------------------------------------------------------------------------------------------------------------------------------
Automatic Data Processing, Inc. 1,939,180 0 1,939,180 96,377,246 0 96,377,246
-------------------------------------------------------------------------------------------------------------------------------
Cognizant Technology Solutions Corp. 1 776,340 0 776,340 60,989,270 0 60,989,270
-------------------------------------------------------------------------------------------------------------------------------
VeriFone Holdings, Inc. 1 0 285,200 285,200 0 9,876,476 9,876,476
-------------------------------------------
322,856,690 9,876,476 332,733,166
-------------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--4.0%
Advanced Micro Devices, Inc. 1 2,695,310 0 2,695,310 38,462,074 0 38,462,074
-------------------------------------------------------------------------------------------------------------------------------
ASML Holding NV 1 1,888,300 563,700 2,452,000 48,661,491 14,526,549 63,188,040
-------------------------------------------------------------------------------------------------------------------------------
Broadcom Corp., Cl. A 1 3,139,280 573,700 3,712,980 95,936,397 17,532,272 113,468,669
-------------------------------------------------------------------------------------------------------------------------------
Microchip Technology, Inc. 1,728,920 0 1,728,920 70,159,574 0 70,159,574
-------------------------------------------------------------------------------------------------------------------------------
SiRF Technology Holdings, Inc. 1 1,180,210 230,000 1,410,210 25,610,557 4,991,000 30,601,557
-------------------------------------------------------------------------------------------------------------------------------
Texas Instruments, Inc. 1,372,730 448,300 1,821,030 48,539,733 15,851,888 64,391,621
-------------------------------------------------------------------------------------------------------------------------------
Varian Semiconductor Equipment Associates,
Inc. 1 0 95,700 95,700 0 4,033,755 4,033,755
-------------------------------------------
327,369,826 56,935,464 384,305,290
-------------------------------------------------------------------------------------------------------------------------------
SOFTWARE--6.3%
Activision, Inc. 1 0 639,500 639,500 0 12,655,705 12,655,705
-------------------------------------------------------------------------------------------------------------------------------
Adobe Systems, Inc. 1 2,596,188 473,400 3,069,588 114,439,967 20,867,472 135,307,439
-------------------------------------------------------------------------------------------------------------------------------
Amdocs Ltd. 1 2,428,890 244,400 2,673,290 94,410,954 9,499,828 103,910,782
-------------------------------------------------------------------------------------------------------------------------------
Autodesk, Inc. 1 2,104,830 457,800 2,562,630 95,664,524 20,807,010 116,471,534
-------------------------------------------------------------------------------------------------------------------------------
Electronic Arts, Inc. 1 678,540 455,100 1,133,640 33,160,250 22,240,737 55,400,987
-------------------------------------------------------------------------------------------------------------------------------
Microsoft Corp. 2,737,811 0 2,737,811 83,968,663 0 83,968,663
-------------------------------------------------------------------------------------------------------------------------------
Red Hat, Inc. 1 2,365,770 515,000 2,880,770 58,103,311 12,648,400 70,751,711
-------------------------------------------------------------------------------------------------------------------------------
Salesforce.com, Inc. 1 506,810 0 506,810 23,946,773 0 23,946,773
-------------------------------------------
503,694,442 98,719,152 602,413,594
-------------------------------------------------------------------------------------------------------------------------------
MATERIALS--3.4%
-------------------------------------------------------------------------------------------------------------------------------
CHEMICALS--3.3%
Monsanto Co. 2,775,220 508,700 3,283,920 170,953,552 31,335,920 202,289,472
-------------------------------------------------------------------------------------------------------------------------------
Praxair, Inc. 1,646,900 0 1,646,900 112,137,421 0 112,137,421
-------------------------------------------
283,090,973 31,335,920 314,426,893
-------------------------------------------------------------------------------------------------------------------------------
METALS & MINING--0.1%
Allegheny Technologies, Inc. 0 105,000 105,000 0 12,136,950 12,136,950
-------------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--3.0%
-------------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION
SERVICES--0.1%
NeuStar, Inc., Cl. A 1 0 378,400 378,400 0 10,996,304 10,996,304
-------------------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--2.9%
America Movil SA de CV, Series L 1,242,600 0 1,242,600 75,239,430 0 75,239,430
-------------------------------------------------------------------------------------------------------------------------------
American Tower Corp. 1 2,187,900 0 2,187,900 94,473,522 0 94,473,522
-------------------------------------------------------------------------------------------------------------------------------
Crown Castle International Corp. 1 1,438,580 0 1,438,580 52,968,516 0 52,968,516
-------------------------------------------------------------------------------------------------------------------------------
NII Holdings, Inc. 1 723,000 0 723,000 58,902,807 0 58,902,807
-------------------------------------------
281,584,275 0 281,584,275
-------------------------------------------------------------------------------------------------------------------------------
Total Common Stocks (Cost $6,104,353,746,
Cost $1,083,142,509, Combined
Cost $7,187,496,255) 8,173,586,220 1,325,122,945 9,498,709,165
EXPIRATION STRIKE
DATES PRICE CONTRACTS CONTRACTS CONTRACTS
--------------------------------------------------------------------------------------------------------------------------------
OPTIONS PURCHASED--0.0%
Apple, Inc. Put 1/28/08 $ 105 0 76 76 0 41,040 41,040
--------------------------------------------------------------------------------------------------------------------------------
Apple, Inc. Put 1/12/08 95 0 2,042 2,042 0 551,340 551,340
---------------------
Total Options Purchased (Cost $0,
Cost $1,908,909, Combined Cost $1,908,909) 0 592,380 592,380
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT AMOUNT AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS IN AFFILIATED COMPANIES--0.6%
Oppenheimer Institutional Money Market
Fund, Cl.E, 5.29% 2,3 (Cost $61,553,901,
Cost $557,986, Combined Cost $62,111,887) $ 61,553,901 $ 557,986 $ 62,111,887 61,553,901 557,986 62,111,887
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST
$6,165,907,647,COST $1,085,609,404,
COMBINED COST 7,251,517,051) 99.8% 100.0% 100.0% 8,235,140,121 1,326,273,311 9,561,413,432
------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF
LIABILITIES/LIABILITIES IN EXCESS OF
OTHER ASSETS 0.2 0.0 0.0 16,573,041 (235,708) 16,337,333
------------------------------------------------------------------------------------------
NET ASSETS 100.0% 100.0% 100.0% $8,251,713,162 $1,326,037,603 $9,577,750,765
==========================================================================================
Footnotes to Statement of Investments
1. Non income producing security.
2. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended May 31, 2007 by virtue of the Fund, owning at least
5% of the voting securities of the issuer or as a result of the Fund and the
issuer having the same investment advisor. Transactions during the period in
which the issuer was an affiliate are as follows:
OPPENHEIMER CAPITAL APPRECIATION FUND
SHARES GROSS GROSS SHARES
AUGUST 31, 2006 ADDITIONS REDUCTIONS MAY 31, 2007
----------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E -- 845,894,240 784,340,339 61,553,901
DIVIDEND
VALUE INCOME
----------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E $61,553,901 $2,061,830
OPPENHEIMER GROWTH FUND
SHARES GROSS GROSS SHARES
AUGUST 31, 2006 ADDITIONS REDUCTIONS MAY 31, 2007
----------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E -- 111,531,739 110,973,753 557,986
DIVIDEND
VALUE INCOME
----------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E $557,986 $72,892
3. Rate shown is the 7-day yield as of May 31, 2007.
4. A sufficient amount of liquid assets has been designated to cover outstanding
written call options, as follows:
OPPENHEIMER GROWTH FUND
CONTRACTS EXPIRATION EXERCISE PREMIUM
SUBJECT TO CALL DATE PRICE RECEIVED VALUE
-------------------------------------------------------------------------------
Apple, Inc. 1,059 1/21/08 $ 130 $ 348,928 $ 1,186,080
PROXY CARD
OPPENHEIMER GROWTH FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 2, 2007
The undersigned, revoking prior proxies, hereby appoints Brian Wixted, Brian
Szilagyi and Kathleen Ives, and each of them, as attorneys-in-fact and proxies
of the undersigned, with full power of substitution, to vote shares held in the
name of the undersigned on the record date at the Special Meeting of
Shareholders of Oppenheimer Growth Fund (the "Fund") to be held at 6803 South
Tucson Way, Centennial, Colorado, 80112, on November 2, 2007, at 1:00 p.m.
Mountain time, or at any adjournment thereof, upon the proposal described in the
Notice of Meeting and accompanying Prospectus and Proxy Statement, which have
been received by the undersigned.
This proxy is solicited on behalf of the Fund's Board of Trustees, and the
proposal (set forth on the reverse side of this proxy card) has been proposed by
the Board of Trustees.
When properly executed, this proxy will be voted as indicated on the reverse
side or "FOR" the proposal if no choice is indicated. The proxy will be voted in
accordance with the proxy holders' best judgment as to any other matters that
may arise at the Meeting.
Note: Please sign this proxy exactly as your name or names appear hereon.
Each joint owner should sign. Trustees and other fiduciaries should indicate the
capacity in which they sign. If a corporation, partnership or other entity, this
signature should be that of a duly authorized individual who should state his or
her title.
----------------------------------------------
Signature Date
----------------------------------------------------------
Signature (if held jointly) Date
------------------------------------------
Title if a corporation, partnership or other entity
FOLD HERE
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. THE MATTER WE ARE
SUBMITTING FOR YOUR CONSIDERATION IS SIGNIFICANT TO THE FUND AND TO YOU AS A
FUND SHAREHOLDER. PLEASE TAKE THE TIME TO READ THE PROXY STATEMENT AND CAST YOUR
VOTE USING ANY OF THE METHODS DESCRIBED BELOW.
Three simple methods to vote your proxy:
1. Internet: Log on to www.myproxyonline.com. Make sure to have this proxy
card Control Number: available when you plan to vote your shares. You will
need the control number and check digit found in the box at the right at
the time you execute your vote.
2. Touchtone Simply dial toll-free 1-866-458-9856 and follow the automated
Check Digit: Phone: instructions. Please have this proxy card available at
the time of the call.
3. Mail: Simply sign, date, and complete the reverse side of this proxy card
and return it in the postage paid envelope provided.
TAGID: "TAG ID" CUSIP: "CUSIP"
PROXY CARD
OPPENHEIMER GROWTH FUND
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 2, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE FUND'S BOARD OF TRUSTEES, AND THE
PROPOSAL BELOW HAS BEEN PROPOSED BY THE BOARD OF TRUSTEES.
TO VOTE, MARK ONE BOX IN BLUE OR BLACK INK. Example: [ ]
PROPOSAL:
1. To approve an Agreement and Plan of Reorganization between Oppenheimer
Growth Fund ("Growth Fund") and Oppenheimer Capital Appreciation Fund
("Capital Appreciation Fund") and the transactions contemplated thereby,
including: (a) the transfer of substantially all the assets of Growth Fund
to Capital Appreciation in exchange for Class A, Class B, Class C and Class
N shares of Capital Appreciation, (b) the distribution of such shares of
Capital Appreciation to the Class A, Class B, Class C and Class N
shareholders of Growth Fund in complete liquidation of Growth Fund and (c)
the cancellation of the outstanding shares of Growth Fund.
FOR AGAINST ABSTAIN
OPPENHEIMER CAPITAL APPRECIATION FUND
FORM N-14
PART C
OTHER INFORMATION
Item 15. - Indemnification
Reference is made to the provisions of Article Seventh of Registrant's Amended
and Restated Declaration of Trust filed as Exhibit 16(1) to this Registration
Statement, and incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "1933 Act") may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a trustee, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person, Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
Item 16. - Exhibits
(1) Amended and Restated Declaration of Trust dated November 22, 2002:
Previously filed with Registrant's Post-Effective Amendment No. 51, (10/23/06),
and incorporated herein by reference.
(2) By-Laws as amended through 6/16/05: Previously filed with Registrant's
Post-Effective Amendment No. 50, 12/23/05, and incorporated herein by reference.
(3) Not Applicable.
(4) Not Applicable.
(5) (i) Specimen Class A Share Certificate: Previously filed with Registrant's
Post-Effective Amendment No. 45, 10/28/02, and incorporated herein by reference.
(ii) Specimen Class B Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 45, 10/28/02, and incorporated herein
by reference.
(iii) Specimen Class C Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 45, 10/28/02, and incorporated herein
by reference.
(iv) Specimen Class N Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 45, 10/28/02, and incorporated herein
by reference.
(v) Specimen Class Y Share Certificate: Previously filed with
Registrant's Post-Effective Amendment No. 45, 10/28/02, and incorporated herein
by reference.
(6) Amended and Restated Investment Advisory Agreement dated 1/1/06: Previously
filed with Registrant's Post-Effective Amendment No. 50, 12/23/05, and
incorporated herein by reference.
(7) (i) General Distributor's Agreement dated 12/10/92: Previously filed with
Registrant's Post-Effective Amendment No. 27, 3/2/94, and incorporated herein by
reference.
(ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.: Previously
filed with Post-Effective Amendment No. 34 to the Registration Statement of
Oppenheimer Main Street Funds, Inc. (Reg. No.33-17850), (10/23/06), and
incorporated herein by reference.
(iii) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.: Previously
filed with Post-Effective Amendment No. 34 to the Registration Statement of
Oppenheimer Main Street Funds, Inc. (Reg. No.33-17850), (10/23/06), and
incorporated herein by reference.
(iv) Form of Agency Agreement of OppenheimerFunds Distributor, Inc.: Previously
filed with Post-Effective Amendment No. 34 to the Registration Statement of
Oppenheimer Main Street Funds, Inc. (Reg. No.33-17850), (10/23/06), and
incorporated herein by reference.
(v) Form of Trust Company Fund/SERV Purchase Agreement of
OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective
Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund
(Reg. No. 2-62076), (10/26/01), and incorporated herein by reference.
(vi) Form of Trust Company Agency Agreement of OppenheimerFunds
Distributor, Inc.: Previously filed with Post-Effective Amendment No. 34 to the
Registration Statement of Oppenheimer Main Street Funds, Inc. (Reg.
No.33-17850), (10/23/06), and incorporated herein by reference.
(8) (i) Amended and Restated Retirement Plan for Non-Interested Trustees or
Directors dated 8/9/01: Previously filed with Post-Effective Amendment No. 34 to
the Registration Statement of Oppenheimer Gold & Special Minerals Fund (Reg. No.
2-82590), (10/25/01), and incorporated herein by reference.
(ii) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Previously filed with Post-Effective Amendment No. 26 to the
Registration Statement of Oppenheimer Gold & Special Minerals Fund (Reg. No.
2-82590), (10/28/98), and incorporated by reference.
(9) (i) Global Custody Agreement dated August 16, 2002: Previously filed with
the Registrant's Post-Effective Amendment No. 51, (10/23/06), and incorporated
herein by reference.
(ii) Amendment dated October 2, 2003 to the Global Custody Agreement
dated August 16, 2002: Previously filed with Pre-Effective Amendment No. 1 to
the Registration Statement of Oppenheimer Principal Protected Trust II (Reg.
333-108093), (11/6/03), and incorporated herein by reference.
(10) (i) Amended and Restated Service Plan and Agreement for Class A shares
dated October 26, 2005: Previously filed with Registrant's Post-Effective
Amendment No. 51, (10/23/06), and incorporated herein by reference.
(ii) Amended and Restated Distribution and Service Plan and Agreement
for Class B shares dated October 26, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 51, (10/23/06), and incorporated herein by
reference.
(iii) Amended and Restated Distribution and Service Plan and Agreement
for Class C shares dated October 26, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 51, (10/23/06), and incorporated herein by
reference.
(iv) Amended and Restated Distribution and Service Plan and Agreement
for Class N shares dated October 26, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 51, (10/23/06), and incorporated herein by
reference.
(v) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated
through 10/24/06: Previously filed with Post-Effective Amendment No. 62 to the
Registration Statement of Oppenheimer Capital Income Fund (Reg. No. 2-33043),
11/21/06, and incorporated herein by reference.
(11) Opinion and Consent of Counsel: To be filed by Amendment.
(12) Tax opinion: To be filed by Amendment.
(13) Not Applicable.
(14) (i) Consent of KPMG LLP for Oppenheimer Capital Appreciation Fund. Filed
herewith.
(ii) Consent of KPMG LLP for Oppenheimer Growth Fund: Filed herewith.
(15) Not Applicable.
(16) (i) Power of Attorney for all Trustees/Directors dated October 11, 2006:
Previously filed with the Registrant's Post-Effective Amendment No. 51,
(10/23/06), and incorporated herein by reference.
(ii) Power of Attorney for Brian W. Wixted dated October 11, 2006:
Previously filed with the Registrant's Post-Effective Amendment No. 51,
10/23/06, and incorporated herein by reference.
(iii) Power of Attorney for David Downes dated August 8, 2007:
Previously filed with the Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-14 of Oppenheimer Capital Appreciation Fund (Reg. No.
333-144564), 08/09/07, and incorporated herein by reference.
(17) Not Applicable.
Item 17. - Undertakings
(1) The undersigned registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by the applicable
registration form for the reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the registration
statement and will not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement or the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
SIGNATURES
As required by the Securities Act of 1933, as amended, this registration
statement has been signed on behalf of the registrant, in the City of New York
and State of New York, on the 17th day of August, 2007.
Oppenheimer Capital Appreciation Fund
By: /s/ John V. Murphy*
---------------------------------------------
John V. Murphy, President,
Principal Executive Officer & Trustee
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
/s/ Brian F. Wruble* Chairman of the
-------------------------------
Brian F. Wruble Board of Trustees August 17, 2007
/s/ John V. Murphy* President, Principal
-------------------------------
John V. Murphy Executive Officer and Trustee August 17, 2007
/s/ Brian W. Wixted* Treasurer, Principal August 17, 2007
-------------------------------
Brian W. Wixted Financial & Accounting Officer
/s/ David K. Downes* Trustee August 17, 2007
-------------------------------
David K. Downes
/s/ Matthew P. Fink* Trustee August 17, 2007
-------------------------------
Matthew P.Fink
/s/ Robert G. Galli* Trustee August 17, 2007
-------------------------------
Robert G. Galli
/s/ Phillip A. Griffiths* Trustee August 17, 2007
-------------------------------
Phillip A. Griffiths
/s/ Mary F. Miller* Trustee August 17, 2007
-------------------------------
Mary F. Miller
/s/ Joel W. Motley* Trustee August 17, 2007
-------------------------------
Joel W. Motley
/s/ Russell S. Reynolds, Jr.* Trustee August 17, 2007
-----------------------------
Russell S. Reynolds, Jr.
/s/ Joseph M. Wikler* Trustee August 17, 2007
-------------------------------
Joseph M. Wikler
/s/ Peter I. Wold* Trustee August 17, 2007
-------------------------------
Peter I. Wold
*By: /s/ Mitchell J. Lindauer
--------------------------------------
Mitchell J. Lindauer, Attorney-in-Fact
OPPENHEIMER CAPITAL APPRECIATION FUND
Registration No. 333-144755
EXHIBIT INDEX
Exhibit No. Description
(14) (i) Consent of KPMG LLP for Oppenheimer Capital Appreciation Fund
(ii) Consent of KPMG LLP for Oppenheimer Growth Fund