<PAGE>
As filed with the Securities and Exchange Commission on September 29, 1995
Registration No. 2-65223
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ______ [ ]
POST-EFFECTIVE AMENDMENT NO. 34 [X]
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 36
QUEST FOR VALUE FUND, INC.
(Exact Name of Registrant as Specified in Charter)
ONE WORLD FINANCIAL CENTER, NEW YORK, NY 10281
(Address of Principal Executive Offices)
(212) 667-7495
(Registrant's Telephone Number)
Thomas E. Duggan, Esq.
One World Financial Center
New York, NY 10281
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ ] On March 1, 1994 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[X] pursuant to paragraph (a) of Rule 485 or 486
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the Investment
Company Act of 1940 and has filed its report pursuant to that Rule for the
fiscal year ended October 31, 1994 on December 14, 1994.
<PAGE>
CROSS REFERENCE SHEET
Form N-1A
Item
Part A Caption Prospectus
- ------ ------- ----------
1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Financial Highlights
Information
4. General Description of Investment Objectives of the Funds;
Registrant Investment Restrictions;
andTechniques; Additional
Information
5. Management of the Fund Investment Management Agreement;
Additional Information
6. Capital Stock and Other Dividends and Distributions; Tax
Securities Status; Additional Information
7. Purchase of Securities How to Buy Shares; Additional
Information
8. Redemption or Repurchase How to Redeem Shares; Exchanging
Shares; Additional Information
9. Legal Proceedings N/A
Part B Caption Statement of Additional Information
- ------ ------- -----------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and N/A
History
13. Investment Objectives and Investment Policies and Special
Policies Investment Methods; Risk of Stock
Index Futures and Related Options;
Investment Restrictions
14. Management of the Fund Directors and Officers
<PAGE>
15. Control Persons and Directors and Officers
Principal Holders of
Securities
16. Investment Advisory and Investment Management Services;
Other Services Distribution and service Plan;
Additional Information
17. Brokerage Allocation Investment Management Services
18. Capital Stock and Other Additional Information
Securities
19. Purchase, Redemption and Determination of Net Asset Value
Pricing of Securities
20. Tax Status N/A
21. Underwriters Additional Information
22. Calculations of Portfolio Yield and Total Return
Performance Data Information
23. Financial Statements Financial Statements
<PAGE>
THE FUNDS COVERED BY THIS PROSPECTUS ARE:
Equity: Quest for Value Fund, Inc.
Small Capitalization Fund
Growth and Income Fund
Flexible: Opportunity Fund
Global Equity: Quest for Value Global Equity Fund, Inc.
This Prospectus sets forth basic information about the Funds,
including applicable sales and distribution fees, that you should
understand before investing. You should read it carefully and
retain it for future reference. Statements of Additional
Information dated November 23,, 1995 for each of the Quest for
Value Global Equity Fund, Inc., Quest for Value Family of Funds
and Quest for Value Fund, Inc. (the "SAIs"), have been filed with
the Securities and Exchange Commission and are incorporated by
reference in this Prospectus. You can obtain a copy of the SAIs
without charge by contacting Shareholder Services, Inc., at the
address or telephone number listed on the back cover. SHARES IN
THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK AND THE SHARES OF THE FUNDS ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY AND ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
INVESTED.
The Funds offer three separate classes of shares: Class A, B and
C shares. Shares of each Class represent an identical interest in
the investment portfolio of a Fund, and generally have the same
rights, but are offered under different sales charge and
distribution fee arrangements. The offering of Class A, B and C
shares presents the investor with the opportunity to choose the
sales charge and distribution fee arrangement which is most
beneficial, depending on the amount of purchase, the length of
time the investor expects to hold the shares, and other
circumstances.
Shares of each Class are offered at the net asset value next
determined after receipt of your purchase order plus an initial
("front-end") sales charge for purchases of Class A shares, or a
deferred sales charge for purchases of Class B or Class C shares.
(See "How to Buy Shares," p. _) Class B and C shares bear a
higher ongoing distribution fee than Class A shares, and
investors should understand that over time the accumulated
distribution charges on Class B and C shares may exceed the
amount of the initial sales charge and ongoing distribution fee
on Class A shares.
NOVEMBER , 1995
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
QUEST FOR VALUE is a registered service mark of Oppenheimer
Capital
1
<PAGE>
The following table sets forth the fees and expenses estimated to have been
incurred if the new Investment Advisory Agreement with Oppenheimer Management
Corporation, the new Distribution Plans with Oppenheimer Funds Distributor and
other agreements entered into pursuant to the recent acquisition by OMC of
certain assets of Quest for Value Advisors had been in effect throughout the
periods shown:
SUMMARY OF FUND EXPENSES
Period: Fiscal Year Ended October 31, 1994 with respect to Quest for Value Fund,
Inc., Small Capitalization, Opportunity and Growth and Income Funds and Fiscal
Year Ended November 30, 1994 with respect to the Global Equity Fund.
<TABLE>
<CAPTION>
QUEST FOR GROWTH AND SMALL
VALUE FUND INCOME OPPORTUNITY CAPITALIZATION GLOBAL EQUITY
----------------- ----------------- ----------------- ----------------- -----------------------------
CLASS OF SHARES: A B C A B C A B C A B C A B C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION
EXPENSES
Maximum Initial
Sales Load
Imposed on
Purchase (as a
% of offering
price). . . . 5.75% none none 5.75% none none 5.75% none none 5.75% none none 5.75% none none
Maximum
Deferred
Sales
Load(1) . . . none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00%
Maximum Sales
Load
Imposed On
Reinvested
Dividends . . none none none none none none none none none none none none none none none
Redemption
Fee . . . . . none none none none none none none none none none none none none none none
Exchange Fee . none none none none none none none none none none none none none none none
ANNUAL FUND
OPERATING
EXPENSES
(AS A % OF
AVERAGE
NET ASSETS)
Management Fee
(2) . . . . . 1.00% 1.00% 1.00% .85% .85% .85% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% .75% .75% .75%
12b-1 Fee
(including
service fees
of .25%). . . .50% 1.00% 1.00% .40% 1.00% 1.00% .50% 1.00% 1.00% .50% 1.00% 1.00% .50% 1.00% 1.00%
Other
Expenses. . . .21% .24% .28% 1.07% 1.08% 1.25% .28% .34% .35% .38% .48% .59% .68% (3) .76% (3) .91% (3)
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL FUND
OPERATING
EXPENSES. . . 1.71% 2.24% 2.28% 2.32% 2.93% 3.10% 1.78% 2.34% 2.35% 1.88% 2.48% 2.59% 1.93% 2.51% 2.66%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
EXAMPLE 1: You would pay the following expenses over the indicated periods in each of the Funds on a $1,000 investment assuming
(a) payment of the maximum sales charge, (b) a 5% annual return, and (c) retention of shares at the end of the time period. 10-year
figures for Class B shares assume conversion to Class A shares after six years.
1 Year . . . . $ 74 $ 23 $ 23 $ 80 $ 30 $ 31 $ 75 $ 24 $ 24 $ 76 $ 25 $ 26 $ 76 $ 25 $ 27
3 Years. . . . 108 70 71 126 91 96 110 73 73 113 77 81 115 78 83
5 Years. . . . 145 120 122 174 154 163 148 125 126 153 132 138 156 134 141
10 Years . . . 248 232 262 308 298 341 255 241 269 265 253 292 270 257 299
EXAMPLE 2: You would pay the following expenses over the indicated periods in each of the Funds on a $1,000 investment assuming
(a) payment of the maximum sales charge, (b) a 5% annual return, and (c) redemption at the end of the time period. 10-year figures
for Class B shares assume conversion to Class A shares after six years.
1 Year . . . . $ 74 $ 73 $ 33 $ 80 $ 80 $ 41 $ 75 $ 74 $ 34 $ 76 $ 75 $ 36 $ 76 $ 75 $ 37
3 Years. . . . 108 100 71 126 121 96 110 103 73 113 107 81 115 108 83
5 Years. . . . 145 140 122 174 174 163 148 145 126 153 152 138 156 154 141
10 Years . . . 248 232 262 308 298 341 255 241 269 265 253 292 270 257 299
<FN>
THE EXAMPLES SHOULD NOT BE CONSIDERED INDICATIONS OF PAST OR FUTURE EXPENSES OR
PERFORMANCE, AND ACTUAL EXPENSES OR PERFORMANCE MAY VARY FROM THOSE SHOWN.
Investors should be aware that over time, Class B and C shareholders may pay
more than the equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers Rules of Fair Practice.
(1) Purchases of Class A shares of $1 million or more will not be subject to
front-end sales charges but a contingent deferred sales charge of 1% will
be imposed if the shares are redeemed within the first 18 months after the
end of the calendar month of their purchase.
(2) The management fee (with respect to the Global Equity Fund, the management
fee combined with the administration fee) is higher than that paid by most
other investment companies.
(3) Includes administration fee of .25% of average net assets.
</TABLE>
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information for the fiscal years set forth below for the Small
Capitalization, Opportunity, Growth and Income and Global Equity Funds has been
audited by Price Waterhouse LLP, independent accountants, whose unqualified
reports thereon appear in the Statements of Additional Information ("SAI(s)").
The financial information for the fiscal years set forth below for Quest for
Value Fund has been audited by KPMG Peat Marwick LLP, independent auditors,
whose unqualified report thereon appears in the SAI. The financial information
for the six month period ended April 30, 1995 for the Quest for Value Fund,
Opportunity, Growth and Income and Small Capitalization Funds and for the six
month period ended May 31, 1995 for the Global Equity Fund is unaudited. All
the following information should be read in conjunction with the financial
statements and related notes thereto appearing in the SAIs. Further information
regarding the performance of each Fund is available in each Fund's Annual
Report. Annual Reports may be obtained without charge by calling the Fund at
(800) 232-FUND.
<TABLE>
<CAPTION>
NAV Net Net realized Total from Dividends Distribution Total
Start of Investment and unrealized Investment from Net from net Dividends
period Income gain (loss) Operations Investment realized and
(loss) on investments Income gain on Distributions
investments
<S> <C> <C> <C> <C> <C> <C> <C>
QUEST FOR VALUE - CLASS A
Six months ended 4/30/95 (11) $12.59 $.06 $1.00 $1.06 $(.08) $(.83) $(.91)
Year ended 10/31/94. . . . . . 12.51 .09 .50 .59 (.04) (.47) (.51)
...10/31/93. . . . . . . . . . 11.71 .05 1.34 1.39 (.05) (.54) (.59)
...10/31/92. . . . . . . . . . 10.61 .04 1.77 1.81 (.07) (.64) (.71)
...10/31/91. . . . . . . . . . 7.84 .09 2.84 2.93 (.16) -- (.16)
...10/31/90 (9). . . . . . . . 9.85 .18 (1.38) (1.20) (.26) (.55) (.81)
...10/31/89 (9). . . . . . . . 8.99 .24 1.09 1.33 (.10) (.37) (.47)
...10/31/88 (9). . . . . . . . 7.94 .09 1.38 1.47 (.05) (.37) (.42)
5/1/87-10/31/87 (9,10) . . . . 9.44 .03 (1.14) (1.11) (.09) (.30) (.39)
Year ended 4/30/87 (9) . . . . 9.47 .09 .81 .90 (.07) (.86) (.93)
...4/30/86 (9) . . . . . . . . 7.40 .06 2.33 2.39 (.09) (.23) (.32)
...4/30/85 (9) . . . . . . . . 7.69 .10 .99 1.09 (.11) (1.27) (1.38)
...4/30/84 (9) . . . . . . . . 8.90 .10 .48 .58 (.17) (1.62) (1.79)
QUEST FOR VALUE - CLASS B
Six months ended 4/30/95 (11) 12.53 .03 .99 1.02 (.07) (.83) (.90)
Year ended 10/31/94. . . . . . 12.51 .02 .50 .52 (.03) (.47) (.50)
9/2/93(4) - 10/31/93 . . . . . 12.66(3) (.01) (.14) (.15) -- -- --
QUEST FOR VALUE - CLASS C
Six months ended 4/30/95 (11) 12.52 .03 1.00 1.03 (.08) (.83) (.91)
Year ended 10/31/94. . . . . . 12.50 .01 .51 .52 (.03) (.47) (.50)
9/2/93(4) - 10/31/93 . . . . . 12.66(3) (.01) (.15) (.16) -- -- --
SMALL CAPITALIZATION - CLASS A
Six months ended 4/30/95 (11) 16.33 .05 .22 .27 -- (.42) (.42)
Year ended 10/31/94. . . . . . 17.68 (.03) .01 (.02) -- (1.33) (1.33)
...10/31/93. . . . . . . . . . 14.60 (.04) 4.26 4.22 -- (1.14) (1.14)
...10/31/92. . . . . . . . . . 13.52 .00 1.50 1.50 -- (.42) (.42)
...10/31/91. . . . . . . . . . 8.80 (.05) 4.85 4.80 (.08) -- (.08)
...10/31/90. . . . . . . . . . 10.91 .07 (2.04) (1.97) (.08) (.06) (.14)
...1/1/89(7)-10/31/89. . . . . 10.00(3) .08 .83 .91 -- -- --
SMALL CAPITALIZATION - CLASS B
Six months ended 4/30/95 (11) 16.24 (.01) .22 .21 -- (.42) (.42)
Year ended 10/31/94. . . . . . 17.66 (.11) .02 (.09) -- (1.33) (1.33)
9/2/93(4)-10/31/93 . . . . . . 17.19(3) (.02) .49 .47 -- -- --
SMALL CAPITALIZATION - CLASS C
Six months ended 4/30/95 (11) 16.23 .00 .22 .22 -- (.42) (42)
Year ended 10/31/94. . . . . . 17.67 (.13) .02 (.11) -- (1.33) (1.33)
...9/2/93(4) - 10/31/93. . . . 17.19(3) (.02) .50 .48 -- -- --
OPPORTUNITY - CLASS A
Six months ended 4/30/95 (11) 19.69 .12 2.25 2.37 (.12) (.61) (.73)
Year ended 10/31/94. . . . . . 18.71 .18 1.35 1.53 (.33) (.22) (.55)
...10/31/93. . . . . . . . . . 16.73 .35 2.02 2.37 (.07) (.32) (.39)
...10/31/92. . . . . . . . . . 14.29 .09 2.93 3.02 (.03) (.55) (.58)
...10/31/91. . . . . . . . . . 9.74 .03 4.78 4.81 (.23) (.03) (.26)
...10/31/90. . . . . . . . . . 11.59 .25 (1.64) (1.39) (.22) (.24) (.46)
1/1/89(7)-10/31/89 . . . . . . 10.00(3) .17 1.42 1.59 -- -- --
OPPORTUNITY - CLASS B
Six months ended 4/30/95 (11) 19.59 .07 2.23 2.30 (.12) (.61) (.73)
Year ended 10/31/94. . . . . . 18.70 .08 1.34 1.42 (.31) (.22) (.53)
...9/2/93(4)-10/31/93. . . . . 18.73(3) .02 (.05) (.03) -- -- --
OPPORTUNITY - CLASS C
Six months ended 4/30/95 (11) 19.58 .07 2.23 2.30 (.12) (.61) (.73)
Year ended 10/31/94. . . . . . 18.70 .08 1.33 1.41 (.31) (.22) (.53)
...9/2/93(4)-10/31/93. . . . . 18.73(3) .02 (.05) (.03) -- -- --
GLOBAL EQUITY - CLASS A
Six months ended 5/31/95(11) 14.16 .07 1.26(8) 1.33 -- (1.23) (1.23)
Year ended 11/30/94. . . . . . 13.54 .01 1.10(8) 1.11 -- (.49) (.49)
...11/30/93. . . . . . . . . . 12.30 -- 2.26(8) 2.26 (.12) (.90) (1.02)
...11/30/92. . . . . . . . . . 11.25 .12 .93(8) 1.05 -- -- --
...11/30/91. . . . . . . . . . 10.57 (.04) .85(8) .81 (.05) (.08)(8) (.13)
7/2/90(7)-11/30/90 . . . . . . 12.05(3) .05 (1.53)(8) (1.48) -- -- --
GLOBAL EQUITY - CLASS B
Six months ended 5/31/95(11) 14.07 .04 1.24(8) 1.28 -- (1.23) (1.23)
Year ended 11/30/94. . . . . . 13.52 (.06) 1.10(8) 1.04 -- (.49) (.49)
9/2/93(4)-11/30/93 . . . . . . 13.75(3) (.02) (.21)(8) (.23) -- -- --
GLOBAL EQUITY - CLASS C
Six months ended 5/31/95(11) 14.06 .03 1.23(8) 1.26 -- (1.23) (1.23)
Year ended 11/30/94. . . . . . 13.52 (.08) 1.11(8) 1.03 -- (.49) (.49)
9/2/93(4)-11/30/93 . . . . . . 13.75(3) (.02) (.21)(8) (.23) -- -- --
GROWTH AND INCOME - CLASS A
Six months ended 4/30/95 (11) 10.09 .18 .67 .85 (.18) (.42) (.60)
Year ended 10/31/94. . . . . . 11.24 .32 .55 .87 (.32) (1.70) (2.02)
...10/31/93. . . . . . . . . . 10.80 .30 .73 1.03 (.26) (.33) (.59)
11/4/91(7) - 10/31/92. . . . . 10.00(3) .28 .80 1.08 (.28) -- (.28)
GROWTH AND INCOME - CLASS B
Six months ended 4/30/95 (11) 10.07 .16 .66 .82 (.16) (.42) (.58)
Year ended 10/31/94. . . . . . 11.23 .25 .56 .81 (.27) (1.70) (1.97)
9/2/93(4) - 10/31/93 . . . . . 11.21(3) .04 .05 .09 (.07) -- (.07)
GROWTH AND INCOME - CLASS C
Six months ended 4/30/95 (11) 10.07 .14 .67 .81 (.14) (.42) (.56)
Year ended 10/31/94. . . . . . 11.23 .24 .56 .80 (.26) (1.70) (1.96)
9/2/93(4) - 10/31/93 . . . . . 11.21(3) .04 .05 .09 (.07) -- (.07)
3
<PAGE>
<CAPTION>
NAV Total Return Net Assets Ratio of net Ratio of net Portfolio
End for period(1) at end of operating investment turnover
of period (000) expenses to income (loss)
period average net to average net
assets assets
QUEST FOR VALUE - CLASS A
Six months ended 4/30/95 (11) $12.74 9.52% $251,821 1.69%(2) .97%(2) 17%
Year ended 10/31/94. . . . . . 12.59 5.01% 238,085 1.71% .72% 49%
...10/31/93. . . . . . . . . . 12.51 12.27% 245,320 1.75% .40% 27%
...10/31/92. . . . . . . . . . 11.71 18.45% 142,939 1.75% .53% 41%
...10/31/91. . . . . . . . . . 10.61 37.94% 79,914 1.83% 1.06% 48%
...10/31/90 (9). . . . . . . . 7.84 (13.43%) 49,740 1.82% 1.71% 51%
...10/31/89 (9). . . . . . . . 9.85 15.68% 77,205 1.81% 2.31% 30%
...10/31/88 (9). . . . . . . . 8.99 19.54% 83,228 2.21% .94% 15%
5/1/87-10/31/87 (9,10) . . . . 7.94 (12.19%) 91,255 2.24%(2) .76%(2) 21%
Year ended 4/30/87 (9) . . . . 9.44 10.25% 104,538 2.17% 1.23% 34%
...4/30/86 (9) . . . . . . . . 9.47 33.66% 64,331 2.18% 1.18% 68%
...4/30/85 (9) . . . . . . . . 7.40 17.86% 28,055 2.34% 1.90% 42%
...4/30/84 (9) . . . . . . . . 7.69 7.45% 13,388 2.29% 1.68% 74%
QUEST FOR VALUE - CLASS B
Six months ended 4/30/95 (11) 12.65 9.23% 23,805 2.21%(2) .45%(2) 17%
Year ended 10/31/94. . . . . . 12.53 4.43% 14,373 2.24% .14% 49%
9/2/93(4) - 10/31/93 . . . . . 12.51 (1.19%) 2,015 2.27%(2) (1.19%)(2) 27%
QUEST FOR VALUE - CLASS C
Six months ended 4/30/95 (11) 12.64 9.31% 6,375 2.24%(2) .43%(2) 17%
Year ended 10/31/94. . . . . . 12.52 4.45% 3,581 2.28% .09% 49%
9/2/93(4) - 10/31/93 . . . . . 12.50 (1.26%) 221 2.27%(2) (.90%)(2) 27%
SMALL CAPITALIZATION - CLASS A
Six months ended 4/30/95 (11) 16.18 1.71% 118,909 1.80%(2) .56%(2) 29%
Year ended 10/31/94. . . . . . 16.33 .04% 120,102 1.88% (.14%) 67%
...10/31/93. . . . . . . . . . 17.68 30.21% 104,898 1.89% (.36%) 74%
...10/31/92. . . . . . . . . . 14.60 11.60% 39,693 2.11% (.04%) 95%
...10/31/91. . . . . . . . . . 13.52 55.01% 20,686 2.25%(5) (.41%)(5) 103%
...10/31/90. . . . . . . . . . 8.80 (18.33%) 1,880 2.00%(5) .71%(5) 18%
...1/1/89(7)-10/31/89. . . . . 10.91 9.10% 2,085 1.74%(5) 1.34%(5) 32%
SMALL CAPITALIZATION - CLASS B
Six months ended 4/30/95 (11) 16.03 1.35% 19,564 2.37%(2) (.01%)(2) 29%
Year ended 10/31/94. . . . . . 16.24 (.39%) 16,144 2.48% (.70%) 67%
9/2/93(4)-10/31/93 . . . . . . 17.66 2.73% 1,754 2.57%(2) (1.15%)(2) 74%
SMALL CAPITALIZATION - CLASS C
Six months ended 4/30/95 (11) 16.03 1.41% 5,670 2.35%(2) (.01%)(2) 29%
Year ended 10/31/94. . . . . . 16.23 (.51%) 3,344 2.59% (.81%) 67%
...9/2/93(4) - 10/31/93. . . . 17.67 2.79% 235 2.57%(2) (1.20%)(2) 74%
OPPORTUNITY - CLASS A
Six months ended 4/30/95 (11) 21.33 12.66% 231,881 1.71%(2) 1.25%(2) 10%
Year ended 10/31/94. . . . . . 19.69 8.41% 163,340 1.78% .96% 42%
...10/31/93. . . . . . . . . . 18.71 14.34% 127,225 1.83%2 .69% 24%
...10/31/92. . . . . . . . . . 16.73 21.93% 40,563 2.27% .72% 32%
...10/31/91. . . . . . . . . . 14.29 50.44% 8,446 2.35%(5) .30%(5) 88%
...10/31/90. . . . . . . . . . 9.74 (12.62%) 4,570 2.00%(5) 2.30%(5) 206%
1/1/89(7)-10/31/89 . . . . . . 11.59 15.90% 3,868 1.84%(2,5) 3.75%(2,5) 103%
OPPORTUNITY - CLASS B
Six months ended 4/30/95 (11) 21.16 12.36% 102,353 2.24%(2) .75%(2) 10%
Year ended 10/31/94. . . . . . 19.59 7.84% 43,317 2.34% .43% 42%
...9/2/93(4)-10/31/93. . . . . 18.70 (.16%) 2,115 2.52%(2) 1.32%(2) 24%
OPPORTUNITY - CLASS C
Six months ended 4/30/95 (11) 21.15 12.37% 20,091 2.26%(2) .73%(2) 10%
Year ended 10/31/94. . . . . . 19.58 7.78% 7,289 2.35% .43% 42%
...9/2/93(4)-10/31/93. . . . . 18.70 (.16%) 313 2.52%(2) 1.13%(2) 24%
GLOBAL EQUITY - CLASS A
Six months ended 5/31/95(11) 14.26 10.24% 155,369 1.87%(2) 1.07%(2) 34%
Year ended 11/30/94. . . . . . 14.16 8.37% 148,044 1.92%(6) .05%(6) 70%
...11/30/93. . . . . . . . . . 13.54 19.72% 135,616 1.76%(6) .04%(6) 46%
...11/30/92. . . . . . . . . . 12.30 9.33% 111,207 1.76%(6) .72%(6) 62%
...11/30/91. . . . . . . . . . 11.25 7.72% 46,937 2.09% (.27%) 41%
7/2/90(7)-11/30/90 . . . . . . 10.57 (12.28%) 58,087 2.11%(2) .92%(2) 2%
GLOBAL EQUITY - CLASS B
Six months ended 5/31/95(11) 14.12 9.93% 14,107 2.44%(2) .58%(2) 34%
Year ended 11/30/94. . . . . . 14.07 7.84% 10,268 2.50%(6) (.44%)(6) 70%
9/2/93(4)-11/30/93 . . . . . . 13.52 (1.67%) 1,676 2.26%(2,6) (.76%)(2,6) 46%
GLOBAL EQUITY - CLASS C
Six months ended 5/31/95(11) 14.09 9.78% 3,841 2.53%(2) (.54%)(2) 34%
Year ended 11/30/94. . . . . . 14.06 7.77% 2,415 2.66%(6) (.59%)(6) 70%
9/2/93(4)-11/30/93 . . . . . . 13.52 (1.67%) 244 2.26%(2,6) (.69%)(2,6) 46%
GROWTH AND INCOME - CLASS A
Six months ended 4/30/95 (11) 10.34 9.11% 32,969 1.92%(2,6) 3.78%(2,6) 63%
Year ended 10/31/94. . . . . . 10.09 8.64% 30,576 1.86%(6) 3.16%(6) 113%
...10/31/93. . . . . . . . . . 11.24 9.93% 28,466 1.90%(6) 2.66%(6) 192%
11/4/91(7) - 10/31/92. . . . . 10.80 10.84% 8,057 2.23%(2,6) 2.73%(2,6) 77%
GROWTH AND INCOME - CLASS B
Six months ended 4/30/95 (11) 10.31 8.79% 4,231 2.49%(2,6) 3.25%(2,6) 63%
Year ended 10/31/94. . . . . . 10.07 7.96% 2,928 2.47(6) 2.53%(6) 113%
9/2/93(4) - 10/31/93 . . . . . 11.23 .81% 319 2.49%(2,6) 1.83%(2,6) 192%
GROWTH AND INCOME - CLASS C
Six months ended 4/30/95 (11) 10.32 8.67% 897 2.77%(2,6) 3.00%(2,6) 63%
Year ended 10/31/94. . . . . . 10.07 7.91% 455 2.62%(6) 2.39%(6) 113%
9/2/93(4) - 10/31/93 . . . . . 11.23 .81% 102 2.49%(2,6) 2.18%(2,6) 192%
<FN>
- -----------
(1) Total return shown assumes reinvestment of all dividends and distributions
but does not reflect deductions for sales charges. Aggregate (not
annualized) total return is shown for any period shorter than one year.
(2) Annualized
(3) Offering Price
(4) Initial offering of Class B and C shares
(5) During the periods the Funds' former adviser voluntarily waived all or a
portion of its fees and assumed some operating expenses of the Funds.
Without such waivers and assumptions, the ratios of net operating expenses
to average net assets and the ratios of net investment income to average
net assets would have been, respectively: Small Capitalization Fund:
Class A shares - 3.27% and (1.43%) for the year ended 10/31/91, 5.82% and
(3.11%) for the year ended 10/31/90, and 6.27% and (3.19%) (annualized) for
the period 1/1/89 (commencement of operations) to 10/31/89; Opportunity
Fund: Class A shares - 3.33% and (.68%) for the year ended 10/31/91, 3.69%
and .61% for the year ended 10/31/90, and 5.32% and .27% (annualized) for
the period 1/1/89 (commencement of operations) to 10/31/89.
(6) During the periods the Funds' former adviser voluntarily waived a portion
of its fees. Without such waiver, the ratios of operating expenses to
average net assets and the ratios of net investment income to average net
assets would have been, respectively: Growth and Income Fund: Class A
shares - 2.17% and 3.53%, annualized, for the six month period ended April
30, 1995,. 2.32% and 2.70% for the year ended October 31, 1994, 2.18% and
2.38% for the year ended 10/31/93, and 2.98% and 1.98% (annualized) for the
period 11/4/91 (commencement of operations) to 10/31/92, Class B shares -
2.73% and 3.01% annualized, for the six month period ended April 30, 1995.
2.93% and 2.07% for the year ended October 31, 1994 and 2.88% and 1.44%
(annualized) for the period September 2, 1993 (initial offering) to
October 31, 1993 and Class C shares - 3.00% and 2.77%, annulized, for the
six month period ended April 30, 1995. 3.10% and 1.91% for the year ended
October 31, 1994 and 2.87% and 1.80% (annualized) for the period 9/2/93
(initial offering) to 10/31/93; Global Equity Fund: Class A shares - 1.93%
and .04% for the year ended 11/30/94, 1.91% and (.11%) for the year ended
11/30/93 and 1.84% and .64% for the year ended 11/30/92, Class B shares -
2.51% and (.45%) for the year ended 11/30/94 and 2.32% and (.82%)
(annualized) for the period 9/2/93 (initial offering) to 11/30/93 and
Class C shares - 2.66% and (.59%) for the year ended 11/30/94 and 2.35% and
(.78%) (annualized) for the period 9/2/93 (initial offering) to 11/30/93.
(7) Commencement of Operations
(8) Includes net gains (losses) on foreign currency transactions
(9) Per share data has been retroactively restated to reflect a 200% stock
dividend as of July 1, 1991.
(10) Quest for Value Fund, Inc. changed its fiscal year end to October 31 in
1987.
(11) Unaudited
</TABLE>
4
<PAGE>
A BRIEF OVERVIEW OF THE FUNDS
Some of the important facts about the Funds are summarized below, with
references to the section of this Prospectus where more complete information can
be found. You should carefully read the entire Prospectus before making a
decision about investing in the Fund. Keep the Prospectus for reference after
you invest, particularly for information about your account, such as how to sell
or exchange shares.
/ / WHAT IS EACH FUND'S INVESTMENT OBJECTIVE? The investment objective of
the Quest for Value Fund is capital appreciation through investment in
securities (primarily equity securities) of companies believed to be
undervalued.
The investment objective of the Small Capitalization Fund is capital
appreciation through investment in a diversified portfolio which under normal
conditions will have at least 65% of its assets invested in equity securities of
companies with market capitalizations under $1 billion.
The investment objective of the Global Equity Fund is long-term capital
appreciation through pursuit of global investment strategy primarily involving
equity securities.
The investment objective of the Growth and Income Fund is a combination of
growth of capital and investment income with growth of capital as the primary
objective.
The investment objective of the Opportunity Fund is growth of capital over
time through investments in a diversified portfolio of common stocks, bonds and
cash equivalents.
/ / WHO MANAGES THE FUNDS? The Funds' investment adviser (the "Manager")
is Oppenheimer Management Corporation, which (including a subsidiary) manages
investment companies currently having over $35 billion in assets. The Manager
is paid an advisory fee by each Fund, based on its net assets. The Funds'
subadvisor is OpCap Advisors, a subsidiary of Oppenheimer Capital, which is paid
a fee by the Manager. The Funds' portfolio managers are employed by OpCap
Advisors and are primarily responsible for the selection of the Funds'
securities. The Funds' Board of Trustees, elected by shareholders, oversees
the investment adviser, the subadvisor and the portfolio managers. Please
refer to "Investment Management Agreement," starting on page ___ for more
information about the Manager and its fees.
/ / HOW CAN I BUY SHARES? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic Investment
Plan under AccountLink. Please refer to "How To Buy Shares" on page ___ for
more details.
/ / WILL I PAY A SALES CHARGE TO BUY SHARES? Each Fund has three classes
of shares. All classes have the same investment portfolio but different
expenses. Class A shares are offered with a front-end sales charge, starting at
5.75%, and reduced for larger purchases. Purchases of $1 million or more of
Class A shares have no initial sales charge but are subject to a contingent
deferred sales charge of 1% if held for less than 18 months. Class B shares are
offered without a front-end sales charge, but if you sell your shares within six
years of buying them, you will normally pay a contingent deferred sales charge
that varies depending on how long you owned your shares. Class C shares are
offered without a front-end sales charge, but may be subject to a contingent
deferred sales charge of 1% if redeemed within one year of buying them. There
is also an annual asset-based sales charge on each class of shares. Please
review "How To Buy Shares" starting on page ___ for more details, including a
discussion about factors you and your financial advisor should consider in
determining which class may be appropriate for you.
/ / HOW CAN I SELL MY SHARES? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How To Sell Shares" on page ___. The Fund also offers
exchange privileges with other OppenheimerFunds, described in "How To Exchange
Shares" on page __.
/ / HOW HAS EACH FUND PERFORMED? Each Fund measures performance by
quoting its average annual total return and cumulative total return, which
measure historical performance. Those returns can be compared to the returns
(over similar periods) of other funds. Of course, other funds may have
different objectives, investments, and levels of risk. Please remember that
past performance does not guarantee future results.
5
<PAGE>
INVESTMENT OBJECTIVES OF THE FUNDS
OpCap Advisors, (formerly known as Quest for Value Advisors) manage
the portfolios of the Funds in accordance with their investment objectives
described below pursuant to a Subadvisory Agreement with the Manager. OpCap
Advisors' equity investment policy is overseen by George Long, Managing Director
and Chief Investment Officer for Oppenheimer Capital, the parent of OpCap
Advisors. Mr. Long has been with Oppenheimer Capital since 1982.
QUEST FOR VALUE FUND seeks capital appreciation through investment in securities
(primarily equity securities) of companies believed by OpCap Advisors to be
undervalued in the marketplace in relation to factors such as the companies'
assets, earnings, growth potential and cash flows. For the purposes of this
Prospectus the term equity securities is defined as common stocks and preferred
stocks; bonds, debentures and notes convertible into common stocks; and
depository receipts for such securities. Investments of the Quest for Value Fund
are managed by Eileen Rominger, Managing Director of Oppenheimer Capital. She
has been portfolio manager of this Fund since 1989. Ms. Rominger has been an
analyst and portfolio manager at Oppenheimer Capital since 1981.
SMALL CAPITALIZATION FUND seeks capital appreciation through investments in a
diversified portfolio which under normal conditions will have at least 65% of
its assets invested in equity securities of companies with market
capitalizations under $1 billion. The Fund's investment approach will attempt to
identify securities of companies whose prices are favorable in relation to their
book values and/or sales and securities of companies which have limited
operating leverage (relatively stable business with below average sensitivity to
changes in the general economy) and/or limited financial leverage (a ratio of
debt to assets, or cost of debt service to income, which is meaningfully below
those of their competitors). The Small Capitalization Fund is managed by Jenny
Beth Jones, Senior Vice President of Oppenheimer Capital, and Louis Goldstein,
Vice President of Oppenheimer Capital . Ms. Jones has been portfolio manager of
this Fund since 1990. Previously Ms. Jones was a portfolio manager and analyst
with Mutual of America. Mr. Goldstein has been portfolio manager of the Fund
since January 3, 1995. He has been a security analyst with Oppenheimer Capital
since 1991. From 1988 to 1991 he was a security analyst with David J. Greene &
Co.
OPPORTUNITY FUND seeks growth of capital over time through investments in a
diversified portfolio of common stocks, bonds and cash equivalents, the
proportions of which will vary based upon management's assessment of the
relative values of each investment under prevailing market conditions. The
Fund's portfolio will normally be invested primarily in common stocks and
securities convertible into common stock. During periods when common stocks
appear to be overvalued and when value differentials are such that fixed-income
obligations appear to present meaningful capital growth opportunities relative
to common stocks or pending investment in securities with capital growth
opportunities, up to 50% or more of the Fund's assets may be invested in bonds
and other fixed-income obligations. This may include cash equivalents which do
not generate capital appreciation. The bonds in which the Fund invests will be
limited to U.S. government obligations, mortgage-backed securities,
investment-grade corporate debt obligations and unrated obligations, including
those of foreign issuers, which management believes to be of comparable quality.
The investments of the Opportunity Fund are managed by Richard J. Glasebrook II,
Managing Director of Oppenheimer Capital. Mr. Glasebrook has been portfolio
manager of this Fund since 1991. Previously, he was a Partner with Delafield
Asset Management where he served as a portfolio manager and analyst.
GROWTH AND INCOME FUND seeks to achieve a combination of growth of capital and
investment income with growth of capital as the primary objective, by investing
in securities that are believed by OpCap Advisors to be undervalued in the
marketplace and to offer the possibility of increased value. The Fund invests in
marketable securities traded on national securities exchanges and in the
over-the-counter market. Ordinarily, the Fund invests its assets in common
stocks (with emphasis on dividend paying stocks), preferred stocks, securities
convertible into common stock, and debt securities. The Fund may invest in
lower-quality, high-yielding convertible debt securities and other debt
securities and currently intends to limit its investments in these securities to
up to 25% of its assets. See "Risk Factors." By focusing its purchases of equity
securities on those issued by mature companies which it believes to be
under-valued, the Fund seeks to achieve both its objectives of obtaining capital
appreciation as well as income from dividends. The Fund's purchases of
convertible securities similarly affords it the potential of capital growth
through the conversion option and greater investment income prior to conversion.
The Fund's purchases of debt securities furthers the objective of investment
income and offers potential for capital appreciation in an economic environment
of declining interest rates or as a result of improved issuer credit
6
<PAGE>
quality. It is anticipated that the Fund, as a result of its investment
approach, will be less volatile than the market in general. The Growth and
Income Fund is managed by Colin Glinsman, Vice President of Oppenheimer Capital.
Mr. Glinsman has been portfolio manager of this Fund since 1992. Since 1991,
Mr. Glinsman has assisted with the management of the Quest for Value Dual
Purpose Fund, Inc., a closed-end fund managed by OpCap Advisors, and has been a
securities analyst with Oppenheimer Capital since 1989. He was previously an
investment banker with Prudential Securities and Morgan Grenfell, and qualified
as a certified public accountant while with Coopers & Lybrand.
GLOBAL EQUITY FUND seeks long-term capital appreciation through pursuit of a
global investment strategy primarily involving equity securities. The Fund may
invest anywhere in the world with no requirement that any specific percentage of
its assets be committed to any given country. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in equity securities in at
least three different countries, one of which may be the United States.
Opportunities for capital appreciation may also be presented by debt securities.
The Fund may invest up to 35% of its total assets in debt obligations with
remaining maturities of one year or more of U.S. or foreign corporate,
governmental or bank issuers. It is the present intention of the Fund, although
not a fundamental policy, not to invest more than 5% of its total assets in debt
securities rated below investment-grade. Domestic investments of this Fund are
managed by Richard J. Glasebrook II, Managing Director of Oppenheimer Capital.
Mr. Glasebrook has been portfolio manager of this Fund since 1991. The Fund's
investments in foreign securities are managed by Pierre Daviron, President and
Chief Investment Officer of Oppenheimer Capital International, a division of
Oppenheimer Capital created in 1993. Mr. Daviron was named portfolio manager of
this Fund in 1993. Previously, he was Chairman and Chief Executive Officer at
Indosuez Gartmore Asset Management, a division of Banque Indosuez, Paris,
France. Prior thereto he was a Managing Director in Mergers and Acquisitions at
J.P. Morgan.
----------------------------------------------
To provide liquidity for the purchase of new instruments and to effect
redemptions of shares, the Funds typically invest a part of their assets in
various types of U.S. government securities and high quality, short-term debt
securities with remaining maturities of one year or less such as government
obligations, certificates of deposit, bankers' acceptances, commercial paper,
short-term corporate securities and repurchase agreements ("money market
instruments"). For temporary defensive purposes, the Funds may invest up to 100%
of their assets in such securities and, in the case of the Growth and Income
Fund, preferred stock. At any time that a Fund for temporary defensive purposes
invests in such securities, to the extent of such investments, it is not
pursuing its investment objectives. In the case of the Global Equity Fund, such
money market instruments may be issued by entities organized in the U.S. or any
foreign country, denominated in dollars or in the currency of any foreign
country.
Except as indicated, the investment objectives and policies described above
are fundamental and may not be changed without a vote of the shareholders. It is
anticipated that the Funds each will have an annual turnover rate (excluding
turnover of securities having a maturity of one year or less) of 100% or less.
For the year ended October 31, 1994, the annual turnover rate of the Growth and
Income Fund was 113%, which was higher than anticipated, as a result of asset
allocation shifts made in reaction to interest rate changes and the overall
market outlook. To the extent that higher portfolio turnover increases capital
gains, more taxes will be payable.
RISK FACTORS
The value of the Funds' shares will fluctuate and on redemption the
value of your shares may be more or less than your investment.
There are two types of risk generally associated with owning equity
securities: market risk and financial risk. Market risk is the risk associated
with the movement of the stock market in general. Financial risk is associated
with the financial condition and profitability of the underlying company.
Smaller capitalization companies may experience higher growth rates and higher
failure rates than do larger capitalization companies. The trading volume of
securities of smaller capitalization companies is normally less than that of
larger capitalization companies and, therefore, may disproportionately affect
their market price, tending to make them rise more in response to buying demand
and fall more in response to selling pressure than is the case with larger
capitalization companies.
7
<PAGE>
There are two types of risk associated with owning debt securities: interest
rate risk and credit risk. Interest rate risk relates to fluctuations in market
value arising from changes in interest rates. If interest rates rise, the value
of debt securities will normally decline and if interest rates fall, the value
of debt securities will normally increase. All debt securities, including U.S.
government securities, which are generally considered to be the most
creditworthy of all debt obligations, are subject to interest rate risk.
Securities with longer maturities generally will have a more pronounced reaction
to interest rate changes than shorter term securities.
Credit risk relates to the ability of the issuer to make periodic interest
payments and ultimately repay principal at maturity. Bonds rated Baa3 by Moody's
Investors Services, Inc. ("Moody's") or BBB- by Standard & Poor's Corporation
("S&P") which the Quest for Value, Small Capitalization, Opportunity, Growth and
Income and Global Equity Funds may acquire, are described by those rating
agencies as having speculative elements. If a debt security is rated below
investment grade by one rating agency and as investment grade by a different
rating agency, OpCap Advisors will make a determination as to the debt
security's investment grade quality. It is the present intention of the Quest
for Value, Small Capitalization and Global Equity Funds to invest no more than
5% of their respective assets in bonds rated below Baa3 by Moody's or BBB- by
S&P (commonly known as "high yield" or "junk bonds"). In the event that any of
those Funds intends in the future to invest more than 5% of its assets in such
bonds, appropriate disclosures will be made to existing and prospective
shareholders. The Growth and Income Fund may invest up to 25% of the value of
its net assets in convertible debt and other debt securities rated not lower
than Caa by Moody's or CCC by S&P, Fitch Investors Service, Inc. ("Fitch") or
Duff & Phelps, Inc. ("Duff") or, if unrated, deemed to be of comparable quality
by OpCap Advisors. Securities rated Ba by Moody's are judged to have
speculative elements; their future cannot be considered as well assured and
often the protection of interest and principal payments may be very moderate.
Securities rated BB by S&P, Fitch or Duff are regarded as having predominantly
speculative characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, they face major
ongoing uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest and
principal payment. Securities rated Caa by Moody's or CCC by S&P, Fitch and Duff
are considered to have predominantly speculative characteristics with respect to
capacity to pay interest and repay principal and to be of poor standing.
Securities rated Ca by Moody's are speculative to a high degree; such issues are
often in default or have other marked shortcomings. A security rated C by
Moody's has extremely poor prospects of ever attaining any real investment
standing. Securities rated CI by S&P are income bonds on which no interest is
being paid, and securities rated D by S&P are in payment default. Debt
obligations of issuers outside the United States and its territories are rated
on substantially the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the issuer but do not take into account
potential actions by the government controlling the currency of denomination
which might have a negative effect on exchange rates. The Growth and Income Fund
does not intend to hold such lower-rated securities unless the opportunities for
capital appreciation and income, combined, remain attractive. See the Appendix
in the SAI for a more complete general description of Moody's, S&P, Fitch and
Duff ratings. The ratings of Moody's, S&P, Fitch and Duff represent their
opinions as to the quality of the obligations which they undertake to rate. It
should be emphasized, however, that ratings are relative and subjective and
although ratings may be useful in evaluating the safety of interest and
principal payments, they do not evaluate the market risk of these securities.
Therefore, although these ratings may be an initial criterion for selection of
such investments, OpCap Advisors also will evaluate these securities and the
ability of the issuers of such securities to pay interest and principal. The
Growth and Income Fund's ability to achieve its investment objectives may be
more dependent on OpCap Advisors' credit analysis than might be the case for a
fund that invested in higher rated securities. Once the rating of a security has
been changed, the Growth and Income Fund will consider all circumstances deemed
relevant in determining whether to continue to hold the security. The market
price and yield of securities rated Ba or lower by Moody's and BB or lower by
S&P, Fitch or Duff are more volatile than those of higher rated securities.
Factors adversely affecting the market price and yield of these securities will
adversely affect the Growth and Income Fund's net asset value. In addition, the
retail secondary market for these securities may be less liquid than that of
higher rated securities; adverse market conditions could make it difficult at
times for the Growth and Income Fund to sell certain securities. The market
values of certain lower rated debt securities tend to reflect individual
corporate developments to a greater extent than do higher rated securities,
which react primarily to fluctuations in the general level of interest rates,
and tend to be more sensitive to economic conditions than higher rated
securities. Companies that issue such securities are often highly leveraged and
may not have available to them more traditional methods of financing.
Consequently, the risk associated with acquiring the securities of such issuers
is greater than with higher rated securities. The Funds are not obliged to
dispose of securities due to changes by
8
<PAGE>
the rating agencies. Although there is no minimum rating for the investments of
the Quest for Value, Small Capitalization, Global Equity, or Growth and Income
Funds, the Funds do not intend to invest in bonds which are in default. To the
extent the Funds invest in mortgage-backed securities, they will be subject to
prepayment risks. Prepayments of mortgage principal reduce the stream of future
payments and generate cash which must be reinvested. Prepayments tend to
increase following declines in interest rates, resulting in reinvestment in a
lower interest rate environment.
The nature and degree of market and financial risk affecting an investment in
each of the Opportunity Fund and Growth and Income Fund will depend on the
relative amounts of the Fund's assets committed to equity, longer-term debt or
money market securities at any particular time.
Higher portfolio turnover can be expected to result in a higher incidence of
short-term capital gains upon which taxes will be payable and will also result
in correspondingly higher transaction costs. Certain of the Funds may have
turnover rates of up to 250%.
Additional Risks of Foreign Securities: All Funds may purchase foreign
securities that are listed on a domestic or foreign securities exchange, traded
in domestic or foreign over-the counter markets or represented by American
Depository Receipts. There is no limit to the amount of such foreign securities
the Funds may acquire. It will be the general practice of the Global Equity Fund
to invest in foreign equity securities. Certain factors and risks are presented
by investment in foreign securities which are in addition to the usual risks
inherent in domestic securities. Foreign companies are not necessarily subject
to uniform accounting, auditing and financial reporting standards or other
regulatory requirements comparable to those applicable to U.S. companies. Thus,
there may be less available information concerning non-U.S. issuers of
securities held by a Fund than is available concerning U.S. companies. In
addition, with respect to some foreign countries, there is the possibility of
nationalization, expropriation or confiscatory taxation; income earned in the
foreign nation being subject to taxation, including withholding taxes on
interest and dividends (see "Tax Status"), or other taxes imposed with respect
to investments in the foreign nation; limitations on the removal of securities,
property or other assets of a fund; difficulties in pursuing legal remedies and
obtaining judgments in foreign courts, or political or social instability or
diplomatic developments which could affect U.S. investments in those countries.
For a description of the risks of possible losses through holding of securities
in foreign custodian banks and depositories, see "Risk Factors and Special
Considerations" in the SAI.
Securities of many non-U.S. companies may be less liquid and their prices more
volatile than securities of comparable U.S. companies. Non-U.S. stock exchanges
and brokers are generally subject to less governmental supervision and
regulation than in the U.S. and commissions on foreign stock exchanges are
generally higher than negotiated commissions on U.S. transactions. In addition,
there may in certain instances be delays in the settlement of non-U.S. stock
exchange transactions. Certain countries restrict foreign investments in their
securities markets. These restrictions may limit or preclude investment in
certain countries, industries or market sectors, or may increase the cost of
investing in securities of particular companies. Purchasing the shares of
investment companies which invest in securities of a given country may be the
only or the most efficient way to invest in that country. This may require the
payment of a premium above the net asset value of such investment companies and
the return will be reduced by the operating expenses of those investment
companies.
A decline in the value of the U.S. dollar against the value of any particular
currency will cause an increase in the U.S. dollar value of a Fund's holdings
denominated in such currency. Conversely, a decline in the value of any
particular currency against the U.S. dollar will cause a decline in the U.S.
dollar value of the Fund's holdings of securities denominated in such currency.
Some foreign currency values may be volatile and there is the possibility of
governmental controls on currency exchange or governmental intervention in
currency markets which could adversely affect a Fund. The Funds do not intend to
speculate in foreign currency in connection with the purchase or sale of
securities on a foreign securities exchange but may enter into foreign currency
contracts to hedge their foreign currency exposure. While those transactions may
minimize the impact of currency appreciation and depreciation, the Funds will
bear a cost for entering into the transaction and such transactions do not
protect against a decline in the security's value relative to other securities
denominated in that currency.
9
<PAGE>
The Global Equity Fund may invest its assets in American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs") or Global Depository Receipts
("GDRs") which are U.S. dollar-denominated receipts that represent and may be
converted into the underlying foreign security. ADRs, GDRs or EDRs are issued by
persons other than the underlying issuer, typically a domestic bank or trust
company. Issuers of the stock of ADRs, EDRs or GDRs sponsored by banks or trust
companies are not obligated to disclose material information in the United
States and therefore, there may not be a correlation between such information
and the market value of such ADRs, GDRs or EDRs.
EMERGING MARKET COUNTRIES: Certain developing countries may have relatively
unstable governments, economies based on only a few industries that are
dependent upon international trade and reduced secondary market liquidity.
Foreign investment in certain emerging market countries is restricted or
controlled in varying degrees. In the past, securities in these countries have
experienced greater price movement, both positive and negative, than securities
of companies located in developed countries. Lower-rated high-yielding emerging
market securities may be considered to have speculative elements.
SOVEREIGN DEBT OBLIGATIONS: The Global Equity Fund may purchase sovereign debt
instruments issued or guaranteed by foreign governments or their agencies,
including those located in emerging market countries. Sovereign debt may be in
the form of conventional securities or other types of debt instruments such as
loans or loan participations. Sovereign debt of emerging market countries may
involve a high degree of risk and may be in default or present the risk of
default. Certain emerging market countries have historically experienced, and
may continue to experience, high inflation and interest rates, large
fluctuations in exchange rates, large amounts of external debt, trade
difficulties and extreme poverty and unemployment. Governmental entities
responsible for repayment of the debt may be unable or unwilling to repay
principal and interest when due. In the event of a default, the Funds may have
limited legal recourse against the issuer or guarantor. Remedies must in some
cases be pursued in the courts of the defaulting party itself and the ability of
holders of foreign government debt securities to obtain recourse may depend on
the political climate in the relevant country. No assurance can be given that
the holders of commercial bank debt will not contest payments to holders of
other sovereign debt obligations in the event of a default under their
commercial bank loan agreements.
EASTERN EUROPE: The Global Equity Fund presently intends not to invest more than
5% of its net assets in companies located in Eastern European countries, but may
invest in companies located outside of such countries which conduct business in
such countries.
Options and Futures: Different uses of futures and options have different risk
and return characteristics. Generally, selling futures contracts, purchasing put
options and writing call options are strategies designed to protect against
falling security prices and can limit potential gains if prices rise. Purchasing
futures contracts, purchasing call options and writing put options are
strategies whose returns tend to rise and fall together with securities prices
and can cause losses if prices fall. If securities prices remain unchanged over
time, option writing strategies tend to be profitable while option buying
strategies tend to be unprofitable. THE GLOBAL EQUITY, GROWTH AND INCOME, SMALL
CAPITALIZATION AND QUEST FOR VALUE FUNDS INTEND TO ENGAGE ONLY IN FUTURES
CONTRACTS, OPTIONS ON FUTURES CONTRACTS OR OPTIONS ON STOCK INDEXES FOR BONA
FIDE HEDGING OR OTHER NON-SPECULATIVE PURPOSES. The Small Capitalization Fund
may write covered call options on individual securities. The Funds will not
enter into any leveraged futures transactions.
Repurchase Agreements: All Funds may acquire securities subject to repurchase
agreements. Repurchase agreements involve certain risks.
For a further description of options and futures, repurchase agreements and
reverse repurchase agreements and other investment techniques used by the Funds,
see "Investment Restrictions and Techniques," below.
INVESTMENT RESTRICTIONS AND TECHNIQUES
The Funds are subject to certain investment restrictions which are
fundamental policies changeable only by shareholder vote. The restrictions in a,
b and c below do not apply to U.S. government securities. The restrictions apply
to each Fund unless otherwise noted. A Fund may not : (a) Purchase more than 10%
of the voting securities of any one issuer (for Global Equity and Growth and
Income only with respect to 75% of its total assets; (b) Purchase more than 10%
of any class of security of any issuer, with all outstanding debt securities and
all preferred stock of an issuer each being
10
<PAGE>
considered as one class (all Funds except Global Equity and Growth and Income);
(c) Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, a Fund may invest up to 25%
of its total assets (valued at the time of investment) in any one industry
classification used by the Fund for investment purposes (for this purpose, a
foreign government is considered an industry). Concentration of investment in
securities of one issuer may tend to increase a Fund's financial risk (See "Risk
Factors," p. _); (d) Borrow money in excess of: 10% of the value of the Fund's
total assets in the case of the Small Capitalization and Opportunity Funds;
33 1/3% of the value of the Fund's total assets in the case of the Quest for
Value, Global Equity and Growth and Income Funds; each Fund (except for Quest
for Value Fund) may borrow only from banks and only as a temporary measure for
extraordinary or emergency purposes and will make no additional investments
while such borrowings exceed 5% of the total assets; Quest for Value Fund may,
but has no present intention to, borrow for leveraging purposes; (e) Invest more
than 10% of the Fund's total assets in illiquid securities (15% for Quest for
Value Fund,and the Global Equity Fund), including securities for which there is
no readily available market, repurchase agreements which have a maturity of
longer than seven days, securities subject to legal or contractual restrictions
and certain over-the-counter options (it is the opinion of the Wisconsin
Securities Commission that investments in restricted securities in excess of 5%
of a Fund's total assets may be considered a speculative activity and therefore
involve greater risk and increase the Fund's expenses; to comply with
Wisconsin's securities laws, all Funds have agreed to limit investments in
restricted securities to 5% of their respective total assets, although the
restriction is not a fundamental policy of such Funds); and (f) Invest more than
5% (15% for Quest for Value Fund) of the Fund's total assets in securities of
issuers having a record, together with predecessors, of less than three years of
continuous operation. (This restriction is not a fundamental policy of each of
the Global Equity or Growth and Income Funds, but was adopted to comply with a
state's securities laws). Notwithstanding investment restriction (e) above, the
Funds each may purchase securities which are not registered under the Securities
Act of 1933 ("1933 Act") but which can be sold to "qualified institutional
buyers" in accordance with Rule 144A under the 1933 Act. Any such security will
not be considered illiquid so long as it is determined by the Board of Directors
or OpCap Advisors, acting under guidelines approved and monitored by the Board,
which has the ultimate responsibility for any determination regarding liquidity,
that an adequate trading market exists for that security. This investment
practice could have the effect of increasing the level of illiquidity in each of
the Funds during any period that qualified institutional buyers become
uninterested in purchasing these restricted securities. The ability to sell to
qualified institutional buyers under Rule 144A is a relatively recent
development and it is not possible to predict how this market will develop. The
Board will carefully monitor any investments by each of the Funds in these
securities. Other investment restrictions are described in the SAIs.
The investment techniques or instruments described below are used for
investment programs of the Funds.
Repurchase Agreements: All Funds may acquire securities subject to repurchase
agreements. Under a typical repurchase agreement, a Fund acquires a debt
security for a relatively short period (usually for one day and very seldom for
more than one week) subject to an obligation of the seller to repurchase (and
the Fund's obligation to resell) the security at an agreed-upon higher price,
thereby establishing a fixed investment return during the holding period.
Pending such repurchase, the seller of the instrument maintains securities as
collateral equal in market value to the repurchase price.
In the event a seller defaulted on its repurchase obligation, a Fund might
suffer a loss to the extent that the proceeds from the sale of the collateral
were less than the repurchase price. In the event of a seller's bankruptcy, a
Fund might be delayed in, or prevented from, selling the collateral for the
Fund's benefit. Each Fund's Board of Directors/Trustees has established
procedures, which are periodically reviewed by the Board, pursuant to which
OpCap Advisors will monitor the creditworthiness of the dealers and banks with
which the Funds enter into repurchase agreement transactions.
Loans of Portfolio Securities: All Funds may lend portfolio securities if
collateral (cash, U.S. Government or agency obligations or letters of credit)
securing such loans is maintained daily in an amount at least equal to the
market value of the securities loaned and if the Funds do not incur any fees
(except transaction fees of the custodian bank) in connection with such loans. A
Fund may call the loan at any time on five days' notice and reacquire the loaned
securities. The Fund would receive the cash equivalent of the interest or
dividends paid by the issuer on the securities loan and would have the right to
receive the interest on investment of the cash collateral in short-term debt
instruments. A portion of either or both kinds of such interest may be paid to
the borrower of such securities. The Fund would continue to retain any voting
rights with respect to the securities. The value of the securities loaned, if
any, is not expected to exceed 10% of the value of the total assets of Quest for
Value, Small Capitalization or Opportunity Funds and 33 1/3% of the value of the
total assets of
11
<PAGE>
Global Equity or Growth and Income Funds. There is a risk that the borrower of
the securities may default and the Funds may have difficulty in reacquiring the
loaned securities.
Brady Bonds. The Global Equity Fund may purchase Brady Bonds and other sovereign
debt of countries that have restructured or are in the process of restructuring
their sovereign debt. Brady Bonds are debt securities issued under the Brady
Plan, a mechanism whereby debtor nations can restructure their indebtedness by
negotiating with lenders and exchanging existing commercial bank debt for Brady
Bonds. Brady Bonds may also be issued in respect of new money being advanced by
existing lenders in connection with the debt restructuring. The Brady Plan only
sets forth general guidelines for economic reform and debt reduction,
emphasizing that solutions must be negotiated on a case-by-case basis between
debtor nations and their creditors. Brady Bonds have been issued only recently
and consequently do not have a long payment history. The principal of certain
Brady Bonds has been collateralized by Treasury zero coupon bonds with
maturities equal to the final maturity of such Brady Bonds. In addition, the
first two or three interest payments on certain Brady Bonds may be
collateralized by cash or securities agreed upon by creditors. See "Risk Factors
and Special Considerations" in the SAI for a more complete description of Brady
Bonds.
Mortgage-Backed Securities: The Opportunity and Growth and Income Funds may
invest in a type of mortgage-backed security known as modified pass-through
certificates. Each certificate evidences an interest in a specific pool of
mortgages that have been grouped together for sale and provides investors with
payments of interest and principal. The issuer of modified pass-through
certificates guarantees the payment of the principal and interest whether or not
the issuer has collected such amounts on the underlying mortgage.
The average life of these securities varies with the maturities of the
underlying mortgage instruments (generally up to 30 years) and with the extent
of prepayments or the mortgages themselves. Any such prepayments are passed
through to the certificate holder, reducing the stream of future payments.
Prepayments tend to rise in periods of falling interest rates, decreasing the
average life of the certificate and generating cash which must be invested in a
lower interest rate environment. This could also limit the appreciation
potential of the certificates when compared to similar debt obligations which
may not be paid down at will, and could cause losses on certificates purchased
at a premium or gains on certificates purchased at a discount. Government
National Mortgage Association ("Ginnie Mae") certificates represent pools of
mortgages insured by the Federal Housing Administration or the Farmers Home
Administration or guaranteed by the Veteran's Administration. The guarantee of
payments under these certificates is backed by the full faith and credit of the
United States. Federal National Mortgage Association ("Fannie Mae") is a
government-sponsored corporation owned entirely by private stockholders. The
guarantee of payments under these instruments is that of Fannie Mae only. They
are not backed by the full faith and credit of the United States but the U.S.
Treasury may extend credit to Fannie Mae through discretionary purchases of its
securities. The U.S. Government has no obligation to assume the liabilities of
Fannie Mae. Federal Home Loan Mortgage Corp. ("Freddie Mac") is a corporate
instrumentality of the United States government whose stock is owned by the
Federal Home Loan Banks. Certificates issued by Freddie Mac represent interest
in mortgages from its portfolio. Freddie Mac guarantees payments under its
certificates but this guarantee is not backed by the full faith and credit of
the United States and Freddie Mac does not have authority to borrow from the
U.S. Treasury.
The coupon rate of these instruments is lower than the interest rate on the
underlying mortgages by the amount of fees paid to the issuing agencies, usually
approximately 1/2 of 1%. It is not anticipated that the Funds' investments will
have any particular maturity. Mortgage-backed securities, due to the scheduled
periodic repayment of principal, and the possibility of accelerated repayment of
underlying mortgage obligations, fluctuate in value in a different manner than
other, non-redeemable debt securities. The Opportunity and Growth and Income
Funds also may invest in "collateralized mortgage obligations" ("CMO's") which
are debt obligations secured by mortgage-backed securities where the investor
looks only to the issuer of the security for payment of principal and interest.
Options and Futures: The Global Equity Fund may purchase and sell financial
futures contracts (including bond futures contracts and index futures
contracts), foreign currency forward contracts, foreign currency futures
contracts, options on futures contracts and options on currencies The Quest for
Value, Small Capitalization and Growth and Income Funds may buy and sell options
on stock indexes, futures contracts and options on futures to hedge their
investments against changes in value or as a temporary substitute for purchases
or sales of actual securities. The Small Capitalization Fund may write covered
call options on individual securities. When each such Fund anticipates a
significant market or market sector
12
<PAGE>
advance, the purchase of a futures contract affords a hedge against not
participating in the advance at a time when the Fund is not fully invested
("anticipatory hedge"). Such a purchase of a futures contract would serve as a
temporary substitute for the purchase of individual securities, which may be
purchased in an orderly fashion once the market has stabilized. As individual
securities are purchased, an equivalent amount of futures contracts could be
terminated by offsetting sales. A Fund may sell futures contracts in
anticipation of or in a general market or market sector decline or increase in
interest rates that may adversely affect the market value of the Fund's
securities ("defensive hedge"). To the extent that a Fund's portfolio of
securities changes in value in correlation with the underlying security or
index, the sale of futures contracts would substantially reduce the risk to the
Fund of a market decline and by so doing, provide an alternative to the
liquidation of securities positions in the Fund with attendant transaction
costs. All options purchased or sold by a Fund will be traded on a U.S. or
foreign commodities exchange or will result from separate, privately negotiated
transactions with a primary government securities dealer recognized by the Board
of Governors of the Federal Reserve System or with other broker-dealers approved
by the Fund's Board. Options on securities, futures contracts and options on
futures contracts that are traded on foreign exchanges are subject to the risk
of governmental action affecting trading in or the prices of foreign currencies
or securities. The value of such positions also could be adversely affected by
(i) other complex foreign political and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions (iii) delays in a Fund's ability to act upon economic events occurring
in foreign markets during nonbusiness hours in the United States, (iv) the
imposition of different exercise and settlement terms and procedures and margin
requirements than in the United States, (v) lesser trading volume and (vi) in
certain circumstances, currency fluctuations. In addition, the Small
Capitalization Fund may write covered call options on individual securities.
So long as Commodities Futures Trading Commission rules so require, a Fund
will not enter into any financial futures or options contract unless such
transactions are for bona-fide hedging purposes or for other purposes only if
the aggregate initial margins and premiums required to establish such
non-hedging positions would not exceed 5% of the liquidation value of the Fund's
total assets. A call option written by a Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option is also covered if the Fund holds a call on the same security and in the
same principal amount as the call written where the exercise price of the call
held (a) is equal to or less than the exercise price of the call written or
(b) is greater than the exercise price of the call written if the difference is
maintained by the Fund in cash, U.S. Government Securities or other liquid
high-grade debt securities in a segregated account with its custodian. A put
option written by a Fund is "covered" if the Fund maintains cash, U.S.
Government securities or other liquid high-grade debt securities with a value
equal to the exercise price in a segregated account with its custodian, or else
holds a put on the same security and in the same principal amount as the put
written where the exercise price of the put held is equal to or greater than the
exercise price of the put written. As a result, the Fund forgoes the opportunity
of trading the segregated assets or writing calls against those assets. There
may not be a complete correlation between the price of options or futures and
the market prices of the underlying securities. The Fund may lose the ability to
profit from an increase in the market value of the underlying securities or may
lose its premium payment. If due to a lack of a market the Fund could not effect
a closing purchase transaction with respect to an OTC option, it would have to
hold the callable securities until the call lapsed or was exercised.
When-Issued and Delayed Delivery Securities and Firm Commitments: All Funds may
purchase securities on a "when-issued" or "delayed delivery" basis or may either
purchase or sell securities on a "firm commitment basis", whereby the price is
fixed at the time of commitment but delivery and payment may be as much as a
month or more later. The underlying securities are subject to market
fluctuations and no interest accrues prior to delivery of the securities.
Rights and Warrants (Global Equity and Growth and Income Funds): Each of these
Funds may invest up to 5% of its total assets in rights or warrants which
entitle the holder to buy equity securities at a specific price for a specific
period of time. The 5% limitation is not a fundamental policy for the Global
Equity and Growth and Income Funds.
INVESTMENT MANAGEMENT AGREEMENT
The Fund is managed by the Manager, Oppenheimer Management
Corporation, which supervises each Fund's investment program and handles its
day-to-day business. The Manager carries out its duties, subject to the
policies
13
<PAGE>
established by the Board of Trustees, under an Investment Advisory Agreement
with each Fund which states the Manager's responsibilities. The agreement sets
forth the fees paid by the Fund to the Manager and describes the expenses that
the Fund pays to conduct its business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other OppenheimerFunds, with assets of more than $35 billion as of
June 30, 1995, and with more than 2.6 million shareholder accounts. The Manager
is owned by Oppenheimer Acquisition Corp., a holding company that is owned in
part by senior officers of the Manager and controlled by Massachusetts Mutual
Life Insurance Company.
For its services under the Investment Advisory Agreement, the Funds
pay the Manager the following annual fees based on each Fund's daily net assets:
Growth and Income - .85%; Quest for Value Fund, Opportunity and Small
Capitalization Funds - 1.00% of the first $400 million of net assets. .90% of
the next $400 million of net assets and .85% of net assets over $800 million.
Global Equity Fund - .75% of the first $400 million of net assets, .70% of the
next $400 million of net assets and .65% of net assets over $800 million. Each
of the Funds except the Quest for Value and Global Equity Funds also reimburses
the Manager for bookkeeping and accounting services performed on behalf of each
Fund.
The Manager has retained OpCap Advisors to provide day-to-day
management of the Fund. OpCap Advisors is a majority-owned subsidiary of
Oppenheimer Capital, a registered investment advisor, whose employees perform
all investment advisory services provided to the Funds by OpCap Advisors. The
Manager will pay OpCap Advisors an annual fee based on the average daily net
assets of each Fund equal to 40% of the advisory fee (and administration fee in
the case of the Global Equity Fund) collected by the Manager based on the total
net assets of the Fund as of November , 1995 (the "Base Amount") plus 30% of
the investment advisory fee (and administration fee in the case of the Global
Equity Fund) collected by the Manager based on the total net assets of the Fund
that exceed the base amount. Oppenheimer Financial Corp., a holding company
holds a 33% interest in Oppenheimer Capital, a registered investment advisor,
and Oppenheimer Capital, L.P., a Delaware limited partnership whose units are
traded on the New York Stock Exchange and of which Oppenheimer Financial Corp.
is the sole general partner, owns the remaining 67% interest. Oppenheimer
Capital has operated as an investment advisor since 1968.
OpCap Advisors may select its affiliate Oppenheimer & Co., Inc.
("Opco"), a registered broker-dealer to execute transactions for the Funds,
provided that the commissions, fees or other remuneration received by Opco are
reasonable and fair compared to those paid to other brokers in connection with
comparable transactions. When selecting broker-dealers other than Opco, OpCap
Advisors may consider their record of sales of shares of the Funds.
Pursuant to an Administration Agreement with the Global Equity Fund, the
Manager provides administrative services and manages the business affairs of
each Fund. Such services include maintenance of the Fund's books and records,
monitoring the activities of entities providing services to the Fund, furnishing
office space, facilities, equipment, clerical help and bookkeeping and legal
services required in the conduct of the Fund's business, including the
preparation of proxy statements and reports filed with federal and state
securities commissions (except to the extent that the participation of
independent accountants and attorneys is, in the opinion of the Manager,
necessary or desirable). The Manager bears the cost of telephone service,
heat, light, power and other utilities provided to the Fund. For these services,
the Global Equity Fund pays the Manager a fee at the annual rate of .25% of
average daily net assets of the Fund.
Each Fund is responsible for bearing certain expenses attributable to the Fund
but not to a particular class ("Fund Expenses"), including deferred organization
expenses; taxes; registration fees; typesetting of prospectuses and financial
reports required for distribution to shareholders; brokerage commissions; fees
and related expenses of trustees or directors who are not interested persons;
legal, accounting and audit expenses; custodian fees; insurance premiums; and
trade association dues. Fund Expenses will be allocated based on the total net
assets of each class. Each class of shares of each Fund will also be
responsible for certain expenses attributable only to that class ("Class
Expenses"). These Class Expenses may include distribution and service fees,
transfer and shareholder servicing agent fees, professional fees, printing and
postage expenses for materials distributed to current shareholders, state
registration fees and shareholder meeting expenses. Such items are considered
Class Expenses provided such fees and expenses relate solely to such Class. A
portion of
14
<PAGE>
printing expenses, such as typesetting costs, will be divided equally among the
Funds, while other printing expenses, such as the number of copies printed, will
be considered Class Expenses.
HOW TO BUY SHARES
CLASSES OF SHARES. The Fund offers investors three different classes of shares.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
/ / CLASS A SHARES. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases by
OppenheimerFunds prototype 401(k) plans). If you purchase Class A shares as
part of an investment of at least $1 million ($500,000 for OppenheimerFunds
prototype 401(k) plans) in shares of one or more OppenheimerFunds or former
Quest Funds, you will not pay an initial sales charge, but if you sell any of
those shares within 18 months of buying them, you may pay a contingent deferred
sales charge. The amount of that sales charge will vary depending on the amount
you invested. Sales charges are described in "Buying Class A Shares" below.
/ / CLASS B SHARES. If you buy Class B shares, you pay no sales charge
at the time of purchase, but if you sell your shares within six years you will
normally pay a contingent deferred sales charge that varies, depending on how
long you have owned your shares. It is described in "Buying Class B Shares"
below.
/ / CLASS C SHARES. When you buy Class C shares, you pay no sales charge
at the time of purchase, but if you sell your shares within 12 months of buying
them, you will normally pay a contingent deferred sales charge of 1%. It is
described in "Buying Class C Shares" below.
WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that a Fund is an
appropriate investment for you, the decision as to which class of shares is
better suited to your needs depends on a number of factors which you should
discuss with your financial advisor. The Fund's operating costs that apply to a
class of shares and the effect of the different types of sales charges on your
investment will vary your investment results over time. The most important
factors are how much you plan to invest, how long you plan to hold your
investment, and whether you anticipate exchanging your shares for shares of
other OppenheimerFunds (not all of which currently offer Class B and Class C
shares). If your goals and objectives change over time and you plan to purchase
additional shares, you should re-evaluate those factors to see if you should
consider another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the sales
charge rates that apply to each class, and considered the effect of the asset-
based sales charges on Class B and Class C expenses (which will affect your
investment return). For the sake of comparison, we have assumed that there is a
10% rate of appreciation in the investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary, based on the
Fund's actual investment returns and the operating expenses borne by each class
of shares, and which class you invest in.
The factors discussed below are not intended to be investment advice or
recommendations, because each investor's financial considerations are different.
The discussion below of the factors to consider in purchasing a particular class
of shares assumes that you will purchase only ONE class of shares and not a
combination of shares of different classes.
/ / HOW LONG DO YOU EXPECT TO HOLD YOUR INVESTMENT? While future
financial needs cannot be predicted with certainty, knowing how long you expect
to hold your investment will assist you in selecting the appropriate class of
shares. Because of the effect of class-based expenses, your choice will also
depend on how much you plan to invest. For example, the reduced sales charges
available for larger purchases of Class A shares may, over time, offset the
effect of paying an initial sales charge on your investment (which reduces the
amount of your investment dollars used to buy shares for your account), compared
to the effect over time of higher class-based expenses on Class B or C shares
for which no initial sales charge is paid.
15
<PAGE>
INVESTING FOR THE SHORT TERM. If you have a short-term investment horizon
(that is, you plan to hold your shares for not more than six years), you should
probably consider purchasing Class A or Class C shares rather than Class B
shares, because of the effect of the Class B contingent deferred sales charge if
you redeem within 6 years, as well as the effect of the Class B asset-based
sales charge on the investment return for that class in the short-term. Class C
shares might be the appropriate choice (especially for investments of less than
$100,000), because there is no initial sales charge on Class C Shares, and the
contingent deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the shorter term, then the
more you invest and the more your investment horizon increases toward six years,
Class C shares might not be as advantageous as Class A shares. That is because
the annual asset-based sales charge on Class C shares will have a greater impact
on your account over the longer term than the reduced front-end sales charge
available for larger purchases of Class A shares. For example, Class A might be
more advantageous than Class C (as well as Class B) for investments of more than
$100,000 expected to be held for 5 or 6 years (or more). For investments over
$250,000 expected to be held 4 to 6 years (or more), Class A shares may become
more advantageous than Class C (and B). If investing $500,000 or more, Class A
may be more advantageous as your investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases Class A
shares will be the most advantageous choice, no matter how long you intend to
hold your shares. For that reason, the Distributor normally will not accept
purchase orders of $500,000 or $1 million or more of Class B or C shares
respectively from a single investor. Of course, these examples are based on
approximations of the effect of current sales charges and expenses on a
hypothetical investment over time, using the assumed annual performance return
stated above, and therefore should not be relied on as rigid guidelines.
INVESTING FOR THE LONGER TERM. If you are investing for the longer term,
for example, for retirement, and do not expect to need access to your money for
seven years or more, Class B shares may be an appropriate consideration, if you
plan to invest less than $100,000. If you plan to invest more than $100,000
over the long term, Class A shares will likely be more advantageous than Class B
shares or C shares, as discussed above, because of the effect of the expected
lower expenses for class A shares and the reduced initial sales charges
available for larger investments in Class A shares under the Funds' Right of
Accumulation.
/ / ARE THERE DIFFERENCES IN ACCOUNT FEATURES THAT MATTER TO YOU?
Because some account features may not be available for Class B or Class C
shareholders, you should carefully review how you plan to use your investment
account before deciding which class of shares is better for you. For example,
share certificates are not available for Class B or Class C shares, and if you
are considering using your shares as collateral for a loan, that may be a factor
to consider. Additionally, dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne solely by those
classes, such as the asset-based sales charges described below and in the
Statement of Additional Information.
/ / HOW DOES IT AFFECT PAYMENTS TO MY BROKER? A salesperson, such as a
broker, or any other person who is entitled to receive compensation for selling
Fund shares may receive different compensation for selling one class rather than
another class. It is important that investors understand that the purpose of
the contingent deferred sales charges and asset-based sales charges for Class B
and Class C shares are the same as the purpose of the front-end sales charge on
sales of Class A shares: to compensate the Distributor for commissions it pays
to dealers and financial institutions for selling shares.
HOW MUCH MUST YOU INVEST? You can open a Fund account with a minimum initial
investment of $1,000 and make additional investments at any time with as little
as $25. There are reduced minimum investments under special investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of at least
$25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250 (if
your IRA is established under an Asset Builder Plan, the $25 minimum applies),
and subsequent investments may be as little as $25.
16
<PAGE>
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list of them
appears in the Statement of Additional Information, or you can ask your dealer
or call the Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
/ / HOW ARE SHARES PURCHASED? You can buy shares several ways: through
any dealer, broker or financial institution that has a sales agreement with the
Distributor, directly through the Distributor, or automatically from your bank
account through an Asset Builder Plan under the OppenheimerFunds AccountLink
service. WHEN YOU BUY SHARES, BE SURE TO SPECIFY CLASS A, CLASS B OR CLASS C
SHARES. IF YOU DO NOT CHOOSE, YOUR INVESTMENT WILL BE MADE IN CLASS A SHARES.
/ / BUYING SHARES THROUGH YOUR DEALER. Your dealer will place your order
with the Distributor on your behalf.
/ / BUYING SHARES THROUGH THE DISTRIBUTOR. Complete an OppenheimerFunds
New Account Application and return it with a check payable to "Oppenheimer Funds
Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217. If you
don't list a dealer on the application, the Distributor will act as your agent
in buying the shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure it is appropriate for you.
/ / BUYING SHARES THROUGH OPPENHEIMERFUNDS ACCOUNTLINK. You can use
AccountLink to link your Fund account with an account at a U.S. bank or other
financial institution that is an Automated Clearing House (ACH) member, to
transmit funds electronically to PURCHASE SHARES, to have the Transfer Agent
SEND REDEMPTION PROCEEDS, or to TRANSMIT DIVIDENDS AND DISTRIBUTIONS.
Shares are purchased for your account on the regular business day the
Distributor is instructed by you to initiate the ACH transfer to buy shares.
You can provide those instructions automatically, under an Asset Builder Plan,
described below, or by telephone instructions using OppenheimerFunds PhoneLink,
also described below. You should request AccountLink privileges on the
application or dealer settlement instructions used to establish your account.
Please refer to "AccountLink" below for more details.
/ / ASSET BUILDER PLANS. You may purchase shares of the Fund (and up to
four other OppenheimerFunds) automatically each month from your account at a
bank or other financial institution under an Asset Builder Plan with
AccountLink. Details are on the Application and in the Statement of Additional
Information.
/ / AT WHAT PRICE ARE SHARES SOLD? Shares are sold at the public offering
price based on the net asset value (and any initial sales charge that applies)
that is next determined after the Distributor receives the purchase order in
Denver. In most cases, to enable you to receive that day's offering price, the
Distributor must receive your order by the time of day the New York Stock
Exchange closes, which is normally 4:00 P.M., New York time, but may be earlier
on some days (all references to time in this Prospectus mean "New York time").
The net asset value of each class of shares is determined as of that time on
each day the New York Stock Exchange is open (which is a "regular business
day").
If you buy shares through a dealer, the dealer must receive your order by
the regular close of business of the New York Stock Exchange on a regular
business day and transmit it to the Distributor so that it is received before
the Distributor's close of business that day, which is normally 5:00 P.M. THE
DISTRIBUTOR MAY REJECT ANY PURCHASE ORDER FOR THE FUND'S SHARES, IN ITS SOLE
DISCRETION.
BUYING CLASS A SHARES. Class A shares are sold at their offering price, which
is normally net asset value plus an initial sales charge. However, in some
cases, described below, where purchases are not subject to an initial sales
charge, the offering price may be net asset value. In some cases, reduced sales
charges may be available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The sales charge
varies depending on the amount of your purchase. A portion of the sales charge
may be retained by the Distributor and allocated to your dealer as commission.
The current sales charge rates and commissions paid to dealers and brokers are
as follows:
17
<PAGE>
<TABLE>
<CAPTION>
______________________________________________________________________________________
FRONT-END SALES CHARGE FRONT-END SALES CHARGE COMMISSION AS
AS A PERCENTAGE OF AS A PERCENTAGE OF PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
______________________________________________________________________________________
<S> <C> <C> <C>
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
______________________________________________________________________________________
</TABLE>
The Distributor reserves the right to reallow the entire commission to dealers.
If that occurs, the dealer may be considered an "underwriter" under Federal
securities laws.
/ / CLASS A CONTINGENT DEFERRED SALES CHARGE. There is no initial sales
charge on purchases of Class A shares of any one or more of the OppenheimerFunds
in the following cases:
/ / Purchases aggregating $1 million or more, or
/ / Purchases by an OppenheimerFunds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more, or (2) has, at the time of purchase, 100
or more eligible participants, or (3) certifies that it projects to have annual
plan purchases of $200,00 or more.
Shares of any of the OppenheimerFunds that offer only one class of shares
that has no designation are considered "Class A shares" for this purpose. The
Distributor pays dealers of record commissions on those purchases in an amount
equal to the sum of 1.0% of the first $2.5 million, plus 0.50% of the next $2.5
million, plus 0.25% of purchases over $5 million. That commission will be paid
only on the amount of those purchases in excess of $1 million ($500,000 for
purchases by OppenheimerFunds 401(k) prototype plans) that were not previously
subject to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge (called the
"Class A contingent deferred sales charge") will be deducted from the redemption
proceeds. That sales charge will be equal to 1.0% of (1) the aggregate net asset
value of the redeemed shares (not including shares purchased by reinvestment of
dividends or capital gain distributions) or (2) the original cost of the shares,
whichever is less. Shares purchased prior to July 1, 1994 are subject to a
contingent deferred sales charge if they are redeemed within 24 months of the
end of the calendar month in which they were purchased in an amount equal to 1%
if the redemption occurs within the first 12 months and equal to .5 of 1% if the
redemption occurs in the next 12 months. Shares purchased on or after July 1,
1994 but prior to the date of this prospectus are subject to a contingent
deferred sales charge if they are redeemed within 12 months of the end of the
calendar month of their purchase in an amount equal to 1%. However, the
18
<PAGE>
Class A contingent deferred sales charge will not exceed the aggregate
commissions the Distributor paid to your dealer on all Class A shares of all
OppenheimerFunds you purchased subject to the Class A contingent deferred sales
charge.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of
shares under the Fund's exchange privilege (described below). However, if the
shares acquired by exchange are redeemed within 18 months of the end of the
calendar month of the purchase of the exchanged shares, the sales charge will
apply.
/ / SPECIAL ARRANGEMENTS WITH DEALERS. The Distributor may advance up to
13 months' commissions to dealers that have established special arrangements
with the Distributor for Asset Builder Plans for their clients. Dealers whose
sales of Class A shares of OppenheimerFunds (other than money market funds)
under OppenheimerFunds-sponsored 403(b)(7) custodial plans exceed $5 million per
year (calculated per quarter), will receive monthly one-half of the
Distributor's retained commissions on those sales, and if those sales exceed $10
million per year, those dealers will receive the Distributor's entire retained
commission on those sales.
REDUCED SALES CHARGES FOR CLASS A SHARE PURCHASES. You may be eligible to buy
Class A shares at reduced sales charge rates in one or more of the following
ways:
/ / RIGHT OF ACCUMULATION. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can add
together Class A and Class B shares you purchase for your individual accounts,
or jointly, or for trust or custodial accounts on behalf of your children who
are minors. A fiduciary can cumulate shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit plans of the
same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and Class B
shares of the Fund and other OppenheimerFunds to reduce the sales charge rate
that applies to current purchases of Class A shares. You can also count Class A
and Class B shares of OppenheimerFunds you previously purchased subject to an
initial or contingent deferred sales charge to reduce the sales charge rate for
current purchases of Class A shares, provided that you still hold that
investment in one of the OppenheimerFunds. The value of those shares will be
based on the greater of the amount you paid for the shares or their current
value (at offering price). The OppenheimerFunds are listed in "Reduced Sales
Charges" in the Statement of Additional Information, or a list can be obtained
from the Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
/ / LETTER OF INTENT. Under a Letter of Intent, if you purchase Class A
shares or Class A and Class B shares of the Fund and other OppenheimerFunds
during a 13-month period, you can reduce the sales charge rate that applies to
your purchases of Class A shares. The total amount of your intended purchases
of both Class A and Class B shares will determine the reduced sales charge rate
for the Class A shares purchased during that period. This can include purchases
made up to 90 days before the date of the Letter. More information is contained
in the Application and in "Reduced Sales Charges" in the Statement of Additional
Information.
/ / GROUP AND ASSOCIATION PURCHASES AND PURCHASES BY CERTAIN QUALIFIED
RETIREMENT PLANS. The following table sets forth the applicable sales charge for
purchases of Class A shares made through a single broker or dealer by qualified
retirement plans including 401(k), 403(b) plans, SEP/IRA and IRA plans of a
single employer, and by members of associations formed for any purpose other
than the purchase of securities that purchased shares of any former Quest Fund
or that received a proposal from OpCap Distributors prior to the date of this
prospectus:
19
<PAGE>
NUMBER OF AS A % AS A % PERCENT OF
ELIGIBLE EMPLOYEES OR MEMBERS OF OF OFFERING
OFFERING NET PRICE
PRICE ASSET RE-ALLOWED TO
VALUE SELLING
PER DEALERS
SHARE
9 or less . . . . . . . . . . . . . . . . . 3.00% 3.09% 2.60%
Between 10 & 49 . . . . . . . . . . . . . . 2.00% 2.04% 1.65%
50 or more . . . . . . . . . . . . . . . . 0.00% see "Class A Contingent
Deferred Sales Charge,"
p.
Purchases made under the Group Purchase provision will qualify for the lower
of the sales charge computed according to the table based on the number of
eligible employees in a plan or members of an association or the sales charge
level under the Rights of Accumulation described above. Purchases by retirement
plans covering 50 or more eligible employees or by associations or groups with
50 or more members shall be entitled to the sales charge waiver applicable to
purchases of $1 million or more described above. In addition, purchases by
401(k) plans can qualify for this sales charge waiver if, in the opinion of
Quest Distributors, the initial purchase plus projected contributions to be
invested in the plan for the following 12 months will exceed $1,000,000.
Individuals who qualify for reduced sales charges as members of
associations,groups or eligible employees in plans as set forth in the above
table also may purchase shares for their individual or custodial accounts at the
same sales charge level.
/ / WAIVERS OF CLASS A SALES CHARGES. The Class A sales charges are not
imposed in the circumstances described below. There is an explanation of this
policy in "Reduced Sales Charges" in the Statement of Additional Information.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES FOR CERTAIN
PURCHASERS. Class A shares purchased by the following investors are not subject
to any Class A sales charges:
/ / the Manager or its affiliates;
/ / present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
/ / registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose;
/ / dealers or brokers that have a sales agreement with the Distributor,
if they purchase shares for their own accounts or for retirement plans for their
employees;
/ / employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have entered
into sales arrangements with such dealers or brokers (and are identified to the
Distributor) or with the Distributor; the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children);
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor providing specifically for the use of
shares of the Fund in particular investment products made available to their
clients; and
/ / dealers, brokers or registered investment advisers that have entered
into an agreement with the Distributor to sell shares of defined contribution
employee retirement plans for which the dealer, broker or investment adviser
provides administrative services.
/ / directors, trustees, officers or full time employees of OpCap Advisors
or its affiliates, their relatives or any trust, pension, profit sharing or
other benefit plan for any of them.
/ / accounts advised by Oppenheimer Capital or persons who are directors
or trustees of such accounts.
20
<PAGE>
/ / purchases made with the proceeds of maturing principal of any
Qualified Unit Investment Liquid Trust Series.
/ / Shareholders of the AMA Family of Funds who acquired shares of any of
the former Quest for Value Funds pursuant to a combination of a Quest Fund with
a portfolio of the AMA Family of Funds who were shareholders of the AMA Family
of Funds on February 28, 1991, provided they continuously own shares of a former
Quest Fund.
/ / Shareholders who acquired shares of any Quest Fund pursuant to the
combination of certain Quest Funds with portfolios of the Unified Funds,
provided they continuously own shares of a former Quest Fund.
WAIVERS OF INITIAL AND CONTINGENT DEFERRED SALES CHARGES IN CERTAIN
TRANSACTIONS. Class A shares issued or purchased in the following transactions
are not subject to Class A sales charges:
/ / shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party,
/ / shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates acts as
sponsor,
/ / shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other OppenheimerFunds (other than
Oppenheimer Cash Reserves) or unit investment trusts for which reinvestment
arrangements have been made with the Distributor, or
/ / shares purchased and paid for with the proceeds of shares redeemed in
the prior 12 months from a mutual fund (other than a fund managed by the Manager
or any of its subsidiaries) on which an initial sales charge or contingent
deferred sales charge was paid (this waiver also applies to shares purchased by
exchange of shares of Oppenheimer Money Market Fund, Inc. that were purchased
and paid for in this manner); this waiver must be requested when the purchase
order is placed for your shares of the Fund, and the Distributor may require
evidence of your qualification for this waiver.
WAIVERS OF THE CLASS A CONTINGENT DEFERRED SALES CHARGE FOR CERTAIN
REDEMPTIONS. The Class A contingent deferred sales charge does not apply to
purchases of Class A shares at net asset value without sales charge as described
in the two sections above. It is also waived if shares that would otherwise be
subject to the contingent deferred sales charge are redeemed in the following
cases:
/ / for retirement distributions or loans to participants or beneficiaries
from qualified retirement plans, deferred compensation plans or other employee
benefit plans, including OppenheimerFunds prototype 401(k) plans (these are all
referred to as "Retirement Plans:); or
/ / to return excess contributions made to Retirement Plans; or
/ / to make Automatic Withdrawal Plan payments that are limited annually
to no more than 12% of the original account value; or
/ / involuntary redemptions of shares by operation of law or involuntary
redemptions of small accounts (see "Shareholder Account Rules and Policies,"
below); or
/ / if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales charge, the
dealer agrees to accept the dealer's portion of the commission payable on the
sale in installments of 1/18th of the commission per month (and no further
commission will be payable if the shares are redeemed within 18 months of
purchase); or
/ / for distributions from OppenheimerFunds prototype 401(k) plans for any
of the following cases or purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or beneficiary (the
death or
21
<PAGE>
disability must occur after the participant's account was established); (2)
hardship withdrawals, as defined in the plan; (3) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (4) to meet the
minimum distribution requirements of the Internal Revenue Code; (5) to
establish "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code, or (6) separation from service.
/ / DISTRIBUTION AND SERVICE PLAN FOR CLASS A SHARES. Each Fund has
adopted a Distribution and Service Plan for Class A shares to compensate the
Distributor for distributing Class A shares and servicing accounts. Under the
Plan the Fund pays the Distributor an annual distribution fee of .15% per year
on Class A shares of the Growth and Income Fund and .25% per year on Class A
shares of the Quest for Value Fund, Opportunity, Small Capitalization and Global
Equity Funds. The Distributor also receives a service fee of .25% per year with
respect to all the Funds. Both fees are computed on the average annual net
assets of Class A shares, determined as of the close of each regular business
day. The distribution fee is used by the Distributor to compensate dealers that
sell Class A shares. The Distributor uses all of the service fees to compensate
dealers, brokers, banks and other financial institutions quarterly for providing
personal service and maintenance of accounts of their customers that hold Class
A shares. Services to be provided include, among others, answering customer
inquiries about a Fund, assisting in establishing and maintaining accounts in
the Fund, making the Fund's investment plans available and providing other
services at the request of the Fund or the Distributor. The payments under the
Plan increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
BUYING CLASS B SHARES. Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed within
6 years of their purchase, a contingent deferred sales charge will be deducted
from the redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains distributions. The
charge will be assessed on the lesser of the net asset value of the shares at
the time of redemption or the original purchase price. The contingent deferred
sales charge is not imposed on the amount of your account value represented by
the increase in net asset value over the initial purchase price (including
increases due to the reinvestment of dividends and capital gains distributions).
The Class B contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 6 years, and (3) shares held the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on the number
of years since you invested and the dollar amount being redeemed, according to
the following schedule:
YEARS SINCE CONTINGENT DEFERRED SALES CHARGE
BEGINNING OF MONTH IN WHICH ON REDEMPTIONS IN THAT YEAR
PURCHASE ORDER WAS ACCEPTED (AS % OF AMOUNT SUBJECT TO CHARGE)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are considered to
have been made on the first regular business day of the month in which the
purchase was made.
22
<PAGE>
/ / AUTOMATIC CONVERSION OF CLASS B SHARES. Six years after you purchase
Class B shares, those shares will automatically convert to Class A shares.
Class B shares purchased prior to the date of this Prospectus will convert to
Class A shares after eight years. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class B shares
under the Class B Distribution Plan, described below. The conversion is based on
the relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares that
were acquired by the reinvestment of dividends and distributions on the
converted shares will also convert to Class A shares. The conversion feature is
subject to the continued availability of a tax ruling described in "Alternative
Sales Arrangements - Class A, Class B and Class C Shares" in the Statement of
Additional Information.
/ / DISTRIBUTION AND SERVICE PLAN FOR CLASS B SHARES. The Fund has adopted
a Distribution and Service Plan for Class B shares to compensate the Distributor
for distributing Class B shares and servicing accounts. Under the Plan, the Fund
pays the Distributor an annual "asset-based sales charge" of 0.75% per year on
Class B shares that are outstanding for 6 years or less. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on the average
annual net assets of Class B shares, determined as of the close of each regular
business day. The asset-based sales charge allows investors to buy Class B
shares without a front-end sales charge while allowing the Distributor to
compensate dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for providing
personal services for accounts that hold Class B shares. Those services are
similar to those provided under the Class A Service Plan, described above. The
asset-based sales charge and service fee increase Class B expenses by 1.00% of
average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for the
first year after Class B shares have been sold by the dealer. After the shares
have been held for a year, the Distributor pays the fee on a quarterly basis.
The Distributor pays sales commissions of 3.75% of the purchase price to dealers
from its own resources at the time of sale.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class B shares. Those
payments, retained by the Distributor, are at a fixed rate which is not related
to the Distributor's expenses. The services rendered by the Distributor include
paying and financing the payment of sales commissions, service fees, and other
costs of distributing and selling Class B shares. If the Plan is terminated by
the Fund, the Board of Trustees may allow the Fund to continue payments of the
service fee and/or asset-based sales charge to the Distributor for distributing
Class B shares before the Plan was terminated.
BUYING CLASS C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within
12 months of their purchase, a contingent deferred sales charge of 1.0% will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset value
of the shares at the time of redemption or the original purchase price. The
contingent deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial purchase
price (including increases due to the reinvestment of dividends and capital
gains distributions). The Class C contingent deferred sales charge is paid to
the Distributor to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 12 months, and (3) shares held the longest during the 12-month period.
/ / DISTRIBUTION AND SERVICE PLAN FOR CLASS C SHARES. The Fund has adopted
a Distribution and Service Plan for Class C shares to compensate the Distributor
for distributing Class C shares and servicing accounts. Under the Plan, the Fund
pays the Distributor an annual "asset-based sales charge" of 0.75% per year on
Class C shares. The Distributor also receives a service fee of 0.25% per year.
Both fees are computed on the average annual net assets of Class C shares,
determined as of the close of each regular business day. The asset-based sales
charge allows investors to buy Class C shares without a front-end sales charge
while allowing the Distributor to compensate dealers that sell Class C shares.
23
<PAGE>
The Distributor uses the service fee to compensate dealers for providing
personal services for accounts that hold Class C shares. Those services are
similar to those provided under the Class A Service Plan, described above. The
asset-based sales charge and service fees increase Class C expenses by 1.00% of
average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for the
first year after Class C shares have been sold by the dealer. After the shares
have been held for a year, the Distributor pays the fee on a quarterly basis.
The Distributor pays sales commissions of 0.75% of the purchase price to dealers
from its own resources at the time of sale. The total up-front commission paid
by the Distributor to the dealer at the time of sale of Class C shares is 1.00%
of the purchase price. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares that have been
outstanding for a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C shares. Those
payments are at a fixed rate which is not related to the Distributor's expenses.
The services rendered by the Distributor include paying and financing the
payment of sales commissions, service fees, and other costs of distributing and
selling Class C shares, including compensation of personnel of the Distributor
who support distribution of Class C shares. If the Plan is terminated by the
Fund, the Board of Trustees may allow the Fund to continue payments of the
service fee and/or asset-based sales charge to the Distributor for distributing
Class C shares before the plan was terminated.
/ / WAIVERS OF CLASS B AND CLASS C SALES CHARGES. The Class B and Class C
contingent deferred sales charges will not be applied to shares purchased in
certain types of transactions nor will it apply to shares redeemed in certain
circumstances as described below. The reasons for this policy are in "Reduced
Sales Charges" in the Statement of Additional Information.
WAIVERS FOR REDEMPTIONS IN CERTAIN CASES. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares in
the following cases:
/ / distributions to participants or beneficiaries from Retirement Plans, if
the distributions are made (a) under an Automatic Withdrawal Plan after the
participant reaches age 59-1/2, as long as the payments are no more than 10% of
the account value annually (measured from the date the Transfer Agent received
the request), or (b) following the death or disability (as defined in the
Internal Revenue Code ("IRC")) of the participant or beneficiary (the death or
disability must have occurred after the account was established);
/ / redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or disability
must have occurred after the account was established, and for disability you
must provide evidence of a determination of disability by the Social Security
Administration);
/ / returns of excess contributions to Retirement Plans;
/ / distributions from IRAs (including SEP-IRAs and SAR/SEP accounts) before
the participant is age 59-1/2, and distributions from 403(b)(7) custodial plans
or pension or profit sharing plans before the participant is age 59-1/2 but only
after the participant has separated from service, if the distributions are made
in substantially equal periodic payments over the life (or life expectancy) of
the participant or the joint lives (or joint life and last survivor expectancy)
of the participant and the participant's designated beneficiary (and the
distributions must comply with other requirements for such distributions under
the IRC and may not exceed 10% of the account value annually, measured from the
date the Transfer Agent received the request);
/ / shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
/ / distributions from OppenheimerFunds prototype 401(k) plans: (1) for
hardship withdrawals; (2) under a Qualified Domestic Relations Order, as
defined in the IRC; (3) to meet minimum distribution requirements as defined in
the IRC; (4) to make "substantially equal periodic payments" as described in
Section 72(t) of the IRC; (5) for separation from service.
24
<PAGE>
WAIVERS FOR REDEMPTIONS WITH RESPECT TO PURCHASES PRIOR TO MARCH 6, 1995. The
CDSC will be waived in the case of redemptions of Class A, B or C shares
purchased prior to March 6, 1995 in connection with (i) distributions to
participants or beneficiaries of plans qualified under Section 401(a) of the
Internal Revenue Code ("IRC") or from custodial accounts under IRC
Section 403(b)(7), individual retirement accounts under IRC Section 408(a),
deferred compensation plans under IRC section 457 and other employee benefit
plans ("plans"), and returns of excess contributions made to these plans,
(ii) withdrawals under an automatic withdrawal plan where the annual withdrawal
does not exceed 10% of the opening value of the account (only for Class B and C
shares); and (iii) liquidation of a shareholder's account if the aggregate net
asset value of shares held in the account is less than the required minimum.
WAIVERS FOR REDEMPTION WITH RESPECT TO PURCHASES ON OR AFTER MARCH 6, 1995 BUT
PRIOR TO DATE OF THE PROSPECTUS. The CDSC will be waived in the case of
redemptions of Class A, B or C shares purchased on or after March 6, 1995, but
prior to the date of this Prospectus in connection with 1) distributions to
participants or beneficiaries from individual retirement accounts under
Section 408(a) of the and retirement plans under Section 401(a), 401(k),
403(b) and 457 of the IRC, which distributions are made either (a) to an
individual participant as a result of separation from service or (b) following
the death or disability (as defined in the IRC) of the participant or
beneficiary; 2) returns of excess contributions to such retirement plans;
3) redemptions other than from retirement plans following the death or
disability of the shareholder(s) (as evidenced by a determination of total
disability by the U.S. Social Security Administration); [4) withdrawals under an
automatic withdrawal plan where the annual withdrawals do not exceed 10% of the
opening value of the account (only for Class B and C shares)]; and
5) liquidation of a shareholder's account if the aggregate net asset value of
shares held in the account is less than the required minimum. A shareholder will
be credited with any CDSC paid in connection with the redemption of any Class A,
B or C shares if within 90 days after such redemption, the proceeds are invested
in the same Class of shares in the same and/or another Fund.
SPECIAL FIDUCIARY RELATIONSHIPS. The CDSC will not apply with respect to
purchases of Class A shares for which the selling dealer is not permitted to
receive a sales load or redemption fee imposed on a shareholder with whom such
dealer has a fiduciary relationship in accordance with provisions of the
Employee Retirement Income Security Act and regulations thereunder. If such
dealer agrees to the reimbursement provision described below, no sales charge
will be imposed on sales of $1,000,000 or more and the Distributor will pay to
the selling dealer a commission described above in, "Class A Contingent Deferred
Sales Charge".
For the period of 13 months from the date of the sales referred to in the
above paragraph, the distribution fee payable by a Fund to the Distributor
pursuant to the Fund's Distribution Plan in connection with such shares will be
retained by the Distributor. In the event of a redemption of any such shares
within 24 months of purchase, the selling dealer will reimburse the Distributor
for the amount of commission paid less the amount of the distribution fee with
respect to such shares.
PURCHASES BY STRATEGIC ALLIANCES. The CDSC will not apply with respect to
purchases of Class A shares by participants in qualified retirement plans that
are part of strategic alliances. No sales charge will be imposed on such
purchases and the Distributor will pay to the selling dealer a commission
described above in "Class A Contingent Deferred Sales Charge." For the period of
13 months from the date of such sales, the distribution fee payable by a Fund to
the Distributor pursuant to the Fund's Distribution and Services Plan in
connection with such shares will be retained by the Distributor.
WAIVERS FOR SHARES SOLD OR ISSUED IN CERTAIN TRANSACTIONS. The contingent
deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:
/ / shares sold to the Manager or its affiliates;
/ / shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose; or
/ / shares issued in plans or reorganization to which the Fund is a party.
25
<PAGE>
SPECIAL INVESTOR SERVICES
ACCOUNTLINK. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send money
electronically between those accounts to perform a number of types of account
transactions. These include purchases of shares by telephone (either through a
service representative or by PhoneLink, described below), automatic investments
under Asset Builder Plans, and sending dividends and distributions or Automatic
Withdrawal Plan payments directly to your bank account. Please refer to the
Application for details or call the Transfer Agent for more information.
AccountLink privileges must be requested on the Application you use to buy
shares, or on your dealer's settlement instructions if you buy your shares
through your dealer. After your account is established, you can request
AccountLink privileges on signature-guaranteed instructions to the Transfer
Agent. AccountLink privileges will apply to each shareholder listed in the
registration on your account as well as to your dealer representative of record
unless and until the Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your account, any
change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own the
account.
/ / USING ACCOUNTLINK TO BUY SHARES. Purchases may be made by telephone
only after your account has been established. To purchase shares in amounts up
to $250,000 through a telephone representative, call the Distributor at 1-800-
852-8457. The purchase payment will be debited from your bank account.
/ / PHONELINK. PhoneLink is the OppenheimerFunds automated telephone
system that enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on already-
established Fund accounts after you obtain a Personal Identification Number
(PIN), by calling the special PhoneLink number: 1-800-533-3310.
/ / PURCHASING SHARES. You may purchase shares in amounts up to $100,000
by phone, by calling 1-800-533-3310. You must have established AccountLink
privileges to link your bank account with the Fund, to pay for these purchases.
/ / EXCHANGING SHARES. With the OppenheimerFunds exchange privilege,
described below, you can exchange shares automatically by phone from your Fund
account to another OppenheimerFunds account you have already established by
calling the special PhoneLink number. Please refer to "How to Exchange Shares,"
below, for details.
/ / SELLING SHARES. You can redeem shares by telephone automatically by
calling the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares," below, for
details.
AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. Each Fund has several plans that enable
you to sell shares automatically or exchange them to another OppenheimerFunds
account on a regular basis:
/ / AUTOMATIC WITHDRAWAL PLANS. If your Fund account is $5,000 or more, you
can establish an Automatic Withdrawal Plan to receive payments of at least $50
on a monthly, quarterly, semi-annual or annual basis. The checks may be sent to
you or sent automatically to your bank account on AccountLink. You may even set
up certain types of withdrawals of up to $1,500 per month by telephone. You
should consult the Application and Statement of Additional Information for more
details.
/ / AUTOMATIC EXCHANGE PLANS. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of up to
five other OppenheimerFunds on a monthly, quarterly, semi-annual or annual basis
under an Automatic Exchange Plan. The minimum purchase for each other
OppenheimerFunds account is $25. These exchanges are subject to the terms of
the Exchange Privilege, described below.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A shares, you
have up to 6 months to reinvest all or part of the redemption proceeds in Class
A shares of a Fund or other OppenheimerFunds without paying a sales charge.
This
26
<PAGE>
privilege applies to Class A shares that you purchased subject to an initial
sales charge and to Class A shares on which you paid a contingent deferred sales
charge when you redeemed them. It does not apply to Class C shares. Please
consult the Statement of Additional Information for more details.
RETIREMENT PLANS. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer, the
plan trustee or administrator must make the purchase of shares for your
retirement plan account. The Distributor offers a number of different retirement
plans that can be used by individuals and employers:
/ / INDIVIDUAL RETIREMENT ACCOUNTS including rollover IRAs, for
individuals and their spouses
/ / 403(b)(7) CUSTODIAL PLANS for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
/ / SEP-IRAS (Simplified Employee Pension Plans) for small business owners
or people with income from self-employment, including SAR/SEP IRAs
/ / PENSION AND PROFIT-SHARING PLANS for self-employed persons and small
business owners
/ / 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents, which
contain important information and applications.
HOW TO SELL SHARES
You can arrange to take money out of your account on any regular business
day by selling (redeeming) some or all of your shares. Your shares will be sold
at the next net asset value calculated after your order is received and accepted
by the Transfer Agent. The Fund offers you a number of ways to sell your
shares: in writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. IF YOU HAVE
QUESTIONS ABOUT ANY OF THESE PROCEDURES, AND ESPECIALLY IF YOU ARE REDEEMING
SHARES IN A SPECIAL SITUATION, SUCH AS DUE TO THE DEATH OF THE OWNER, OR FROM A
RETIREMENT PLAN, PLEASE CALL THE TRANSFER AGENT FIRST, AT 1-800-525-7048, FOR
ASSISTANCE.
/ / RETIREMENT ACCOUNTS. To sell shares in an OppenheimerFunds retirement
account in your name, call the Transfer Agent for a distribution request form.
There are special income tax withholding requirements for distributions from
retirement plans and you must submit a withholding form with your request to
avoid delay. If your retirement plan account is held for you by your employer,
you must arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the Statement of
Additional Information.
/ / CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE. To protect you and
each Fund from fraud, certain redemption requests must be in writing and must
include a signature guarantee in the following situations (there may be other
situations also requiring a signature guarantee):
/ / You wish to redeem more than $50,000 worth of shares and receive a
check
/ / The redemption check is not payable to all shareholders listed on the
account statement
/ / The redemption check is not sent to the address of record on your
statement
/ / Shares are being transferred to a Fund account with a different owner
or name
/ / Shares are redeemed by someone other than the owners (such as an
Executor)
/ / WHERE CAN I HAVE MY SIGNATURE GUARANTEED? The Transfer Agent will
accept a guarantee of your signature by a number of financial institutions,
including: a U.S. bank, trust company, credit union or savings association, or
by a foreign bank that has a U.S. correspondent bank, or by a U.S. registered
dealer or broker in securities, municipal securities or government securities,
or by a U.S. national securities exchange, a registered securities association
or a clearing agency.
27
<PAGE>
IF YOU ARE SIGNING AS A FIDUCIARY OR ON BEHALF OF A CORPORATION, PARTNERSHIP OR
OTHER BUSINESS, YOU MUST ALSO INCLUDE YOUR TITLE IN THE SIGNATURE.
SELLING SHARES BY MAIL. Write a "letter of instructions" that includes:
-- Your name
-- The Fund's name
-- Your Fund account number (from your account statement)
-- The dollar amount or number of shares to be redeemed
-- Any special payment instructions
-- Any share certificates for the shares you are selling,
-- The signatures of all registered owners exactly as the account is
registered, and
-- Any special requirements or documents requested by the Transfer Agent
to assure proper authorization of the person asking to sell shares.
USE THE FOLLOWING ADDRESS FOR REQUESTS SEND COURIER OR EXPRESS MAIL
BY MAIL: REQUESTS TO:
Shareholder Services, Inc. Shareholder Services, Inc.
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231
SELLING SHARES BY TELEPHONE. You and your dealer representative of record may
also sell your shares by telephone. To receive the redemption price on a regular
business day, your call must be received by the Transfer Agent by the close of
The New York Stock Exchange that day, which is normally 4:00 P.M. but may be
earlier on some days. SHARES HELD IN AN OPPENHEIMERFUNDS RETIREMENT PLAN OR
UNDER A SHARE CERTIFICATE MAY NOT BE REDEEMED BY TELEPHONE.
/ / To redeem shares through a service representative, call 1-800-852-8457
/ / To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address on the
account statement, or, if you have linked your Fund account to your bank account
on AccountLink, you may have the proceeds wired to that bank account.
/ / TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone, once in each 7-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account. This
service is not available within 30 days of changing the address on an account.
/ / TELEPHONE REDEMPTIONS THROUGH ACCOUNTLINK. There are no dollar limits
on telephone redemption proceeds sent to a bank account designated when you
establish AccountLink. Normally the ACH wire to your bank is initiated on the
business day after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be wired.
SELLING SHARES THROUGH YOUR DEALER. The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. Please refer to "Special
Arrangements for Repurchase of Shares from Dealers and Brokers" in the Statement
of Additional Information for more details.
HOW TO EXCHANGE SHARES
Shares of the Funds may be exchanged for shares of certain OppenheimerFunds
at net asset value per share at the time of exchange, without sales charge. To
exchange shares, you must meet several conditions:
/ / Shares of the fund selected for exchange must be available for sale in
your state of residence
28
<PAGE>
/ / The prospectuses of this Fund and the fund whose shares you want to
buy must offer the exchange privilege
/ / You must hold the shares you buy when you establish your account for
at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
/ / You must meet the minimum purchase requirements for the fund you
purchase by exchange
/ / BEFORE EXCHANGING INTO A FUND, YOU SHOULD OBTAIN AND READ ITS
PROSPECTUS
SHARES OF A PARTICULAR CLASS MAY BE EXCHANGED ONLY FOR SHARES OF THE SAME
CLASS IN THE OTHER OPPENHEIMERFUNDS. For example, you can exchange Class A
shares of this Fund only for Class A shares of another fund. At present, not
all of the OppenheimerFunds offer the same classes of shares. If a fund has only
one class of shares that does not have a class designation, they are "Class A"
shares for exchange purposes. Certain OppenheimerFunds offer Class A, Class B
and/or Class C shares, and a list can be obtained by calling the Distributor at
1-800-525-7048. In some cases, sales charges may be imposed on exchange
transactions. Please refer to "How to Exchange Shares" in the Statement of
Additional Information for more details.
Exchanges may be requested in writing or by telephone:
/ / WRITTEN EXCHANGE REQUESTS. Submit an OppenheimerFunds Exchange Request
form, signed by all owners of the account. Send it to the Transfer Agent at the
addresses listed in "How to Sell Shares."
/ / TELEPHONE EXCHANGE REQUESTS. Telephone exchange requests may be made
either by calling a service representative at 1-800-852-8457 or by using
PhoneLink for automated exchanges, by calling 1-800-533-3310. Telephone
exchanges may be made only between accounts that are registered with the same
name(s) and address. Shares held under certificates may not be exchanged by
telephone.
You can find a list of OppenheimerFunds currently available for exchanges in
the Statement of Additional Information or by calling a service representative
at 1-800-525-7048. Exchanges of shares involve a redemption of the shares of the
fund you own and a purchase of shares of the other fund.
There are certain exchange policies you should be aware of:
/ / Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that is in proper form by the close
of The New York Stock Exchange that day, which is normally 4:00 P.M. but may be
earlier on some days. However, either fund may delay the purchase of shares of
the fund you are exchanging into if it determines it would be disadvantaged by a
same-day transfer of the proceeds to buy shares. For example, the receipt of
multiple exchange requests from a dealer in a "market-timing" strategy might
require the disposition of securities at a time or price disadvantageous to the
Fund.
/ / Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request that
will disadvantage it, or to refuse multiple exchange requests submitted by a
shareholder or dealer.
/ / The Fund may amend, suspend or terminate the exchange privilege at any
time. Although the Fund will attempt to provide you notice whenever it is
reasonably able to do so, it may impose these changes at any time.
/ / If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for exchange will
be exchanged.
The Distributor has entered into agreements with certain dealers and
investment advisers permitting them to exchange their clients' shares by
telephone. These privileges are limited under those agreements and the
Distributor has the right to reject or suspend those privileges. As a result,
those exchanges may be subject to notice requirements, delays and other
limitations that do not apply to shareholders who exchange their shares directly
by calling or writing to the Transfer Agent.
29
<PAGE>
SHAREHOLDER ACCOUNT RULES AND POLICIES
/ / NET ASSET VALUE PER SHARE is determined for each class of shares as of
the close of the New York Stock Exchange, which is normally 4:00 P.M. but may be
earlier on some days, on each day the Exchange is open by dividing the value of
each Fund's net assets attributable to a class by the number of shares of that
class that are outstanding. The Fund's Board of Trustees has established
procedures to value each Fund's securities to determine net asset value. In
general, securities values are based on market value. There are special
procedures for valuing illiquid and restricted securities, obligations for which
market values cannot be readily obtained, and call options and hedging
instruments. Generally, trading in foreign securities is substantially
completed each day at various times prior to the close of the NYSE. The values
of such securities used in computing the net asset value of a Fund's shares are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE. If events materially affecting the
value of such securities and exchange rates occur between the time of such
determination and/or the close of the NYSE, then these securities will be valued
at their fair value as determined in good faith under procedures established by
and under the supervision of the Fund's Board. These procedures are described
more completely in the Statement of Additional Information.
/ / THE OFFERING OF SHARES may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Trustees at any time the Board believes it is in the Fund's best
interest to do so.
/ / TELEPHONE TRANSACTION PRIVILEGES for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Funds at any time. If
an account has more than one owner, the Fund and the Transfer Agent may rely on
the instructions of any one owner. Telephone privileges apply to each owner of
the account and the dealer representative of record for the account unless and
until the Transfer Agent receives cancellation instructions from an owner of the
account.
/ / THE TRANSFER AGENT WILL RECORD ANY TELEPHONE CALLS to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not use
reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it nor a Fund will be liable for losses or
expenses arising out of telephone instructions reasonably believed to be
genuine. If you are unable to reach the Transfer Agent during periods of
unusual market activity, you may not be able to complete a telephone transaction
and should consider placing your order by mail.
/ / REDEMPTION OR TRANSFER REQUESTS WILL NOT BE HONORED UNTIL THE TRANSFER
AGENT RECEIVES ALL REQUIRED DOCUMENTS IN PROPER FORM. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements for
redemptions stated in this Prospectus.
/ / DEALERS THAT CAN PERFORM ACCOUNT TRANSACTIONS FOR THEIR CLIENTS BY
PARTICIPATING IN NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to perform
those transactions and are responsible to their clients who are shareholders of
the Fund if the dealer performs any transaction erroneously.
/ / THE REDEMPTION PRICE FOR SHARES WILL VARY from day to day because the
value of the securities in each Fund's portfolio fluctuates, and the redemption
price, which is the net asset value per share, will normally be different for
Class A, Class B and Class C shares. Therefore, the redemption value of your
shares may be more or less than their original cost.
/ / PAYMENT FOR REDEEMED SHARES is made ordinarily in cash and forwarded by
check or through AccountLink (as elected by the shareholder under the redemption
procedures described above) within 7 days after the Transfer Agent receives
redemption instructions in proper form, except under unusual circumstances
determined by the Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer, payment will
be forwarded within 3 business days. THE TRANSFER AGENT MAY DELAY FORWARDING A
CHECK OR PROCESSING A PAYMENT VIA ACCOUNTLINK FOR RECENTLY PURCHASED SHARES, BUT
ONLY UNTIL THE PURCHASE PAYMENT HAS CLEARED. THAT DELAY MAY BE AS MUCH AS 10
DAYS FROM THE DATE THE SHARES WERE PURCHASED. THAT DELAY MAY BE AVOIDED IF YOU
PURCHASE SHARES
30
<PAGE>
BY CERTIFIED CHECK OR ARRANGE WITH YOUR BANK TO PROVIDE TELEPHONE OR WRITTEN
ASSURANCE TO THE TRANSFER AGENT THAT YOUR PURCHASE PAYMENT HAS CLEARED.
/ / INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by the Fund if
the account value has fallen below $200 for reasons other than the fact that the
market value of shares has dropped, and in some cases involuntary redemptions
may be made to repay the Distributor for losses from the cancellation of share
purchase orders.
/ / UNDER UNUSUAL CIRCUMSTANCES, shares of a Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with securities
from the Fund's portfolio. Please refer to the Statement of Additional
Information for more details.
/ / "BACKUP WITHHOLDING" of Federal income tax may be applied at the rate
of 31% from dividends, distributions and redemption proceeds (including
exchanges) if you fail to furnish the Fund a certified Social Security or
taxpayer identification number when you sign your application, or if you violate
Internal Revenue Service regulations on tax reporting of dividends.
/ / THE FUND DOES NOT CHARGE A REDEMPTION FEE, but if your dealer or broker
handles your redemption, they may charge a fee. That fee can be avoided by
redeeming your Fund shares directly through the Transfer Agent. Under the
circumstances described in "How To Buy Shares," you may be subject to a
contingent deferred sales charges when redeeming certain Class A, Class B and
Class C shares.
/ / TO AVOID SENDING DUPLICATE COPIES OF MATERIALS TO HOUSEHOLDS, each Fund
will mail only one copy of each annual and semi-annual report and updated
prospectus to shareholders having the same last name and address on the Fund's
records. However, each shareholder may call the Transfer Agent at 1-800-525-
7048 to ask that copies of those materials be sent personally to that
shareholder.
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income are declared and paid quarterly
for the Growth and Income Fund. The Quest for Value, Small Capitalization,
Opportunity and Global Equity Funds declare and pay dividends from net
investment income on an annual basis following the end of their fiscal years
(October 31, except for the Global Equity Fund, which is November 30). The Funds
may at times make payments from sources other than income or net capital gains.
Payments from such sources would, in effect, represent a return of each
shareholder's investment. All or a portion of such payments would not be taxable
to shareholders.
Distributions from net long-term capital gains, if any, for all Funds normally
are declared and paid annually, subsequent to the end of their respective fiscal
years. Distributions from net short-term capital gains, if any, for the U.S.
Government Income Fund will be made quarterly and for all other Funds will be
made annually. Short-term capital gains include the gains from the disposition
of securities held less than one year, a portion of the premiums from expired
put and call options written by a Fund and net gains from closing transactions
with respect to such options. If required by tax laws to avoid excise or other
taxes, dividends and/or capital gains distributions may be made more frequently.
Dividends paid by any Fund with respect to Class A, B and C shares, to the
extent any dividends are paid, will be calculated in the same manner at the same
time on the same day, with each class bearing its own distribution and other
class-related expenses. Accordingly, the higher distribution fees paid by
Class B and C shares and the higher resulting expense ratio will cause such
shares to be paid lower per share dividends than those paid on Class A shares.
However, a Class B or C shareholder will receive more shares at the time of
purchase than a Class A shareholder investing the same dollar amount since no
sales charge is deducted from the amount invested in Class B or C shares.
Reinvestment Options: You can receive your dividends and capital gains
distributions either in cash or in additional Fund shares without a sales
charge. You will be subject to tax on such distributions. See the SAI for a
description of how to change your election.
31
<PAGE>
DISTRIBUTION OPTIONS. When you open your account, specify on your application
how you want to receive your distributions. For OppenheimerFunds retirement
accounts, all distributions are reinvested. For other accounts, you have four
options:
/ / REINVEST ALL DISTRIBUTIONS IN THE FUND. You can elect to reinvest all
dividends and long-term capital gains distributions in additional shares of the
Fund.
/ / REINVEST CAPITAL GAINS ONLY. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to your
bank account on AccountLink.
/ / RECEIVE ALL DISTRIBUTIONS IN CASH. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them sent to
your bank on AccountLink.
/ / REINVEST YOUR DISTRIBUTIONS IN ANOTHER OPPENHEIMERFUNDS ACCOUNT. You
can reinvest all distributions in another OppenheimerFunds account you have
established.
TAXES. If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in a Fund. Long-term
capital gains are taxable as long-term capital gains when distributed to
shareholders. It does not matter how long you held your shares. Dividends paid
from short-term capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be subject to
state or local taxes. Your distributions are taxable when paid, whether you
reinvest them in additional shares or take them in cash. Every year each Fund
will send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.
/ / "BUYING A DIVIDEND": When a Fund goes ex-dividend, its share price is
reduced by the amount of the distribution. If you buy shares on or just before
the ex-dividend date, or just before the Fund declares a capital gains
distribution, you will pay the full price for the shares and then receive a
portion of the price back as a taxable dividend or capital gain.
/ / TAXES ON TRANSACTIONS: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is the
difference between the price you paid for the shares and the price you received
when you sold them.
/ / RETURNS OF CAPITAL: In certain cases distributions made by a Fund may
be considered a non-taxable return of capital to shareholders. If that occurs,
it will be identified in notices to shareholders. A non-taxable return of
capital may reduce your tax basis in your Fund shares.
Dividends, interest and gains on foreign securities may give rise to
withholding and other taxes imposed by foreign countries, reducing the amount
distributable to you. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. The Global EquityFund may qualify to
make an election to allow you either to claim United States foreign tax credits
with respect to such foreign taxes withheld or paid, or to deduct such amounts
as an itemized deduction on your tax return. This would increase your taxable
income (in addition to income you actually received) by the amount of such taxes
and the Fund would not be able to deduct such taxes in computing its taxable
income.
This information is only a summary of certain federal tax information about
your investment. More information is contained in the Statement of Additional
Information, and in addition you should consult with your tax adviser about the
effect of an investment in a Fund on your particular tax situation.
ADDITIONAL INFORMATION
ORGANIZATION OF THE FUNDS. The Small Capitalization, Opportunity and
Growth and Income Funds are portfolios of Quest for Value Family of Funds (the
"Trust"), an open-end management investment company organized as a Massachusetts
business trust on April 17, 1987. The Trust's other portfolio is the Officers
Fund. The Trust may establish
32
<PAGE>
additional portfolios which may have different investment objectives from those
stated in this prospectus. Quest for Value Fund, Inc. and Quest for Value Global
Equity Fund, Inc. are each open-end diversified management investment companies
organized as Maryland corporations.
None of the Funds is required to hold annual shareholder meetings, although
special meetings may be called for a specific Fund or group of Funds as a whole
as required by applicable law or as requested in writing by holders of 10% or
more of the outstanding shares of the Fund for the purpose of voting upon the
question of removal of a director or trustee. Each Fund will assist shareholders
in communicating with one another in connection with such a meeting. For matters
affecting only one portfolio of Quest for Value Family of Funds, only the
shareholders of that portfolio are entitled to vote. For matters affecting all
the portfolios, but affecting them differently, separate votes by portfolio are
required. Stock certificates for Class B charts or Class C shares will not be
issued. No stock certificates will be issued for Class A shares unless
specifically requested in writing.
Under Massachusetts law shareholders of the Trust could, in certain
circumstances, be held personally liable as partners for obligations of the
Trust. The Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Trust and its portfolios and requires
that notice of such disclaimer be given in each instrument entered into or
executed by the Trust on behalf of its portfolios. The Declaration of Trust also
provides indemnification out of the Trust's property for any shareholder held
personally liable for any of the obligations of the Trust. Thus, the risk of
loss to a shareholder from being held personally liable for the obligations of
the Trust is limited to the unlikely circumstance in which the Trust would be
unable to meet its obligations. There is a remote possibility that one Fund
might become liable for a misstatement in this Prospectus about another Fund.
Each class of shares represents identical interests in the applicable Fund's
investment portfolio. As such, they have the same rights, privileges and
preferences, except with respect to the: (a) designation of each class,
(b) effect of the respective sales charges, if any, for each class,
(c) distribution fees borne by each class, (d) expenses allocable exclusively to
each class, (e) voting rights on matters exclusively affecting a single class
and (f) exchange privilege of each class.
PERFORMANCE INFORMATION: From time to time the Funds may advertise yield and
total return figures, based on historical earnings. The figures are not intended
to indicate future performance. "Yield" is calculated by dividing the net
investment income for the stated period (exclusive of gains, if any, from
options and financial futures transactions) by the value, at maximum offering
price on the last day of the period, of the average number of shares entitled to
receive dividends during the period. The yield formula assumes that net
investment income is earned at a constant rate and reinvested semi-annually.
"Total Return" refers to the average annual compounded rates of return over some
representative period that would equate an initial amount invested at the
beginning of a stated period to the ending redeemable value of the investment,
after giving effect to the reinvestment of all dividends and distributions and
deductions of expenses during the period. A Fund also may advertise its total
return over different periods of time by means of aggregate, average, year by
year or other types of total return figures. In addition, reference in
advertisements may be made to ratings and rankings among similar funds by
independent evaluators such as Lipper Analytical Services, Inc. or Morningstar
and the performance of the Funds may be compared to recognized indices of market
performance. Performance data will be computed separately for each Class of
shares in accordance with formulas specified by the SEC.
POSSIBLE CONFLICTS OF INTEREST BETWEEN CLASSES. The Boards of the Funds have
determined that currently no conflict of interest exists between Class A, B
and/or C shares of any Fund. On an ongoing basis, the Boards shall monitor the
Funds for the existence of any material conflicts between the interests of the
classes of outstanding shares. The Boards shall take such action as is
reasonably necessary to eliminate any such conflicts that may develop, up to and
including establishing a new Fund.
CUSTODIAN. The custodian of the assets, transfer agent and shareholder servicing
agent for the Funds is State Street Bank and Trust Company, whose principal
business address is P.O. Box 8505, Boston., MA 02266-8505. Cash balances of the
Funds with the Custodian in excess of $100,000 are unprotected by Federal
deposit insurance. Such uninsured balances may at times be substantial.
33
<PAGE>
TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT. The transfer agent and
shareholder servicing agent is Shareholder Services, Inc., a subsidiary of the
Manager, whose address is P.O. Box 5270, Denver, Colorado 80217.
SHAREHOLDER REPORTS. To reduce expenses, only one copy of financial reports will
be mailed to your household, even if you have more than one account in the
particular fund. If you wish to receive additional copies of financial reports,
please call 1-800-525-7048.
SHAREHOLDER SERVICING AGENT FOR CERTAIN SHAREHOLDERS. Unified Management
Corporation (1-800-346-4601) is the shareholder servicing agent for former
shareholders of the AMA Family of Funds and clients of AMA Investment
Advisers, L.P. who acquire shares of any Fund, and for former shareholders of
the Unified Funds and Liquid Green Trusts, accounts which participated or
participate in a retirement plan for which Unified Investment Advisers, Inc. or
an affiliate acts as custodian or trustee, accounts which have a Money Manager
brokerage account, and other accounts for which Unified Management Corporation
is the dealer of record.
34
<PAGE>
APPENDIX
The average distribution of investments in bonds by ratings as a percentage of
average net assets for the Growth and Income Fund for the fiscal year ended
October 31, 1994 calculated monthly on a dollar-weighted basis was as follows:
RATED BONDS
MOODY'S INVESTORS SERVICE, INC. STANDARD & POOR'S CORPORATION PERCENTAGE
- ----------------------------- ----------------------------- -----------
Aaa AAA --
Aa AA --
A A --
Baa BBB 6.2%
Ba BB --
B B 6.8%
Caa CCC 4.4%
UNRATED BONDS DEEMED COMPARABLE TO THE INDICATED RATING
MOODY'S INVESTORS SERVICE, INC. STANDARD & POOR'S CORPORATION PERCENTAGE
- ----------------------------- ----------------------------- -----------
Aaa AAA 0%
Aa AA 0%
A A 0%
Baa BBB 0%
Ba BB 0%
B B 0%
Caa CCC 0%
The actual distribution of a Fund's corporate bond investments by rating will
vary on any given date. The distribution of a Fund's investments by rating as
set forth above should not be considered representative of the future
composition of the Fund's portfolio.
35
<PAGE>
TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
Table of Contents
Summary of Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .
A Brief Overview of the Funds . . . . . . . . . . . . . . . . . . . . . . .
Investment Objectives of the Funds . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Restrictions and Techniques . . . . . . . . . . . . . . . . . .
Investment Management Agreement . . . . . . . . . . . . . . . . . . . . . .
How to Buy Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Investor Services . . . . . . . . . . . . . . . . . . . . . . . . .
How to Sell Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to Exchange Shares . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder Account Rules and Policies . . . . . . . . . . . . . . . . . .
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Advisor
Oppenheimer Management Corporation
Two World Trade Center
New York, NY 10048
Subadvisor
OpCapAdvisors
One World Financial Center
New York, New York 10281
Transfer Agent:
Shareholder Services, Inc.
P.O. Box 5270
Denver, Colorado 80217
(800) 525-7048
36
<PAGE>
General Distributor:
Oppenheimer Funds Distributor, Inc.
Two World Trade Center
New York, NY 10048
/ / GROWTH AND INCOME FUND
/ / OPPORTUNITY FUND
/ / SMALL CAPITALIZATION FUND
/ / QUEST FOR VALUE FUND, INC.
/ / QUEST FOR VALUE GLOBAL EQUITY FUND, INC.
November __, 1995
PROSPECTUS
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
QUEST FOR VALUE FUND, INC.
Two World Trade Center
New York, New York 10048
(800) 525-7048
This Statement of Additional Information (the "Additional Statement") is not a
Prospectus. Investors should understand that this Additional Statement should be
read in conjunction with the Prospectus dated November , 1995 (the
"Prospectus") of Quest for Value Fund, Inc. (the "Fund"), which may be obtained
by written request to Shareholder Services, Inc. ("SSI") P.O. Box 5270, Denver
Colorado 80217 or by calling SSI at (800) 525-7048.
The date of this Additional Statement is November , 1995.
QUEST FOR VALUE is a registered service mark of Oppenheimer Capital
1
<PAGE>
TABLE OF CONTENTS
Investment Policies and Special Investment Methods . . . . . . . . . . . . . . 3
Risks of Stock Index Futures and Related Options . . . . . . . . . . . . . . . 7
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Investment Management Services . . . . . . . . . . . . . . . . . . . . . . . .13
Distribution and Service Plans . . . . . . . . . . . . . . . . . . . . . . . .14
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . .17
Total Return and Tax Information . . . . . . . . . . . . . . . . . . . . . . .18
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
2
<PAGE>
INVESTMENT POLICIES AND SPECIAL INVESTMENT METHODS
The investment objectives and policies of the Fund are described in the
Prospectus. In seeking to achieve its objectives, the Fund may use the
following investment methods.
BORROWING. The Fund may from time to time increase its ownership of
securities above the amounts otherwise possible by borrowing from banks on an
unsecured basis at fixed rates of interest and investing the borrowed funds.
Any such borrowing will be made only from banks, and will only be made to the
extent that the value of the Fund's assets, less its liabilities (other than
such borrowings) is equal to at least 300% of all borrowings including the
proposed borrowing. If the value of the Fund's assets computed as above should
fail to meet the 300% coverage described above, the Fund, within three days, is
required to reduce its bank debt to the extent necessary to meet such asset
coverage and may have to sell a portion of its investments at a time when
independent investment judgment would not dictate such action.
Interest paid on money borrowed is an expense of the Fund which it would
not otherwise incur so that it may have little or not net investment income when
its borrowings are substantial.
Borrowing for investment increases both investment opportunity and
investment risk. Since substantially all of the Fund's assets fluctuate in
value, and the obligation resulting from borrowing is fixed, the net asset value
per share of the Fund will tend to increase more when the portfolio assets
increase in value, and decrease more when the portfolio assets decrease in
value, than would otherwise be the case if no borrowing had been done. This is
the speculative factor known as leverage; such borrowings will be used only for
the purchase of securities.
During the past fiscal year, the Fund has not invested in warrants,
restricted securities, securities of small, unseasoned companies, or options on
indices, and has no current intention of doing so in the foreseeable future, nor
did the Fund borrow for investment purposes.
INVESTMENT IN WARRANTS. The Fund may not invest more than 5% of its assets
at the time of purchase in warrants (other than those that have been acquired in
units or attached to other securities). Of such 5%, not more than 2% of the
assets at the time of purchase may be invested in warrants that are not listed
on the New York or American Stock Exchanges. Warrants are pure speculation in
that they have no voting rights, pay no dividends, and have no rights with
respect to the assets of the corporation issuing them. Warrants are basically
an option to purchase equity securities at a specific price valid for a specific
period of time. They do not represent ownership of the securities, but only the
right to buy them. The prices of warrants do not necessarily move parallel to
the prices of the underlying securities.
RESTRICTED SECURITIES. From time to time, the Fund may invest in
securities the disposition of which would be subject to legal restrictions. It
may be difficult to sell such securities at a price representing, in the opinion
of OpCap Advisors, their fair value until such time as such securities may be
sold publicly. Whether the Fund or the issuer or seller of the restricted
securities will pay the expenses of their registration under the Securities Act
of 1933 will in each case be the subject of
3
<PAGE>
negotiation at the time the securities are purchased. The Fund will ordinarily
acquire the right to have such securities registered within some specified
period of time.
When registration is required, a considerable period may elapse between a
decision to sell the securities and the time when the Fund would be permitted to
sell. Thus, the Fund may not be able to obtain as favorable a price as that
prevailing at the time of the decision to sell. The Fund may also acquire
securities through private placements under which it may agree to contractual
restrictions on the resale of such securities. Such restrictions might prevent
the sale of such securities at a time when such sale would otherwise be
desirable.
No restricted securities for which there is no readily available market
("illiquid securities") will be acquired which at the time of acquisition will
cause the aggregate current value of restricted securities (including private
placements and repurchase transactions maturing beyond seven days) to exceed 10%
of the value of the Fund's net assets. When as a result of either the increase
in the value of some or all of the restricted and illiquid securities held, or
the diminution in the value of unrestricted marketable securities in the
portfolio, the restricted and illiquid securities come to represent a larger
percentage of the value of the Fund's net assets, OpCap Advisors will consider
appropriate steps to protect the Fund's flexibility.
INVESTMENT IN SMALL UNSEASONED COMPANIES. Assets of the Fund may be
invested in securities of small, unseasoned companies as well as those of large
and well-known companies. The former may have a limited trading market, which
may adversely affect their disposition by the Fund and can result in their
shares being priced at a lower level than might otherwise be the case. In
addition, there are other investment companies (including those advised by OpCap
Advisors' affiliates) and other investment media engaged in trading this type of
security and, to the extent that these organizations trade in the same
securities, the Fund may be forced to dispose of its holdings at prices lower
than might otherwise be obtained. The Fund will not make investments that will
result in more than 15% of the Fund's net assets (at the time of purchase) being
invested in securities of companies that have operated less than three years,
including the operation of predecessors.
INVESTMENT IN FOREIGN SECURITIES. The Fund may purchase foreign securities
provided that they are listed on a domestic or foreign securities exchange or
represented by American depository receipts listed on a domestic securities
exchange or traded in the United States' over-the-counter market. There is no
limit on the amount of such foreign securities that the Fund might acquire. The
Fund does not intend to speculate in foreign currency nor invest in foreign
currency contracts. The Fund will only hold foreign currency in connection with
the purchase or sale of securities on a foreign securities exchange. To the
extent that foreign currency is so held, there may be a risk due to foreign
currency exchange rate fluctuations. Such foreign currency and foreign
securities will be held by the Fund's custodian bank, or by a foreign branch of
a U.S. bank, acting as subcustodian. The custodian bank will hold such foreign
securities pursuant to such arrangements as are permitted by applicable foreign
and domestic law and custom. In connection with purchases on foreign securities
exchanges, although the Fund may purchase securities issued by companies in any
country, developed or underdeveloped, the Fund does not presently intend to
purchase securities issued by companies in underdeveloped countries.
4
<PAGE>
Investments in foreign companies involve certain considerations which are
not typically associated with investing in domestic companies. An investment
may be affected by changes in currency rates and in exchange control regulations
(e.g. currency blockage). The Fund may bear a transaction charge in connection
with the exchange of currency. There may be less publicly available information
about a foreign company than about a domestic company. Foreign companies are
generally not subject to uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic companies. Most foreign
stock markets have substantially less volume than the New York Stock Exchange
and securities of some foreign companies are less liquid and more volatile than
securities of comparable domestic companies. There is generally less government
regulation of foreign stock exchanges, brokers, and listed companies than there
is in the United States. In addition, with respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could
adversely affect investment in securities of issuers located in those countries.
Individual foreign economies may differ favorable or unfavorably from the United
States economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. If it should become necessary, the Fund would normally
encounter greater difficulties in commencing a lawsuit against the issuer of a
foreign security that it would against a United States issuer.
RISKS OF OPTIONS ON INDICES. The Fund's purchase and sale of options on
indices will be subject to certain risks, notwithstanding the use of such
options solely to hedge the value of the Fund's equity portfolio. The index
option hedging strategy to be employed by OpCap Advisors will involve primarily
the purchase of put options against indices which, in the opinion of OpCap
Advisors, will be affected by market conditions in a substantially similar
fashion to the Fund's equity portfolio. Put options will be sold only to close
out long positions. Price movements in the Fund's portfolio probably will not
correlate exactly to movements in the level of the index and, therefore, the
Fund bears the risk that the price of the securities held by the Fund may
decrease more than the corresponding value of the long index put option position
may increase. It is also possible that the price of the index may rise while
the value of the Fund portfolio may fall. If this happened the Fund would
experience a loss on the value of its portfolio which is not offset by an
increase in the value of its hedging option position. However, OpCap Advisors
believes that the value of a diversified Fund portfolio, will, over time, tend
to move in the same direction as the market and that movements in the value of
the Fund in the opposite direction as the market will be likely to occur only
for a short period or to a small degree.
Index prices may be distorted if trading or certain stocks included in the
indices in interrupted. Trading in index options also may be interrupted in
certain circumstances such as if trading is halted in a substantial number of
stocks included in the index. If this occurred the Fund would not be able to
close out options which it had purchased, which could result in losses to the
Fund if the underlying index moved adversely before trading resumed. However,
it is the Fund's policy to purchase options only on indices which include a
sufficient number of stocks so that the likelihood of a trading halt in the
index is minimized.
The purchase of an index option may also be subject to a timing risk. If
an option is exercised before final determination of the closing index value for
that day, the risk exists that the level of the underlying index may
subsequently change. If such a change caused the exercised option to fall out
of the money (i.e. the exercising of the option would result in a loss not a
gain) the holder would be required to pay the difference between the closing
index value and the exercise price of the option
5
<PAGE>
(times the applicable multiple) to the assigned writer. Although the Fund may
be able to minimize this risk by withholding exercise instructions until just
before the daily cutoff time, it may not be possible to eliminate the risk
entirely because the exercise cutoff time for index options may be different
than those fixed for other types of options and may occur before definitive
closing index values are announced. Alternatively, when the index level is
close to the exercise price, the Fund may sell rather than exercise its option.
Although the markets for certain option contracts have developed rapidly,
the markets for other index options are still relatively illiquid. The ability
to establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain
that this market will develop in all index option contracts. The Fund will not
purchase or sell any index option contract unless and until, in the opinion of
OpCap Advisors, the market for such option has developed sufficiently that the
risk in connection with such transactions is no greater than the risk in
connection with options on stocks.
LOWER RATED BONDS. The Fund may invest up to 5% of its assets in bonds
rated below Baa3 by Moody's Investors Service Inc. ("Moody's") or BBB by
Standard & Poor's Corporation ("S&P") (commonly known as "junk bonds").
Securities rated less than Baa by Moody's or BBB by S&P are classified as non-
investment grade securities and are considered speculative by those rating
agencies. Junk bonds may be issued as a consequence of corporate
restructurings, such as leveraged buyouts, mergers, acquisitions, debt
recapitalizations, or similar events or by smaller or highly leveraged
companies. Although the growth of the high yield securities market in the 1980s
had paralleled a long economic expansion, recently many issuers have been
affected by adverse economic and market conditions. It should be recognized
that an economic downturn or increase in interest rates is likely to have a
negative effect on (i) the high yield bond market, (ii) the value of high yield
securities and (iii) the ability of the securities' issuers to service their
principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. The market for junk bonds may be less
liquid than the market for investment grade bonds. In periods of reduced market
liquidity, junk bond prices may become more volatile and may experience sudden
and substantial price declines. Also, there may be significant disparities in
the prices quoted for junk bonds by various dealers. Under such conditions, the
Fund may have to use subjective rather than objective criteria to value its junk
bond investments accurately and rely more heavily on the judgment of the Fund's
Board of Directors. Prices for junk bonds also may be affected by legislative
and regulatory developments. For example, new federal rules require that
savings and loans gradually reduce their holdings of high-yield securities.
Also, from time to time, Congress has considered legislation to restrict or
eliminate the corporate tax deduction for interest payments or to regulate
corporate restructurings such as takeovers, mergers or leveraged buyouts. Such
legislation, if enacted, may depress the prices of outstanding junk bonds.
ADDITIONAL RISKS. Securities in which the Fund may invest are subject to
the provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors and shareholders, such as the federal Bankruptcy Code, and
laws, if any, which may be enacted by Congress or the state legislatures
extending the time for payment of principal or interest, or both or imposing
other constraints upon enforcement of such obligations.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund has no present
intention of investing in the securities of other investment companies.
6
<PAGE>
RISKS OF STOCK INDEX FUTURES AND RELATED OPTIONS
Unlike when the Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract. Instead,
the Fund will be required to deposit with its broker an amount of cash or U.S.
Treasury bills equal to approximately 5% of the contract amount. This is known
as initial margin. Such initial margin is in the nature of a performance bond
or good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. In addition, because under current futures industry practice
daily variations in gains and losses on open contracts are required to be
reflected in cash in the form of variation margin payments, the Fund may be
required to make additional payments during the term of the contract to its
broker. Such payments would be required where during the term of a stock index
futures contract purchased by the Fund, the price of the underlying stock index
declined, thereby making the Fund's position less valuable. In all instances
involving the purchase of stock index futures contracts by the Fund resulting in
a net long position, an amount of cash and cash equivalents equal to the market
value of the futures contracts will be deposited in a segregated account with
the Fund's custodian to collateralize the position and thereby insure that the
use of such futures is unleveraged. At any time prior to the expiration of the
futures contract, the Fund may elect to close the position by taking an opposite
position which will operate to terminate the Fund's position in the futures
contract.
There are several risks in connection with the use of stock index futures
in the Fund as a hedging device. One risk arises because of the imperfect
correlation between the price of the stock index future and the price of the
securities which are the subject of the hedge. This risk of imperfect
correlation increases as the composition of the Fund portfolio diverges from the
securities included in the applicable stock index. The price of the stock index
future may move more than or less than the price of the securities being hedged.
If the price of the stock index future moves less than the price of the
securities which are the subject of the hedge, the hedge will not be fully
effective, but, if the price of the securities being hedged has moved in an
unfavorable direction, the Fund would be in a better position than if it had not
hedged at all. If the price of the securities being hedged has moved in a
favorable direction this advantage will be partially offset by the future. If
the price of the futures moves more than the price of the stock the Fund will
experience a loss or a gain on the future which will be completely offset by
movement in the price of the securities which are the subject of the hedge. To
compensate for the imperfect correlation of movements in the price of securities
being hedged and movements in the price of the stock index futures, the Fund may
buy or sell stock index futures in a greater dollar amount than the dollar
amount of the securities being hedged if the historical volatility of the prices
of such securities has been greater than the historical volatility of the index.
Conversely, the Fund may buy or sell fewer stock index futures contracts if the
historical volatility of the price of the securities being hedged is less than
the historical volatility of the stock index. It is possible that where the
Fund has sold futures to hedge its portfolio against a decline in the market,
the market may advance and the Fund's portfolio may decline. If this occurred,
the Fund would lose money on the futures and also experience a decline in the
value of its portfolio securities. While this should occur, if at all, for a
very brief period or to a very small degree, OpCap Advisors believes that over
time the value of a diversified portfolio will tend to move in the same
direction as the market indices upon which the futures are based. It is also
possible that if the Fund has hedged against the possibility of a decline in the
market adversely affecting stocks held in its portfolio and stock prices
increase instead, the Fund will lose part or all of the benefit of the increased
value of its stock which it had hedged because it will
7
<PAGE>
have offsetting losses in its futures positions. In addition, in such
situations, if the Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may be but
will not necessarily be, at increase prices which reflect the rising market.
The Fund may also have to sell securities at a time when it may be
disadvantageous to do so.
Where futures are purchased to hedge against a possible increase in the
price of stocks before the Fund is able to invest its cash (or cash equivalents)
in stock (or options) in an orderly fashion, it is possible the market may
decline instead. If the Fund then concluded to not invest in stock or options
at the time because of concern as to possible further market decline or for
other reasons, the Fund will realize a loss on the futures contract that is not
offset by a reduction in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the stock index future and the
portion of the portfolio being hedged, the price of stock index futures may not
correlate perfectly with movements in the stock index due to certain market
distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index and
futures markets. Moreover, the deposit requirements in the futures market are
less onerous than margin requirements in the securities market and may therefore
cause increased participation by speculators in the market. Such increased
participation may also cause temporary price distortions. Due to the
possibility of price distortion in the futures market and because of the
imperfect correlation between movements in the stock index and movements in the
price of stock index futures, the value of stock index futures contracts as a
hedging device may be reduced.
Currently, stock index futures contracts can be purchased or sold with
respect to several different stock indices, each based on a different measure of
market performance. Positions in stock index futures may be closed out only on
an exchange or board of trade which provides a secondary market for such
futures. Although the Fund intends to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active secondary
market, as with stock options, there is no assurance that a liquid secondary
market or an exchange or board of trade will exist for any particular contract
or at any particular time. In such event it may not be possible to close a
futures position and in the event of adverse price movements, the Fund would
continue to be required to make daily cash payments of variation margin.
However, in the event futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of the securities,
if any, may partially or completely offset losses on the futures contract.
However, as described above, there is no guarantee that the price of securities
will, in fact, correlate with the price movements in the futures contract and
thus provide an offset to losses on a futures contract.
In addition, if the Fund has insufficient cash it may at times have to sell
securities to meet variation margin requirements. Such sales may have to be
effected at a time when it is disadvantageous to do so.
INVESTMENT RESTRICTIONS
8
<PAGE>
The Fund's significant investment restrictions are described in the
Prospectus. The following are also fundamental policies and cannot be changed
without shareholder approval. Under these additional restrictions, the Fund
cannot:
(a) Invest in real estate or interests in real estate (including limited
partnership interests), but may purchase readily marketable securities
of companies holding real estate or interests therein;
(b) Purchase securities on margin;
(c) Underwrite securities of other companies, except insofar as it might
be deemed to be an underwriter for purposes of the Securities Act of
1933 in the resale of any securities held in its own portfolio (except
that the Fund may in the future invest all of its investable assets in
an open-end management investment company with substantially the same
investment objective and restrictions as the Fund);
(d) Mortgage, hypothecate or pledge any of its assets;
(e) Invest or hold securities of any issuer if the Officers and Directors
of the Fund or its Manager or Subadvisor owning individually more then
1/2 of 1% of the securities of such issuer together own more than 5%
of the securities of such issuer; or
(f) Invest in companies for the primary purpose of acquiring control or
management thereof (except that the Fund may in the future invest all
of its investable assets in an open-end management investment company
with substantially the same investment objective and restrictions as
the Fund);
(g) Invest in physical commodities or physical commodity contracts, or
speculate in financial commodity contracts, but may purchase and sell
stock futures contracts and options on such futures contracts
exclusively for hedging purposes;
(h) Write, purchase or sell puts, calls, or combinations thereof on
individual stocks, but may purchase or sell exchange traded put and
call options on stock indices to protect the Fund's assets.
In addition, the Fund may not, with respect to 75% of its assets, invest
more than 5% of the value of its total assets in the securities of any one
issuer . Although not a fundamental policy, in order to comply with a state's
securities laws, the Fund has agreed not to make loans to any person or
individual (except that portfolio securities may be loaned within the
limitations set forth in the Prospectus), not to make short sales of securities
except "against-the-box" and not to invest in interests in oil, gas or other
mineral exploration or development programs or leases.
MAJOR SHAREHOLDERS
To the knowledge of the Fund, the following shareholders held as beneficial or
record owners 5% or more of each specified class of shares of the Fund as of
September 7, 1995:
9
<PAGE>
Number and Class of Shares
Beneficially Owned or
Held of Record Name and Address Percentage of Class
------------------------- ---------------- -------------------
2,546,407 Class A shares Unified Management Corp 12.78%
held for the benefit of Omnibus Account
clients 429 N. Pennsylvania Street
Indianpolis, IN 46204
DIRECTORS AND OFFICERS
The directors and officers of the Fund, and their principal occupations
during the past five years, are set forth below. Directors who are "interested
persons", as defined in the 1940 Act, are denoted by an asterisk. The address
of each is Two World Trade Center, New York, New York 10048, except as noted.
As of September 7, 1995, all of the Directors and Officers of the Fund as a
group owned less than 1% of its outstanding shares.
BRIDGETT A. MACASKILL, CHAIRMAN OF THE BOARD OF DIRECTORS AND PRESIDENT*
Chief Executive Officer of the Manager since September 30, 1995; President and
Chief Operating Officer of the Manager since 1991; prior thereto, Chief
Operating Officer of the Manager from 1989-1991 and Executive Vice President of
the Manager from 1987-1989. Vice President, Director of Oppenheimer Acquisition
Corp., Director of Oppenheimer Partnership Holdings, Inc., Chairman and a
Director of Shareholder Services, Inc., Director of Main Street Advisers, Inc.,
Director of HarbourviewAsset Management Corporation, all of which are
subsidiaries of the Manager.
PAUL Y. CLINTON, DIRECTOR
946 Morris Avenue
Bryn Mawr, Pennsylvania 19010
Director, External Affairs, Kravco Corporation, a national real estate owner and
property management corporation; formerly President of Essex Management
Corporation, a management consulting company; Trustee of Capital Cash Management
Trust, Prime Cash Fund and Short Term Asset Reserves, each of which is a money-
market fund; Director of Quest Cash Reserves, Inc. and Quest for Value Global
Equity Fund, Inc., Trustee of Quest for Value Accumulation Trust and Quest for
Value Family of Funds, all of which are open-end investment companies. Formerly
a general partner of Capital Growth Fund, a venture capital partnership;
formerly a general partner of Essex Limited Partnership, an investment
partnership; formerly President of Geneve Corp., a venture capital fund;
formerly Chairman of Woodland Capital Corp., a small business investment
company; formerly Vice President of W.R. Grace & Co.
THOMAS W. COURTNEY, C.F.A., DIRECTOR
P.O. Box 580
Sewickley, Pennsylvania 15143
10
<PAGE>
Principal of Courtney Associates, Inc., a venture capital firm; former General
Partner of Trivest Venture Fund, a private venture capital fund; former
President of Investment Counseling Federated Investors, Inc.and Trustee of Cash
Assets Trust, a money market fund; Director of Quest Cash Reserves, Inc. and
Quest for Value Global Equity Fund, Inc., Trustee of Quest for Value
Accumulation Trust, all of which are open-end investment companies; former
President of Boston Company Institutional Investors; Trustee of Hawaiian Tax-
Free Trust and Tax Free Trust of Arizona, tax-exempt bond funds; Director of
several privately owned corporations; former Director of Financial Analysts
Federation.
LACY B. HERRMANN, DIRECTOR
380 Madison Avenue, Suite 2300
New York, New York 10017
President and Chairman of the Board of Aquila Management Corporation (since
1984) and of Incap Management Corporation (since 1982), the sponsoring
organizations and Administrator and/or Sub-Advisor to the following open-end
investment companies, and Chairman of the Board of Trustees and President of
each: Churchill Cash Reserves Trust (since 1985), Short Term Asset Reserves
(since 1984), Cash Assets Trust (since 1984), U.S. Treasuries Cash Assets Trust
(since 1988), Tax-Free Cash Assets Trust (since 1988), Prime Cash Fund (since
1982), Oxford Cash Management Fund (1982-1988) and Trinity Liquid Assets Trust
(1982-1985), each of which is a money market fund, and of Churchill Tax-Free
Fund of Kentucky (since 1986), Tax-Free Fund of Colorado (since 1986), Tax-Free
Trust of Oregon (since 1985), Tax-Free Trust of Arizona (since 1985), and
Hawaiian Tax-Free Trust (since 1984), each of which is a tax-free municipal bond
fund; Vice President, Director, Secretary, and formerly Treasurer of Aquila
Distributors, Inc. (since 1981), distributor of most of the above funds;
President and Chairman of the Board of Trustees of Capital Cash Management Trust
("CCMT") a money market fund (since 1981) and an STCM Management Company, Inc.,
sponsor and Sub-Advisor to CCMT; General Partner of Tamarack Associates (1966-
1984), a private investment partnership and Chairman of the Board and President
of various of its subsidiaries through 1986. Director of Quest Cash Reserves,
Inc. and Quest for Value Global Equity Fund, Inc. Trustee of Quest for Value
Accumulation Trust, Quest for Value Family of Funds and The Saratoga Advantage
Trust, each of which is an open-end investment company.
GEORGE LOFT, DIRECTOR
51 Herrick Road
Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc. and Quest for Value
Global Equity Fund, Inc. Trustee of Quest for Value Accumulation Trust, Quest
for Value Family of Funds and The Saratoga Advantage Trust, all of which are
open-end investment companies, and Director of Quest for Value Dual Purpose
Fund, Inc., a closed-end investment company.
ROBERT DOLL, JR., VICE PRESIDENT AND PORTFOLIO MANAGER
Execuive Vice President and Director of Equity Investments of the Manager; an
officer and Portfolio Manager of other Oppenheimer Funds.
11
<PAGE>
ANDREW J. DONOHUE, SECRETARY
Executive Vice President and General Counsel of the Manager and the Distributor;
an officer of other Oppenheimer Funds; formerly Senior Vice President and
Associate General Counsel of the Manager and the Distributor; partner in Kraft &
McManimon (a law firm); an officer of First Investors Corporation (a broker-
dealer) and First Investors Management Company, Inc. (broker-dealer and
investment adviser), and a director and an officer of First Investors Family of
Funds and First Investors Life Insurance Company.
GEORGE C. BOWEN, TREASURER
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and Treasurer
of the Distributor and HarbourView; Senior Vice President, Treasurer, Assistant
Secretary and a director of Centennial; Vice President, Treasurer and Secretary
of SSI and SFSI; an officer of other Oppenheimer Funds.
REMUNERATION OF THE MANAGER AND DIRECTORS. All officers of the Fund are
officers or directors of the Manager and receive no salary or fee from the Fund.
The following table sets forth the aggregate compensation received from the Fund
and the Fund Complex of OpCap Advisors, the Fund's former adviser, by the Fund's
non-interested directors during the fiscal year ended October 31, 1994.
Name of Person Aggregate Pension or Estimated Total
Compensation Retirement Annual Compensation
from the Fund Benefits Benefits Upon from Fund
Accrued as Retirement and Fund
Part of Fund Complex
Expenses
Paul Y. Clinton $4,200 None None $68,100
Thomas W. 4,200 None None 66,600
Courtney
Lacy B. 4,200 None None 67,350
Herrmann
George Loft 4,200 None None 74,800
Messrs. Clinton, Courtney and Herrmann earned directors fees with respect
to 18 investment companies in OpCap Advisors' Fund Complex and the fees earned
by Mr. Loft were with respect to 19 investment companies in the Complex. During
such periods the non-interested Directors received fees from three investment
companies for which they no longer serve as directors and which are no longer
part of the Complex but for which OpCap Advisors currently serves as subadviser.
In addition, during such periods, Mr. Clinton and Mr. Courtney each served as
director with respect to three investment companies in the Complex for which
they received no fees and Mr. Loft and Mr. Herrmann each served as director with
respect to 10 investment companies in the Complex for which they received no
fees. For the purpose of this paragraph, a portfolio of an investment company
organized in series form is considered to be an investment company.
AMA FAMILY OF FUNDS INDEMNIFICATION. In connection with the combination of
Quest for Value Fund, Inc. with Classic Growth Fund of AMA Family of Funds,
Inc., Quest for Value Fund, Inc. has
12
<PAGE>
agreed to assume the obligation of Classic Growth Fund to indemnify the
directors of the AMA Family of Funds, Inc. to the fullest extent permitted by
law and the By-Laws of AMA Family of Funds, Inc.
UNIFIED FUNDS INDEMNIFICATION. In connection with the combination of Quest for
Value Fund, Inc. with Unified Growth Fund, Quest for Value Fund, Inc. has agreed
to assume the obligation of Unified Growth Fund to indemnify the directors of
Unified Growth Fund to the fullest extent permitted by law and the By-Laws of
the Unified Growth Fund.
INVESTMENT MANAGEMENT AND OTHER SERVICES
THE MANAGER AND ITS AFFILIATES. The Manager is wholly-owned by Oppenheimer
Acquisition Corp. ("OAC"), a holding company controlled by MassMutual. OAC is
also owned in part by certain of the Manager's directors and officers, some of
whom also serve as officers of the Fund and one of whom (Ms. Macaskill) also
serves as Director of the Fund.
The Manager and the Fund has a Code of Ethics. It is designed to detect
and prevent improper personal trading by certain employees, including portfolio
managers, that would compete with or take advantage of the Fund's portfolio
transactions. Compliance with the Code of Ethics is carefully monitored and
strictly enforced by the Manager.
THE INVESTMENT ADVISORY AGREEMENT. The Manager acts as investment adviser
to the Fund pursuant to the terms of an Investment Advisory Agreement dated as
of November , 1995.
Under the Investment Advisory Agreement, the Manager acts as the investment
adviser for the Fund and supervises the investment program of the Fund. The
Investment Advisory Agreement provides that the Manager will provide
administrative services for the Fund including the completion and maintenance of
records, preparation and filing of reports required by the Securities and
Exchange Commission, reports to shareholders and composition of proxy statements
and registration statements required by Federal and state securities laws. The
Manager will furnish the Fund with office space, facilities and equipment and
arrange for its employees to serve as officers of the Fund. The administrative
services to be provided by the Manager under the Investment Advisory Agreement
will be at its own expense.
Expenses not assumed by the Manager under the Investment Advisory Agreement
or paid by the Distributor will be paid by Fund including interest, taxes,
brokerage commissions, insurance premiums, compensation, expenses and fees of
non-interested Directors, legal and audit expenses, transfer agent and custodian
fees and expenses, registration fees, expenses of printing and mailing reports
and proxy statements to shareholders, expenses of shareholders meetings and non-
recurring expenses including litigation. The Investment Advisory Agreement
contains no expense limitation. However, independently of the Investment
Advisory Agreement, the Manager has undertaken to reimburse the Fund to the
extent that the total expenses of the Fund in any fiscal year (including the
investment advisory fee but exclusive of taxes, interest, brokerage commissions,
distribution plan payments and any extraordinary non-recurring expenses,
including litigation) exceeds the most stringent state regulatory limitation
application to the Fund. At present, that limitation is imposed by California
and limits expenses (with specified exclusions) to 2.5% of the first $30 million
of average annual net assets, 2% of the next $70 million and 1.5% of average
annual net assets in excess of $100 million.
13
<PAGE>
The payment of the management fee at the end of any month will be reduced
or eliminated such that there will not be any accrued but unpaid liability under
this expense limitation. The Manager reserves the right to terminate or amend
the undertaking at any time. Any assumption of the Fund's expenses under this
undertaking would lower the Fund's overall expense ratio and increase its total
return during any period in which expenses are limited.
The Investment Advisory Agreement provides that in the absence or willful
misfeasance, bad faith, or gross negligence in the performance of its duty, or
reckless disregard for its obligations and duties under the advisory agreement,
the Manager is not liable from any loss resulting from a good faith or omission
on its part with respect to any of its duties thereunder. The Investment
Advisory Agreement permits the Manager to act as investment adviser for any
other person, firm or corporation and to use the name "Oppenheimer" in
connection with its other investment companies for which it may act as an
investment advisor or general distributor. If the Manager shall no longer act
as investment adviser to the Fund, the right of the Fund to use "Oppenheimer" as
part of its name may be withdrawn.
For the services and facilites to be provided by the Manager under the
Investment Advisory Agreement the Fund will pay a monthly fee computed as a
percentage of the Fund's average daily net assets at the rate of 1.00% of the
first $400 million of net assets, .90% of the next $400 million of net assets
and .85% of net assets over $800 million.
FEES PAID UNDER THE PRIOR INVESTMENT ADVISORY AGREEMENT
OpCap Advisors served as investment adviser to the Fund from its inception
until November , 1995. The following fees were paid by the Fund to OpCap
Advisors for services under the prior Investment Advisory Agreement: $1,223,192
for the fiscal year ended October 31, 1992; $2,052,883 for the fiscal year ended
October 31, 1993; and $2,479,887 for the fiscal year ended October 31, 1994.
Expenses not expressly assumed by the Manager under the Investment Advisory
Agreement or by the Distributor are paid by the Fund. The Fund is responsible
for bearing certain expenses attributable to the Fund but not to a particular
class ("Fund Expenses"), including deferred organization expenses; taxes;
registration fees; typesetting of prospectuses and financial reports required
for distribution to shareholders; brokerage commissions; fees and related
expenses of directors who are not interested persons; legal, accounting and
audit expenses; custodian fees; insurance premiums; and trade association dues.
Fund Expenses will be allocated based on the total net assets of each class.
Each class of shares of each Fund will also be responsible for certain expenses
attributable only to that class ("Class Expenses"). These Class Expenses may
include distribution and service fees, transfer and shareholder servicing agent
fees, professional fees, printing and postage expenses for materials distributed
to current shareholders, state registration fees and shareholder meeting
expenses. Such items are considered Class Expenses provided such fees and
expenses relate solely to such Class. A portion of printing expenses, such as
typesetting costs, will be divided equally among the Fund, while other printing
expenses, such as the number of copies printed, will be considered Class
Expenses.
The Investment Advisory Agreement was approved by the Board of
Directors, including a majority of the Directors who are not "interested
persons" of the Fund (as defined in the 1940 Act) and who have no direct or
indirect financial interest in such Agreement, on June 22, 1995 and by the
shareholders of the Fund at a meeting held for that purpose on November 3, 1995.
14
<PAGE>
The Investment Advisory Agreement provides that the Manager may enter into
sub advisory agreements with other affiliated or unaffiliated registered
investment advisers in order to obtain specialized services for the Fund
provided that the Fund is not required to pay any additional fees for such
services. The Manager has retained OpCap Advisors (previously called Quest for
Value Advisors) pursuant to a Subadvisory Agreement dated as of November , 1995
with respect to each Fund.
THE SUBADVISORY AGREEMENT
The Subadvisory Agreement provides that OpCap Advisors shall regularly
provide investment advice with respect to the Fund and invest and reinvest
cash, securities and the property comprising the assets of the Funds. Under the
Subadvisory Agreement, OpCap Advisors agrees not to change the Portfolio Manager
of the Fund without the written approval of the Manager and to provide
assistance in the distribution and marketing of the Fund. The Subadvisory
Agreement was approved by the Board of Directors, including a majority of the
Directors who are not "interested persons" of the Fund (as defined in the 1940
Act) and who have no direct or indirect financial interest in such agreements on
June 22, 1995 and by the shareholders of the Fund at a meeting held for that
purpose on November 3, 1995.
Under the Subadvisory Agreement, the Manager will pay OpCap Advisors an
annual fee payable monthly, based on the average daily net assets of the Fund,
equal to 40% of the investment advisory fee collected by the Manager of the Fund
based on the total net assets of the Fund as of the effective date of the
Subadvisory Agreement (the "base amount") plus 30% of the investment advisory
fee collected by the Manager based on the total net assets of the Fund that
exceed the base amount.
The Subadvisory Agreement provides that in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its duties or
obligations, OpCap Advisors shall not be liable to the Manager for any act or
omission in the course of or connected with rendering services under the
Subadvisory Agreement or for any losses that may be sustained in the purchase,
holding or sale of any security.
PORTFOLIO TRANSACTIONS. Portfolio decisions are based upon recommendations
of the portfolio manager and the judgment of the portfolio managers. The Fund
will pay brokerage commissions on transactions in listed options and equity
securities. Prices of portfolio securities purchased from underwriters of new
issues include a commission or concession paid by the issuer to the underwriter,
and prices of debt securities purchased from dealers include a spread between
the bid and asked prices.
The Investment Advisory Agreement contains provisions relating to the
selection of broker-dealers ("brokers") for the Fund's portfolio transactions.
The Manager and the Subadvisor may use such brokers as may, in their best
judgment based on all relevant factors, implement the policy of the Fund to
achieve best execution of portfolio transactions. While the Manager need not
seek advance competitive bidding or base its selection on posted rates, it is
expected to be aware of the current rates of most eligible brokers and to
minimize the commissions paid to the extent consistent with the interests and
policies of the Fund as established by its Board and the provisions of the
Investment Advisory Agreement.
15
<PAGE>
The Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, the Manager
and the Subadvisor, in the interest of the Fund, may select brokers other than
affiliated brokers, because they provide brokerage and/or research services to
the Fund and/or other accounts of the Manager or any Subadvisor. The
commissions paid to such brokers may be higher than another qualified broker
would have charged if a good faith determination is made by the Manager or the
Subadvisor that the commissions are reasonable in relation to the services
provided, viewed either in terms of that transaction or the Manager's or the
Subadvisor's overall responsibilities to all its accounts. No specific dollar
value need be put on the services, some of which may or may not be used by the
Manager or the Subadvisor for the benefit of the Fund or other of its advisory
clients. To show that the determinations were made in good faith, the Manager
or any Subadvisor must be prepared to show that the amount of such commissions
paid over a representative period selected by the Board was reasonable in
relation to the benefits to the Fund. The Investment Advisory Agreement
recognizes that an affiliated broker-dealer may act as one of the regular
brokers for the Fund provided that any commissions paid to such broker are
calculated in accordance with procedures adopted by the Fund's Board under
applicable SEC rules.
The Subadvisory Agreement permits OpCap Advisors to enter into "soft
dollar" arrangements through the agency of third parties to obtain services for
the Fund. Pursuant to these arrangements, OpCap Advisors will undertake to
place brokerage business with broker-dealers who pay third parties that provide
services. Any such "soft dollar" arrangements will be made in accordance with
policies adopted by the Board of the Fund and in compliance with applicable law.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which are
intangible and on which no dollar value can be placed. There is no formula for
such allocation. The research information may or may not be useful to one or
more of the Fund and/or other accounts of the Manager or OpCap Advisors;
information received in connection with directed orders of other accounts
managed by the Manager or OpCap Advisors or its affiliates may or may not be
useful to one or more of the funds managed by the Manager or OpCap Advisors.
Such information may be in written or oral form and includes information on
particular companies and industries as well as market, economic or institutional
activity areas. It serves to broaden the scope and supplement the research
activities of the Manager or OpCap Advisors, to make available additional views
for consideration and comparison, and to enable the Manager or OpCap Advisors to
obtain market information for the valuation of securities held in the Fund's
assets.
The following table presents information as to the allocation of brokerage
commissions paid to Opco and other brokers during the Fund's last three
completed fiscal years.
16
<PAGE>
Total Brokerage Total Amount of
Brokerage Commissions Paid to Transactions Where
For the Fiscal Commissions Opco Brokerage Commissions
Year Ended October Paid Paid to Opco
31,
- --------------------------------------------------------------------------------
Dollar % Dollar Amounts %
Amounts
--------------------------------------------
...1992 160,939 109,542 68.1 60,032,554 71.6
...1993 152,344 73,313 48.1 58,028,142 55.2
...1994 318,014 162,914 51.2 103,314,410 53.2
The Fund does not effect principal transactions with Opco. When the Fund
effects principal transactions with other broker-dealers, commissions are
imputed. During the fiscal year ended October 31, 1994, the Fund directed
$6,592,325 of brokerage transactions to brokers because of research services
provided. The commissions related to such transactions were $9,500.
During the fiscal year ended October 31, 1994 the Fund acquired common
stock of Morgan Stanley Group Incorporated, the parent of one of the Fund's
regular broker-dealers. The value of the Fund's holdings of Morgan Stanley
Group Incorporated was $5,883,750 at October 31, 1994.
THE DISTRIBUTOR. Under a General Distributor's Agreement with the Fund dated
as of November , 1995, the Distributor acts as the Fund's principal underwriter
in the continuous public offering of the Class A, Class B and Class C shares of
the Fund but is not obligated to sell a specific number of shares. Expenses
normally attributable to sales, including advertising and the cost of printing
and mailing prospectuses, other than those furnished to existing shareholders,
are borne by the Distributor. For additional information about distribution of
the Fund's shares and the expenses connected with such activities, please refer
to "Distribution and Service Plans" below.
DISTRIBUTION AND SERVICE PLANS
The Fund entered into an Amended and Restated Distribution and Service Plan
and Agreement as of November , 1995 (a "Plan") with Oppenheimer Funds
Distributor, Inc. (the "Distributor") with respect to each Class of shares (the
"Plans"). The Plans were approved on June 22, 1995 by the Directors, including
the non-interested Directors, and by the shareholders of each class of shares of
the Fund at a meeting held for that purpose on November 3, 1995.
The fees under each Plan consist of a service fee at the annual rate of
.25% of the average net assets of the shares and a distribution fee at the
annual rate of .25% of the average net assets of Class A shares of the Fund and
at the annual rate of .75% of the average net assets of Class B and Class C
shares of the Fund.
The Distributor will be authorized under the Plans to pay broker dealers,
banks or other entities (the "Recipients") that render assistance in the
distribution of shares or provide administrative support with respect to shares
held by customers. The service fee payments made under the Plans will
compensate the Distributor and the Recipients for providing administrative
support with respect to shareholder accounts. The distribution fee payments
made under the Plans will compensate the Distributor and the Recipients for
providing distribution assistance in connection with the sale of Fund shares.
17
<PAGE>
The Plans provide that payments may be made by the Manager or by the
Distributor to the Recipients from their own resources or from borrowings. The
Distributor and the Manager may, in their sole discretion, increase or decrease
the amount of payments they make from their own resources to Recipients.
The Plans may not be amended to increase materially the amount of payments
to be made without the approval of the relevant class of shareholders of the
Fund. In addition, because Class B shares of the Fund automatically convert into
Class A shares after six years, the Fund is required to obtain the approval of
Class B as well as Class A shareholders for the proposed amendment to the Class
A Plan that would materially increase the amount to be paid by Class A
shareholders under the Class A Plan. Such approval must be by a "majority" of
the Class A and Class B shares (as defined in the Investment Company Act),
voting separately by class. All material amendments must be approved by the
Independent Directors.
While the Plans are in effect, the Treasurer of the Fund shall provide
separate written reports to the Fund's Board of Directors at least quarterly on
the amount of all payments made pursuant to each Plan, the purpose for which the
payment was made and the identity of each Recipient that received any such
payment. Those reports, including the allocations on which they are based, will
be subject to the review and approval of the Independent Directors in the
exercise of their fiduciary duty. Each Plan further provides that while it is
in effect, the selection and nomination of those Directors of the Fund who are
not "interested persons" of the Fund is committed to the discretion of the
Independent Directors. This does not prevent the involvement of others in such
selection and nomination if the final decision on any such selection or
nomination is approved by a majority of such Independent Directors.
Under the Plans, no payment will be made to any Recipient in any quarter if
the aggregate net asset value of all Fund shares held by the Recipient for
itself and its customers does not exceed a minimum amount, if any, that may be
determined from time to time by a majority of the Fund's Independent Directors.
Initially, the Board of Directors has set the fee at the maximum rate and set no
minimum amount.
Each Plan will remain in effect only if its continuance is specifically
approved at least annually by the vote of both a majority of the Directors and a
majority of the non-interested Directors who have no direct or indirect
individual financial interest in the operation of the Plans or any agreements
related thereto (the "Qualified Directors"). The Plans may be terminated at any
time by vote of a majority of the Qualified Directors or by a vote of a majority
of the relevant class of Shares of the Fund. In the event of such termination,
the Board including the Qualified Directors shall determine whether the
Distributor is entitled to payment by the Fund of all or a portion of the
service fee and/or the distribution fee with respect to shares sold prior to the
effective date of such termination.
The service fee and the distribution fee payable under the Plans are
subject to reduction or elimination under the limits imposed by the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. ("NASD
Rules"). The Plans are intended to comply with NASD Rules and Rule 12b-1
adopted under the 1940 Act. Rule 12b-1 requires that the selection and
nomination of Directors who are not "interested persons" of the Fund be
committed to the
18
<PAGE>
discretion of the Qualified Directors and that the Directors receive quarterly
reports on the payments made under the Plans and the purposes for those
payments.
THE PRIOR PLANS From the inception date of the Fund through November ,
1995, OpCap Distributors served as Distributor to the Fund and provided
distribution services pursuant to plans adopted under the Investment Company Act
(the "Prior Plans").
For the fiscal year ended October 31, 1994, the total distribution fee for
Class A shares was $1,189,613, the total distribution fee for Class B shares was
$83,411 and the total distribution fee for Class C shares was $17,249 under the
Prior Plans.
It is estimated that OpCap Distributors spent approximately the following
amounts with respect to Class A, B and C shares of the Fund for the fiscal year
ended October 31, 1994.
<TABLE>
<CAPTION>
Printing and
Mailing of
Prospectuses to
Sales Material other than Current Compensation Compensation to
Class and Advertising Shareholders to Dealers Sales Personnel Other(1)
<S> <C> <C> <C> <C> <C>
A $247,915 $146,955 $594,808 $577,489 $322,936
B 47,277 30,176 482,866 112,084 63,783
C 30,691 19,494 29,138 72,813 41,356
<FN>
(1) Includes costs of telephone and overhead.
</TABLE>
During the fiscal year ended October 31, 1994, OpCap Distributors received the
following compensation with respect to the Fund:
Portion of
Sales Charge on Compensation on
Class A. Shares Redemptions (CDSCs)
136,398 $ 10,000
OpCap Distributors paid $276,738 in distribution and service fees to Oppenheimer
& Co., Inc., an affiliated broker-dealer, with respect to the Fund
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is determined each day the New
York Stock Exchange (the "Exchange") is open, as of the close of the regular
trading session of the Exchange (currently 4:00 p.m., Eastern Time) that day, by
dividing the value of the Fund's net assets by the total number of its shares
outstanding. The Exchange's most recent annual announcement (which is subject
to change) states that it will close on New Year's Day, Presidents' Day, Good
Friday, Memorial Day, July 4, Labor Day, Thanksgiving and Christmas Day. It may
also close on other days. Although the legal rights of Class A, B and C shares
are identical, the different expenses borne by each class may result in
differing net asset values and dividends for each class.
19
<PAGE>
Securities listed on a national securities exchange or designated as
national market system securities are valued at the last reported sale price on
that day or, if there has been no sale on such day or on the previous day on
which the Exchange was open (if a week has not elapsed between such days), then
the value of such security is taken to be the reported bid price at the time of
which the value is being ascertained. Securities actively traded in the over-
the-counter market but not designated as national market system securities are
valued at the last quoted bid price. Any securities or other assets for which
current market quotations are not readily available are valued at their fair
value as determined in good faith under procedures established by and under
general supervision and responsibility of the Fund's Board of Directors. Debt
securities having remaining maturities in excess of sixty days when purchased
and debt securities originally purchased with maturities in excess of sixty days
but which currently have maturities of sixty days or less are valued at cost
adjusted for amortization of premiums and accretion of discounts. Accumulated
unrealized appreciation or depreciation on the sixty-first day, if any, is
amortized to maturity.
Concerning the valuation of an open short sale against-the-box, the Fund
would value securities covering such a sale at the market price thereof and
offset such value by the short position.
Investors should be aware that because of the difference between the bid
and asked prices of the over-the-counter securities which the Fund may invest
in, there may be an immediate reduction in the net asset value of the shares of
the Fund after the Fund has completed a purchase of such securities.
TOTAL RETURN AND TAX INFORMATION
TOTAL RETURN CALCULATION. Total returns quoted in advertising reflect all
aspects of the Fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in the Fund's net asset value per
share over the period. Average annual returns are calculated by determining the
growth or decline in value of a hypothetical investment in the Fund over a
stated period, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant over the period. For example, a cumulative return of 100%
over ten years would produce an average annual return of 7.18%, which is the
steady annual return that would result in 100% growth on a compounded basis in
ten years.
Total return information may be useful to investors in reviewing the Fund's
performance. However, certain factors should be considered before using this
information as a basis for comparison with alternative investments. No
adjustment is made for taxes payable on distributions. The total return for any
given past period is not an indication or representation by the Fund of future
rates of return on its shares. When comparing the Fund's total return with that
of other alternatives, investors should understand that as the Fund is an equity
fund seeking capital appreciation, its shares are subject to greater market
risks than shares of funds having other investment objectives and that the Fund
is designed for investors who are willing to accept greater risk of loss in the
hope of realizing greater gains.
Average annual total return is calculated according to the following
formula:
P (1+t)n = ERV
20
<PAGE>
Where: P = a hypothetical initial investment of $1,000
t = average annual total return
n = number of years
ERV = ending redeemable value of P at the end of each period.
Average Annual Total Return through October 31, 1994 for the period beginning:
<TABLE>
<CAPTION>
4/30/80 Class A
11/1/93 11/1/89 11/1/84 9/2/93 Class B
(1 year) (5 years) (10 years) and Class C
(since inception)
- ------------------------------------------------------------------------------------------------------------------------------------
Without
Class deduction With deduction Without With deduction Without With deduction Without With deduction
of sales of maximum deduction of of maximum deduction of of maximum deduction of of maximum
charge sales charge sales charge sales charge sales charge sales charge sales charge sales charge
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 5.01 -1.02(1) 10.76 9.46(1) 12.67 12.01(1) 18.06 17.58(1)
B 4.43 -.57 N/A N/A N/A N/A 2.74 -.66
C 4.45 3.45 N/A N/A N/A N/A 2.68 2.68
<FN>
(1) These numbers have been restated to reflect the maximum sales charge of
5.75% as if it had been in effect throughout the above periods.
</TABLE>
In addition to average annual returns, each class of shares of the Fund may
quote unaveraged or cumulative total returns reflecting the simple change in
value of an investment over a stated period. Average annual and cumulative
total returns may be quoted as a percentage or as a dollar amount and may be
calculated for a single investment, a series of investments and/or a series of
redemptions over any time period. Total returns and other performance
information may be quoted numerically or in a table, graph, or similar
illustration. Total returns may be quoted with or without taking the Fund's
sales charge into account. Excluding the Fund's sales charge from a total
return calculation produces a higher total return figure.
The cumulative total returns on an investment made in Class A shares of the
Fund for the one, five and ten year periods ended October 31, 1994 and for the
one year period for B and C and since inception for Class A, B and C shares were
as follows:
21
<PAGE>
<TABLE>
<CAPTION>
For the one year period ended For the five year period For the ten year period From inception (1) through
10/31/94 ended 10/31/94 ended 10/31/94 10/31/94
- ------------------------------------------------------------------------------------------------------------------------------------
Without With deduction Without With deduction Without With deduction Without With deduction of
deduction of of maximum deduction of maximum deduction of of maximum deduction of maximum sales
sales charge sales charge of sales sales charge sales charge sales charge sales charge charge(2)
Class charge
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 5.01% -1.02%(3) 66.77% 57.18 %(3) 229.91% 210.94%(3) 1,013.52% 949.49%(3)
B 4.43% -.57% N/A N/A N/A N/A 3.19% -.76%
C 4.45% 3.45% N/A N/A N/A N/A 3.13% 3.13%
<FN>
(1) The Quest for Value Fund commenced operations on 4/30/80. Class B and C
shares of the Fund were first offered on 9/2/93.
(2) Reflects deduction of front-end sales charge for Class A shares and
Contingent Deferred Sales Charge for Class B and C shares.
(3) These numbers have been restated to reflect the maximium sales charge of
5.75% as if it had been in effect throughout the above periods.
</TABLE>
From time to time the Fund may refer in advertisements to rankings and
performance statistics published by (1) recognized mutual fund performance
rating services including but not limited to Lipper Analytical Services, Inc.
and Morningstar, Inc.; (2) recognized indexes including but not limited to the
Standard & Poor's Composite Stock Price Index, Consumer Price Index and Dow
Jones Industrial Average; and (3) Money Magazine and other financial
publications including magazines, newspapers and newsletters. Performance
statistics may include total returns, measures of volatility, or other methods
of performance based on the method used by the publishers of the information.
Advertising materials for the Fund may also compare the Fund's total return to
money market fund yields and rates on certificates of deposit, U.S. Government
Securities and corporate bonds, and may refer to current or historic financial
or economic trends or conditions.
The performance of the Fund may be compared to the performance of other
mutual funds in general, or to the performance of particular types of mutual
funds. These comparisons may be expressed as mutual fund rankings prepared by
Lipper Analytical Services, Inc. ("Lipper"), and Morningstar, Inc.
("Morningstar"), independent services located in Summit, New Jersey and Chicago,
Illinois, respectively, that monitor the performance of mutual funds. Lipper
and Morningstar generally rank funds on the basis of total return, assuming
reinvestment of distributions, but do not take sales charges or redemption fees
into consideration, and are prepared without regard to tax consequences. In
addition to the mutual fund rankings, performance may be compared to mutual fund
performance indices prepared by Lipper.
From time to time, the Fund's performance also may be compared to other
mutual funds tracked by financial or business publications and periodicals, For
example, the Fund may quote Morningstar ratings in its advertising materials.
Morningstar rates mutual funds on a one star to five star scale on the basis of
risk-adjusted performance.
22
<PAGE>
The Distributor may provide information designed to help individuals
understand their investment goals and explore various financial strategies such
as general principles of investing, asset allocation, diversification, risk
tolerance; goal setting; and a questionnaire designed to help create a personal
financial profile.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical
returns of the capital markets in the United States, including common stocks,
small capitalization stocks, long-term corporate bonds, intermediate-term
government bonds, long-term government bonds, Treasury bills, the U.S. rate of
inflation (based on CPI), and combinations of various capital markets. The
performance of these capital markets is based on the returns of different
indices.
The Distributor may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Fund. The
Fund may also compare performance to that of other compilations or indices that
may be developed and made available in the future.
In advertising materials, the Distributor may reference or discuss its
products and services, which may include: other Oppenheimer funds; retirement
investing; brokerage products and services; the effects of dollar-cost averaging
and saving for college; and the risk of market timing. In addition, the
Distributor may quote financial or business publications and periodicals,
including model portfolios or allocations, as they relate to fund management,
investment philosophy, and investment techniques. The Distributor may also
reprint, and use as advertising and sales literature, articles from a quarterly
magazine provided free of charge to Oppeneimer fund shareholders.
The Fund may present its fund number, Quotron symbol, CUSIP number, and
discuss or quote its current portfolio manager.
Volatility. The Fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the Fund may compare these
measures to those of other funds. Measures of volatility seek to compare a
fund's historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a comparative
benchmark may be. All measures of volatility and correlation are calculated
using averages of historical data.
Momentum Indicators indicate the Fund's price movements over specific
periods to time. Each point on the momentum indicator represents the Fund's
percentage change in price movements over that period.
The Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in
23
<PAGE>
a fund at periodic intervals, thereby purchasing fewer shares when prices are
high and more shares when prices are low. While such a strategy does not assure
a profit or guard against a loss in a declining market, the investor's average
cost per share can be lower than if fixed numbers of shares are purchased at the
same intervals. In evaluating such a plan, investors should consider their
ability to continue purchasing shares during period of low price levels.
The Fund may be available for purchase through retirement plans or other
programs offering deferral of or exemption from income taxes, which may produce
superior after-tax returns over time. For example, a $1,000 investment earning
a taxable return of 10% annually would have an after-tax value of $1,949 after
ten years, assuming tax was deducted from the return each year at a 28% rate.
An equivalent tax-deferred investment would have an after-tax value of $2,100
after ten years, assuming tax was deducted at a 31% rate from the tax-deferred
earnings at the end of the ten-year plan.
TAX STATUS OF THE FUND'S DIVIDENDS AND DISBURSEMENTS. The Federal tax treatment
of the Fund's dividends and distributions is explained in the Prospectus under
the caption "Tax Status." The Code provides for a 70% dividends-received
deduction (the "deduction") by corporations. Special provisions are contained
in the Code as to the eligibility of payments to shareholders made by mutual
funds for the deduction. Long-term capital gains distributions are not eligible
for the deduction. In addition, the amount of dividends paid by the Fund which
may qualify for the deduction is limited to the aggregate amount of qualifying
dividends which the Fund derives from its portfolio investments which the Fund
has held for a minimum period, usually 46 days. It should also be noted that a
shareholder will not be eligible for the deduction on dividends paid with
respect to shares which are held by the shareholder for 45 days or less. The
Fund will be subject to a nondeductible 4% excise tax to the extent that it
fails to distribute by the end of any calendar year substantially all its
ordinary income for that year and capital gain net income for the one year
period ending on October 31 of that year.
ADDITIONAL INFORMATION
DESCRIPTION OF THE FUND. The Fund was formed under the laws of Maryland on
August 6, 1979. When issued, the shares of each class of the Fund are fully
paid and have no preemptive, conversion, or other subscription rights. Each
class of shares represents identical interests in the applicable Fund's
investment portfolio. As such, they have the same rights, privileges and
preferences, except with respect to: (a) the designation of each class, (b) the
effect of the respective sales charges, if any, for each class, (c) the
distribution fees borne by each class, (d) the expenses allocable exclusively to
each class, (e) voting rights on matters exclusively affecting a single class
and (f) the exchange privilege of each class. Upon liquidation of the Fund,
shareholders are entitled to share pro rata in the net assets available for
distribution to shareholders after all debts and expenses have been paid. The
shares do not have cumulative voting rights.
It is expected that the investment company will not be required to hold
annual meetings, but will hold special meetings of shareholders when, in the
judgment of the Directors, it is necessary or desirable to submit matters for
shareholder vote.
24
<PAGE>
INDEPENDENT AUDITORS. KPMG Peat Marwick LLP, 345 Park Avenue, New York, New
York, are the independent auditors of the Fund. Their services include auditing
the financial statements of the Fund as well as other related services.
CUSTODIAN. State Street Bank and Trust Company acts as custodian of the assets
for the Fund.
TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT. Shareholder Services, Inc. acts
as the transfer agent and shareholder servicing agent for the Fund.
DISTRIBUTION OPTIONS. Shareholders may change their distribution options by
giving the Transfer Agent three days prior notice in writing.
SHAREHOLDER SERVICING AGENT FOR CERTAIN SHAREHOLDERS. Unified Management
Corporation (1-800-346-4601) is the shareholder servicing agent for former
shareholders of the AMA Family of Funds and clients of AMA Investment Advisers,
Inc. (which acted as the investment advisor to the AMA Family of Funds) who
acquire shares of any former Quest Fund, and for former shareholders of the
Unified Funds and Liquid Green Trusts, accounts which participated or
participate in a retirement plan for which Unified Investment Advisers, Inc. or
an affiliate acts as custodian or trustee, accounts which have a Money Manager
brokerage account, and other accounts for which Unified Management Corporation
is the dealer of record.
RETIREMENT PLANS. The Distributor may print advertisements and brochures
concerning retirement plans, lump sum distributions, and 401-k plans. These
materials may include descriptions of tax rules, strategies for reducing risk,
and descriptions of the 401-k program offered by the Distributors. From time to
time, hypothetical investment programs illustrating various tax-deferred
investment strategies will be used in brochures, sales literature, and omitting
prospectuses. The following example illustrates the general approaches that
will be followed. These hypotheticals will be modified with different
investment amounts, reflecting the amounts that can be invested in different
types of retirement programs, different assumed tax rates, and assumed rates of
return. They should not be viewed as indicative of past or future performance
of any Oppenheimer product.
25
<PAGE>
EXAMPLES
<TABLE>
<CAPTION>
Benefits of Long Term Tax-Free Compounding - Benefits of Long Term Tax-Free Compounding -
Single Sum Periodic Investment
- ------------------------------------------------------------------------------------------------------------------------------------
Amount of Contribution: $100,000 Amount Invested Annually: $2000
- ------------------------------------------------------------------------------------------------------------------------------------
Rates of Return Rates of Return
Years ------------------------------------------- Years -------------------------------------------------
8.00% 10.00% 12.00% 8.00% 10.00% 12.00%
------------------------------------------- -------------------------------------------------
Value at end Value at End
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 146,933 $ 161,051 $ 176,234 5 $ 12,672 $ 13,431 $ 14,230
10 $ 215,892 $ 259,374 $ 310,585 10 $ 31,291 $ 35,062 $ 39,309
15 $ 317,217 $ 417,725 $ 547,357 15 $ 58,649 $ 69,899 $ 83,507
20 $ 466,096 $ 672,750 $ 964,629 20 $ 98,846 $126,005 $161,397
25 $ 684,848 $1,083,471 $1,700,006 25 $157,909 $216,364 $298,668
30 $1,006,266 $1,744,940 $2,995,992 30 $244,692 $361,887 $540,585
<CAPTION>
Comparison of Taxable and Tax-Free Investing -- Periodic Investments
(Assumed Tax Rate : 28%)
- ------------------------------------------------------------------------------------------------------------------------------------
Amount of Annual Contribution (Pre-Tax):$2,000 Annual Contribution (After Tax): $1,440
- ------------------------------------------------------------------------------------------------------------------------------------
Tax Deferred Rates of Return Fully Taxed Rates of Return
Years ----------------------------------------------- Years ------------------------------------------------
8.00% 10.00% 12.00% 5.76% 7.20% 8.64%
----------------------------------------------- ------------------------------------------------
Value at end Value at End
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 12,672 $ 13,431 $ 14,230 5 $ 8,544 $ 8,913 $ 9,296
10 $ 31,291 $ 35,062 $ 39,309 10 $ 19,849 $ 21,531 $ 23,364
15 $ 58,649 $ 69,899 $ 83,507 15 $ 34,807 $ 39,394 $ 44,654
20 $ 98,846 $126,005 $161,397 20 $ 54,598 $ 64,683 $ 76,874
25 $157,909 $216,364 $298,668 25 $ 80,785 $100,485 $125,635
30 $244,692 $361,887 $540,585 30 $115,435 $151,171 $199,429
<CAPTION>
Comparison of Tax Deferred Investing
-- Deducting Taxes at End
(Assumed Tax Rate at End: 28%)
- -------------------------------------------------------------------------------
Amount of Annual Contribution: $2,000
- -------------------------------------------------------------------------------
Tax Deferred Rates of Return
Years -----------------------------------------------------------
8.00% 10.00% 12.00%
-----------------------------------------------------------
Value at End
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
5 $ 11,924 $ 12,470 $ 13,046
10 $ 28,130 $ 30,485 $ 33,903
15 $ 50,627 $ 58,728 $ 68,525
20 $ 82,369 $101,924 $127,406
25 $127,694 $169,782 $229,041
30 $192,978 $277,359 $406,021
</TABLE>
26
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY BILLS -- 0.1%
$ 350,000 5.06%, 4/06/95
(cost -- $342,326) $ 342,031
------------
<CAPTION>
SHORT-TERM CORPORATE NOTES -- 10.7%
BANKING -- 3.3%
$ 8,632,000 Norwest Financial, Inc.
4.95%, 12/05/94 $ 8,591,645
------------
ENERGY -- 0.8%
2,000,000 Chevron Oil Finance Co.
4.91%, 11/28/94 1,992,635
------------
INSURANCE -- 0.9%
2,300,000 Prudential Funding Corp.
4.85%, 11/14/94 2,295,972
------------
MACHINERY & ENGINEERING -- 3.1%
7,900,000 Deere (John) Capital Corp.
4.92%, 11/07/94 7,893,522
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.6%
1,470,000 Beneficial Corp.
4.88%, 11/21/94 1,466,015
1,300,000 Commercial Credit Co.
4.85%, 11/21/94 1,296,497
4,000,000 Household Finance Corp.
4.97%, 12/01/94 3,983,433
------------
6,745,945
------------
Total Short-Term Corporate Notes
(cost -- $27,519,719) $ 27,519,719
------------
CONVERTIBLE CORPORATE BONDS -- 0.8%
REAL ESTATE
$ 2,310,156 Security Capital Realty, Inc.
12.00%, 6/30/14
(cost -- $2,177,494) (A) $ 1,997,340
------------
CONVERTIBLE PREFERRED STOCKS -- 1.1%
METALS/MINING
60,000 Freeport McMoRan, Inc.
$4.375 Conv. Pfd.
(cost -- $2,654,325) $ 2,880,000
------------
COMMON STOCKS -- 88.0%
AEROSPACE -- 10.1%
215,000 AlliedSignal, Inc. $ 7,444,375
129,000 Martin Marietta Corp. 5,917,875
59,000 McDonnell Douglas Corp. 8,319,000
90,000 Sundstrand Corp. 4,095,000
------------
25,776,250
------------
BANKING -- 6.1%
75,000 Citicorp 3,581,250
68,000 First Interstate Bancorp 5,440,000
120,810 Mellon Bank Corp. 6,720,056
------------
15,741,306
------------
CHEMICALS -- 3.1%
27,000 Hercules, Inc. 3,152,250
64,000 Monsanto Co. 4,872,000
------------
8,024,250
------------
CONGLOMERATES -- 1.7%
90,200 General Electric Co. 4,408,525
------------
CONSUMER PRODUCTS -- 7.5%
80,000 Avon Products, Inc. 5,060,000
252,000 Hasbro, Inc. 8,316,000
50,000 Unilever N.V. 5,937,500
------------
19,313,500
------------
DRUGS & MEDICAL PRODUCTS -- 5.4%
213,000 Becton, Dickinson & Co. 10,064,250
48,000 Warner-Lambert Co. 3,660,000
------------
13,724,250
------------
ELECTRONICS -- 2.6%
177,000 Arrow Electronics, Inc.* 6,681,750
INSURANCE -- 20.5%
82,000 American International Group, Inc. 7,677,250
411,000 EXEL Ltd. 16,183,125
38,500 General Reinsurance Corp. 4,312,000
205,000 John Alden Financial Corp. 6,150,000
202,500 Progressive Corp., Ohio 7,695,000
101,000 Transamerica Corp. 4,961,625
121,000 UNUM Corp. 5,550,875
------------
52,529,875
------------
MANUFACTURING -- 4.2%
260,000 Case Corp. 5,460,000
290,000 Pall Corp. 5,256,250
------------
10,716,250
------------
<FN>
* Non-income producing security.
</TABLE>
A-1
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
QUEST FOR VALUE FUND, INC. (cont'd)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------
<C> <S> <C>
METALS/MINING -- 1.7%
2,844 Freeport McMoRan, Copper & Gold (Class A) $ 64,701
227,000 Freeport McMoRan, Inc. 4,171,125
------------
4,235,826
------------
MISCELLANEOUS FINANCIAL SERVICES -- 9.9%
200,000 American Express Co. 6,150,000
340,000 Countrywide Credit Industries, Inc. 5,015,000
152,000 Federal Home Loan Mortgage Corp. 8,284,000
90,000 Morgan Stanley Group, Inc. 5,883,750
------------
25,332,750
------------
REAL ESTATE -- 1.1%
3,050 Security Capital Realty, Inc. (A) 2,758,036
------------
RETAIL -- 3.5%
213,000 May Department Stores Co. 8,014,125
21,000 Mercantile Stores Co., Inc. 955,500
------------
8,969,625
------------
TECHNOLOGY -- 3.1%
127,000 Intel Corp. 7,889,875
------------
TELECOMMUNICATIONS -- 1.9%
344 Bell Atlantic Corp. 18,017
145,200 Sprint Corp. 4,737,150
------------
4,755,167
------------
TEXTILES/APPAREL -- 2.1%
280,600 Warnaco Group, Inc. (Class A)* 5,296,325
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.5%
116,000 Dole Food Co. $ 3,117,500
240,000 Sara Lee Corp. 5,910,000
------------
9,027,500
------------
Total Common Stocks
(cost -- $192,374,371) $225,181,060
------------
Total Investments
(cost -- $225,068,235) 100.7% $257,920,150
Other Liabilities in Excess of
Other Assets (0.7) (1,881,015)
----- ------------
TOTAL NET ASSETS 100.0% $256,039,135
----- ------------
----- ------------
OPPORTUNITY FUND
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES -- 20.6%
AUTOMOTIVE -- 0.7%
$ 1,450,000 Ford Motor Credit Co.
4.91%, 11/28/94 $ 1,444,660
------------
BANKING -- 4.9%
10,600,000 Norwest Financial, Inc.
4.95%, 12/05/94 10,550,445
------------
CONGLOMERATES -- 0.5%
950,000 General Electric Capital Corp.
4.90%, 11/14/94 948,319
------------
ENERGY -- 3.5%
Chevron Oil Finance Co.
6,100,000 4.82%, 11/28/94 6,077,949
1,450,000 4.91%, 11/28/94 1,444,661
------------
7,522,610
------------
INSURANCE -- 0.6%
1,300,000 Prudential Funding Corp.
5.00%, 11/14/94 1,297,653
------------
<FN>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities.):
VALUATION
DESCRIPTION DATE OF PAR SHARES UNIT AS OF
ACQUISITION AMOUNT COST OCTOBER 31,
1994
- --------------------------------------------------------------------------------
Security Capital Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,310,156 -- $ .94 $ .86
Security Capital Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 904
</TABLE>
A-2
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------
<S> <C> <C>
MACHINERY & ENGINEERING -- 1.8%
Deere (John) Capital Corp.
$ 800,000 4.83%, 11/21/94 $ 797,853
3,100,000 4.92%, 11/07/94 3,097,458
------------
3,895,311
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.6%
Beneficial Corp.
4,950,000 4.88%, 11/21/94 4,936,580
1,100,000 5.00%, 11/07/94 1,099,083
1,800,000 CIT Group Holdings, Inc.
5.05%, 11/07/94 1,798,485
1,200,000 Commercial Credit Co.
4.85%, 11/21/94 1,196,767
Household Finance Corp.
2,500,000 4.52%, 11/02/94 2,499,686
6,100,000 4.85%, 11/28/94 6,077,811
800,000 4.88%, 11/14/94 798,590
------------
18,407,002
------------
Total Short-Term Corporate Notes
(cost -- $44,066,000) $ 44,066,000
------------
U.S. TREASURY NOTES -- 1.5%
$ 1,000,000 7.50%, 11/15/01 $ 992,030
1,000,000 7.50%, 5/15/02 990,470
550,000 7.875%, 4/15/98 560,054
550,000 7.875%, 8/15/01 557,304
------------
Total U.S. Treasury Notes
(cost -- $3,149,370) $ 3,099,858
------------
CONVERTIBLE PREFERRED STOCKS -- 1.1%
METALS/MINING
50,000 Freeport McMoRan, Inc.
$4.375 Conv. Pfd.
(cost -- $2,211,938) $ 2,400,000
------------
COMMON STOCKS -- 76.5%
AEROSPACE -- 8.9%
115,000 McDonnell Douglas Corp. $ 16,215,000
60,000 Sundstrand Corp. 2,730,000
------------
18,945,000
------------
BANKING -- 15.2%
120,000 Citicorp $ 5,730,000
34,000 First Empire State Corp. 5,108,500
226,000 Mellon Bank Corp. 12,571,250
10,000 U.S. Bancorp 240,000
60,000 Wells Fargo & Co. 8,917,500
------------
32,567,250
------------
CHEMICALS -- 4.7%
75,000 Hercules, Inc. 8,756,250
18,000 Monsanto Co. 1,370,250
------------
10,126,500
------------
CONSUMER PRODUCTS -- 3.8%
60,000 Avon Products, Inc. 3,795,000
50,000 Hasbro, Inc. 1,650,000
92,500 Mattel, Inc. 2,705,625
------------
8,150,625
------------
DRUGS & MEDICAL PRODUCTS -- 5.9%
120,000 Becton, Dickinson & Co. 5,670,000
90,000 Warner-Lambert Co. 6,862,500
------------
12,532,500
------------
ENERGY -- 5.4%
139,200 Tenneco, Inc. 6,159,600
149,300 Triton Energy Corp.* 5,300,150
------------
11,459,750
------------
HEALTHCARE SERVICES -- 2.9%
435,000 National Health
Laboratories, Inc. 6,253,125
------------
INSURANCE -- 5.3%
160,000 EXEL Ltd. 6,300,000
60,000 Transamerica Corp. 2,947,500
60,000 Travelers, Inc. 2,085,000
------------
11,332,500
------------
MANUFACTURING -- 1.3%
160,000 Collins & Aikman Corp.* 1,420,000
100,100 Shaw Industries, Inc. 1,463,962
------------
2,883,962
------------
<FN>
* Non-income producing security.
</TABLE>
A-3
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
OPPORTUNITY FUND (cont'd)
<TABLE>
<CAPTION>
- --------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS FINANCIAL SERVICES -- 16.5%
240,000 American Express Co. $ 7,380,000
321,700 Countrywide Credit
Industries, Inc. 4,745,075
210,000 Federal Home Loan Mortgage
Corp. 11,445,000
55,000 Federal National Mortgage
Assoc. 4,180,000
110,000 Lehman Brothers Holdings,
Inc. 1,705,000
90,000 Morgan Stanley Group, Inc. 5,883,750
------------
35,338,825
------------
TECHNOLOGY -- 4.8%
70,000 Alliant Techsystems, Inc.* 2,406,250
110,000 Intel Corp. 6,833,750
50,500 Unitrode Corp.* 972,125
------------
10,212,125
------------
TELECOMMUNICATIONS -- 1.8%
120,100 Sprint Corp. 3,918,263
------------
Total Common Stocks
(cost -- $149,478,552) $163,720,425
------------
Total Investments
(cost -- $198,905,860) 99.7% $213,286,283
Other Assets in Excess of
Other Liabilities 0.3 659,462
----- ------------
TOTAL NET ASSETS 100.0% $213,945,745
----- ------------
----- ------------
SMALL CAPITALIZATION FUND
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 8.5%
AUTOMOTIVE -- 0.7%
$1,038,000 Ford Motor Credit Co.
4.91%, 11/28/94 $ 1,034,178
------------
BANKING -- 5.0%
7,041,000 Norwest Financial, Inc.
4.95%, 12/05/94 7,008,083
------------
CONGLOMERATES -- 0.7%
930,000 General Electric Capital
Corp.
4.82%, 11/21/94 927,510
------------
INSURANCE -- 1.1%
$1,468,000 Prudential Funding Corp.
4.85%, 11/28/94 $ 1,462,660
------------
MISCELLANEOUS FINANCIAL SERVICES -- 1.0%
925,000 Beneficial Corp.
4.88%, 11/21/94 922,492
475,000 Federal National Mortgage
Assoc.
4.75%, 11/01/94 475,000
------------
1,397,492
------------
Total Short-Term Corporate Notes
(cost -- $11,829,923) $ 11,829,923
------------
CORPORATE NOTES & BONDS -- 0.7%
ENERGY -- 0.3%
$ 375,000 Global Marine, Inc.
12.75%, 12/15/99 $ 405,000
------------
PRINTING & PUBLISHING -- 0.4%
700,000 U.S. Banknote Corp.
10.375%, 6/01/02 602,000
------------
Total Corporate Notes & Bonds
(cost -- $1,104,862) $ 1,007,000
------------
CONVERTIBLE CORPORATE BONDS -- 0.9%
REAL ESTATE
$1,363,500 Security Capital Realty, Inc.
12.00%, 6/30/14
(cost -- $1,285,200) (A) $ 1,178,870
------------
SHARES VALUE
- ------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 346,500
------------
COMMON STOCKS -- 86.3%
ADVERTISING -- 4.7%
100,000 Foote, Cone & Belding
Communications, Inc. 4,475,000
39,000 Omnicom Group, Inc. 2,076,750
------------
6,551,750
------------
AEROSPACE -- 1.2%
200,000 BE Aerospace, Inc.* 1,737,500
------------
AUTOMOTIVE -- 0.2%
126,000 Collins Industries, Inc.* 283,500
------------
BUILDING & CONSTRUCTION -- 3.9%
146,000 CRSS, Inc. 1,642,500
102,600 D.R. Horton, Inc. 1,346,625
120,000 Martin Marietta Materials,
Inc. 2,475,000
------------
5,464,125
------------
CHEMICALS -- 2.0%
141,400 OM Group, Inc. 2,828,000
------------
<FN>
* Non-income producing security.
</TABLE>
A-4
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
COMPUTER SERVICES -- 4.1%
147,700 BancTec, Inc.* $ 2,954,000
34,600 Globalink, Inc.* 484,400
90,000 National Data Corp. 1,867,500
70,000 Sudbury, Inc.* 481,250
------------
5,787,150
------------
DRUGS & MEDICAL PRODUCTS -- 3.6%
40,000 Beckman Instruments, Inc. 1,175,000
108,900 Sybron International Corp.* 3,770,662
------------
4,945,662
------------
ELECTRICAL EQUIPMENT -- 0.7%
80,000 Instrument Systems Corp.* 600,000
16,000 Marshall Industries* 418,000
------------
1,018,000
------------
ENERGY -- 9.5%
136,800 Aquila Gas Pipeline Corp. 1,043,100
195,500 BWIP Holdings, Inc. (Class
A) 3,519,000
330,155 Global Natural Resources,
Inc.* 2,476,162
125,000 Nahama & Weagant
Energy Co.* 54,687
137,500 Noble Drilling Corp.* 1,014,063
72,000 St. Mary Land &
Exploration Co. 967,500
65,000 Triton Energy Corp.* 2,307,500
92,530 UGI Corp. 1,862,166
------------
13,244,178
------------
HEALTHCARE SERVICES -- 1.7%
90,000 Community Health Systems,
Inc.* 2,362,500
------------
INSURANCE -- 3.3%
123,300 Financial Security Assurance
Holdings, Ltd. 2,758,838
112,500 Guaranty National Corp. 1,884,375
------------
4,643,213
------------
LEISURE -- 0.7%
43,700 Club Med, Inc. 977,787
------------
MANUFACTURING -- 6.8%
89,000 Collins & Aikman Corp.* 789,875
97,000 Exabyte Corp.* 2,134,000
50,000 Giddings & Lewis, Inc. 775,000
181,300 Interlake Corp.* 430,587
65,100 Masland Corp. 1,049,738
170,000 North American Watch Co. 2,210,000
85,600 Welbilt Corp.* 2,118,600
------------
9,507,800
------------
MEDIA/BROADCASTING -- 0.6%
25,000 Pulitzer Publishing Co. 893,750
------------
METALS/MINING -- 0.5%
50,000 Olympic Steel, Inc.* 737,500
------------
MISCELLANEOUS FINANCIAL SERVICES -- 3.6%
221,400 SafeCard Services, Inc. 3,542,400
100,800 Union Corp.* 1,499,400
------------
5,041,800
------------
PAPER PRODUCTS -- 0.7%
61,500 CSS Industries, Inc.* $ 1,022,438
------------
PRINTING & PUBLISHING -- 3.8%
72,000 Commerce Clearing House,
Inc. (Class B) 1,206,000
216,300 Nu-Kote Holdings, Inc.
(Class A)* 4,028,588
------------
5,234,588
------------
REAL ESTATE -- 10.6%
151,800 Cousins Properties, Inc. 2,352,900
44,000 Post Properties, Inc. 1,292,500
219,750 Property Trust of America 3,543,469
230,000 Security Capital Industrial
Trust, Inc. 3,507,500
1,800 Security Capital Realty,
Inc. (A) 1,627,848
239,000 Taubman Centers, Inc. 2,479,625
------------
14,803,842
------------
RETAIL -- 4.3%
190,000 AmeriCredit Corp.* 1,258,750
72,700 Brookstone, Inc.* 1,090,500
350,700 Cash America International,
Inc. 2,893,275
15,600 Finish Line, Inc. 113,100
52,500 Fred's, Inc. 603,750
------------
5,959,375
------------
SECURITY/INVESTIGATION SERVICES -- 0.5%
202,910 Automated Security Holdings
PLC ADS 532,639
498,184 Holmes Protection Group,
Inc. 187,409
------------
720,048
------------
TECHNOLOGY -- 8.1%
100,400 Dionex Corp.* 3,714,800
202,000 Rational Software Corp.* 505,000
130,000 Stratus Computer, Inc.* 4,842,500
113,100 Unitrode Corp.* 2,177,175
------------
11,239,475
------------
TEXTILES/APPAREL -- 3.5%
18,000 Blair Corp. 756,000
70,000 Dyersburg Corp. 437,500
42,700 Fab Industries, Inc. 1,318,363
128,000 Warnaco Group, Inc. (Class
A)* 2,416,000
------------
4,927,863
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 2.1%
70,900 Morningstar Group, Inc. 514,025
220,118 Sylvan Food Holdings, Inc.* 2,366,268
------------
2,880,293
------------
TRANSPORTATION -- 2.0%
183,700 Interpool, Inc.* 2,525,875
18,000 MTL, Inc. 279,000
------------
2,804,875
------------
UTILITIES -- 1.7%
221,200 Sithe Energies, Inc.* 2,322,600
------------
<FN>
* Non-income producing security.
</TABLE>
A-5
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
SMALL CAPITALIZATION FUND (cont'd)
<TABLE>
<CAPTION>
- -------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------
<S> <C> <C>
OTHER -- 1.9%
142,000 McGrath RentCorp. $ 2,165,500
89,200 National Education Corp.* 434,850
------------
2,600,350
------------
Total Common Stocks
(cost -- $114,775,894) $120,539,962
------------
Total Investments
(cost -- $129,355,879) 96.6% $134,902,255
Other Assets in Excess of
Other Liabilities 3.4 4,687,545
----- ------------
TOTAL NET ASSETS 100.0% $139,589,800
----- ------------
----- ------------
GROWTH AND INCOME FUND
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 13.5%
AUTOMOTIVE -- 3.4%
$ 1,150,000 Ford Motor Credit Co.
4.76%, 11/07/94 $ 1,149,088
------------
CONGLOMERATES -- 2.6%
885,000 General Electric Capital Corp.
4.72%, 11/04/94 884,652
------------
ENERGY -- 4.1%
1,415,000 Chevron Oil Finance Co.
4.70%, 11/01/94 1,415,000
------------
MISCELLANEOUS FINANCIAL SERVICES -- 3.4%
1,150,000 Household Finance Corp.
4.77%, 11/08/94 1,148,933
------------
Total Short-Term Corporate Notes
(cost -- $4,597,673) $ 4,597,673
------------
CORPORATE NOTES & BONDS -- 11.2%
CONTAINERS -- 3.0%
$ 1,000,000 Stone Container Corp.
11.875%, 12/01/98 $ 1,030,000
------------
ENERGY -- 3.8%
1,750,000 Triton Energy Corp.
Zero Coupon, 11/01/97 1,279,687
------------
TELECOMMUNICATIONS -- 4.4%
3,000,000 Nextel Communications, Inc.
0.00%/11.50%, 9/01/03** 1,515,000
------------
Total Corporate Notes & Bonds
(cost -- $4,187,052) $ 3,824,687
------------
CONVERTIBLE CORPORATE BONDS -- 6.2%
DRUGS & MEDICAL PRODUCTS -- 1.7%
$ 1,692,000 Alza Corp.
Zero Coupon, 7/14/14 $ 568,935
------------
MEDIA/BROADCASTING -- 4.5%
5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 1,525,000
Total Convertible Corporate Bonds
(cost -- $2,173,746) $ 2,093,935
------------
- -------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 12.3%
ENERGY -- 5.4%
130,000 Gerrity Oil & Gas Corp.
$1.50 Conv. Pfd. $ 1,820,000
------------
RETAIL -- 2.2%
20,000 Venture Stores, Inc.
$3.25 Conv. Pfd. 760,000
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 4.7%
80,000 Flagstar Companies, Inc.
$2.25 Conv. Pfd. 1,590,000
------------
Total Convertible Preferred Stocks
(cost -- $4,878,620) $ 4,170,000
------------
COMMON STOCKS -- 52.6%
AEROSPACE -- 6.2%
15,000 McDonnell Douglas Corp. $ 2,115,000
------------
<FN>
* Non-income producing security.
** Represents a step-up floater which will receive 0.00% interest until
9/01/98, then will "step-up"to 11.50% until maturity.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities.):
AS OF
DATE OF PAR UNIT OCTOBER 31,
DESCRIPTION ACQUISITION AMOUNT SHARES COST 1994
- --------------------------------------------------------------------------------
Security Capital Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,363,500 -- $ .94 $ .86
Security Capital Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 904
</TABLE>
A-6
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------
<S> <C> <C>
AUTOMOTIVE -- 3.2%
27,000 General Motors Corp. $ 1,066,500
------------
BANKING -- 2.7%
7,000 Citicorp 334,250
4,000 Wells Fargo & Co. 594,500
------------
928,750
------------
CONGLOMERATES -- 1.0%
20,000 Canadian Pacific Ltd. 320,000
------------
CONSUMER PRODUCTS -- 0.9%
5,000 Avon Products, Inc. 316,250
------------
ENERGY -- 3.1%
5,000 McMoRan Oil & Gas Corp. 18,750
20,000 Triton Energy Corp.* 710,000
15,000 Union Texas Petroleum
Holdings, Inc. 313,125
------------
1,041,875
------------
INSURANCE -- 7.0%
16,000 Equitable Co. 312,000
10,000 Progressive Corp., Ohio 380,000
35,000 TIG Holdings, Inc. 673,750
20,000 Travelers, Inc. 695,000
7,000 UNUM Corp. 321,125
------------
2,381,875
------------
METALS/MINING -- 4.4%
1,562 Freeport McMoRan, Copper &
Gold (Class A) 35,536
80,000 Freeport McMoRan, Inc. 1,470,000
------------
1,505,536
------------
MISCELLANEOUS FINANCIAL SERVICES -- 9.7%
26,000 American Express Co. 799,500
100,000 Countrywide Credit
Industries, Inc. 1,475,000
17,000 Federal Home Loan Mortgage
Corp. 926,500
5,200 Lehman Brothers Holdings,
Inc. 80,600
------------
3,281,600
------------
RETAIL -- 1.1%
10,000 May Department Stores Co. 376,250
------------
TECHNOLOGY -- 3.7%
20,000 Intel Corp. 1,242,500
------------
TELECOMMUNICATIONS -- 1.9%
20,000 Sprint Corp. 652,500
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 7.7%
45,000 PepsiCo, Inc. $ 1,575,000
17,000 Philip Morris Companies,
Inc. 1,041,250
------------
2,616,250
------------
Total Common Stocks
(cost -- $16,287,790) $ 17,844,886
------------
Total Investments
(cost -- $32,124,881) 95.8% $ 32,531,181
Other Assets in Excess of
Other Liabilities 4.2 1,428,001
----- ------------
TOTAL NET ASSETS 100.0% $ 33,959,182
----- ------------
----- ------------
U.S. GOVERNMENT INCOME FUND
- -------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
REPURCHASE AGREEMENT -- 0.1%
$ 100,000 Prudential Bache, 4.70%,
11/01/94 (proceeds at
maturity: $100,013,
collateralized by $105,000
par, $103,373 value, U.S.
Treasury Notes 4.625%,
2/29/96)
(cost -- $100,000) $ 100,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 817,404 9.50%, 12/01/02 - 11/01/03
(cost -- $823,662) $ 846,773
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 51.6%
$40,573,258 7.00%, 2/15/22 - 11/15/23
(A) $ 36,363,783
16,903,209 7.50%, 2/15/22 - 2/15/24 15,693,446
3,819,011 8.00%, 4/15/02 - 2/15/23 3,711,053
11,354,828 8.50%, 6/15/01 - 9/15/24 (A) 11,222,631
690,831 10.50%, 1/15/98 - 12/15/00 740,481
------------
Total Government National Mortgage
Association I (cost -- $75,692,773) $ 67,731,394
------------
U.S. TREASURY BONDS -- 2.9%
$ 4,000,000 7.625%, 11/15/22
(cost -- $4,740,548) $ 3,804,360
------------
<FN>
* Non-income producing security.
(A) Securities segregated (full or partial) as collateral for written options
outstanding. The aggregate market value of such segregated securities is
$20,087,482.
</TABLE>
A-7
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
U.S. GOVERNMENT INCOME FUND (cont'd)
<TABLE>
<CAPTION>
- -------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
<C> <C> <C>
U.S. Treasury Notes -- 44.6%
$60,000,000 6.875%, 8/31/99
(cost -- $58,889,522) $ 58,565,400
------------
Total Investments
(cost -- $140,246,505) 99.8% $131,047,927
----- ------------
- -------------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO CALL VALUE
- ------------------------------------------------------
WRITTEN CALL OPTIONS OUTSTANDING -- (0.1%)
$10,000,000 Government National
Mortgage Association I,
7.00%, expiring Dec. '94,
strike @ 89.22 $ (115,625)
10,000,000 Government National
Mortgage Association I,
8.50%, expiring Dec. '94,
strike @ 98.78 (75,000)
------------
Total Written Call Options
Outstanding (premiums
received: $142,188) $ (190,625)
------------
Other Assets in Excess of
Other Liabilities 0.3 436,494
----- ------------
Total Net Assets 100.0% $131,293,796
----- ------------
----- ------------
INVESTMENT QUALITY INCOME FUND
- -----------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 9.4%
CONGLOMERATES -- 3.7%
$ 2,075,000 General Electric Capital Corp.
4.72%, 11/14/94 $ 2,071,463
------------
MISCELLANEOUS FINANCIAL SERVICES -- 5.7%
2,075,000 Amercian Express Credit Corp.
4.75%, 11/07/94 2,073,357
1,150,000 Household Finance Corp.
4.68%, 11/02/94 1,149,851
------------
3,223,208
------------
Total Short-Term Corporate Notes
(cost -- $5,294,671) $ 5,294,671
------------
- -------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
CORPORATE NOTES & BONDS -- 88.2%
AEROSPACE -- 3.6%
$ 2,000,000 United Technologies Corp.
8.875%, 11/15/19 $ 2,007,420
------------
AIRLINES -- 2.6%
1,000,000 American Airlines
9.73%, 9/29/14 916,910
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 538,351
------------
1,455,261
------------
BANKING -- 6.4%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 74,378
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,439,139
500,000 RBSG Capital Corp.
10.125%, 3/01/04 547,640
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,555,020
------------
3,616,177
------------
CHEMICALS -- 0.9%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 521,470
------------
CONGLOMERATES -- 5.1%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,082,160
1,000,000 ITT Financial Corp.
6.50%, 5/01/11 786,860
------------
2,869,020
------------
ENERGY -- 5.9%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,312,990
------------
ENTERTAINMENT -- 4.8%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 2,670,390
------------
EQUIPMENT LEASING -- 2.7%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,522,832
------------
INSURANCE -- 11.1%
1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 879,780
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,172,700
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,595,120
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 2,606,610
------------
6,254,210
------------
</TABLE>
A-8
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------
<C> <S> <C>
MACHINERY & ENGINEERING -- 3.3%
$ 1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 $ 1,825,810
------------
MISCELLANEOUS FINANCIAL SERVICES -- 12.6%
20,000 Beneficial Corp.
12.875%, 8/01/13 23,754
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,467,105
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 910,732
115,000 10.00%, 5/15/99 121,464
205,000 Midland American
Capital Corp.
12.75%, 11/15/03 237,845
800,000 Paine Webber Group, Inc.
9.25%, 12/15/01 816,216
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 2,274,780
1,250,000 Source One Mortgage Services
Corp.
9.00%, 6/01/12 1,233,887
------------
7,085,783
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 109,261
------------
RETAIL -- 1.3%
May Department Stores Co.
250,000 9.875%, 6/01/17 246,032
405,000 10.625%, 11/01/10 465,957
------------
711,989
------------
TELECOMMUNICATIONS -- 12.2%
$ 420,000 GTE Corp.
10.25%, 11/01/20 $ 464,386
2,500,000 New York Telephone Co.
9.375%, 7/15/31 2,532,600
2,000,000 Pacific Bell
8.50%, 8/15/31 1,894,220
2,000,000 Southern New England
Telephone Co.
8.70%, 8/15/31 1,978,300
------------
6,869,506
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.2%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 1,779,260
------------
UTILITIES -- 9.7%
2,000,000 Hydro-Quebec
8.50%, 12/01/29 1,862,400
2,000,000 Southern California Edison
Co.
8.875%, 6/01/24 1,915,060
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,642,635
------------
5,420,095
------------
OTHER -- 2.6%
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,431,825
------------
Total Corporate Notes & Bonds
(cost -- $53,153,893) $ 49,463,299
------------
Total Investments
(cost -- $58,448,564) 97.6% $ 54,757,970
Other Assets in Excess of
Other Liabilities 2.4 1,352,181
----- ------------
Total Net Assets 100.0% $ 56,110,151
----- ------------
----- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
A-9
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE FUND, OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost --
$225,068,235, $198,905,860,
$129,355,879, $32,124,881,
$140,246,505 and $58,448,564,
respectively)........................ $257,920,150 $213,286,283 $134,902,255 $32,531,181 $131,047,927 $54,757,970
Cash.................................. 490,615 495,564 347,062 8,772 14,763 25,873
Receivable for investments sold....... 3,452,070 -- 1,212,440 1,339,806 168,384 --
Receivable for investments sold to
affiliates........................... -- -- 3,506,625 -- -- --
Receivable for fund shares sold....... 482,019 2,000,491 516,512 637,310 163,696 113,417
Dividends receivable.................. 387,321 470,950 90,453 65,264 -- --
Interest receivable................... 7,084 80,497 103,317 49,276 1,314,298 1,455,316
Deferred organization expenses........ -- -- -- 38,509 -- 13,971
Other assets.......................... 42,588 18,959 16,622 24,165 34,935 19,197
------------ ------------ ------------ ------------ ------------ ------------
Total Assets........................ 262,781,847 216,352,744 140,695,286 34,694,283 132,744,003 56,385,744
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES
Written options outstanding, at value
(premiums received: $142,188)........ -- -- -- -- 190,625 --
Payable for investments purchased..... 6,159,929 2,049,446 676,409 648,600 6,250 --
Payable for fund shares redeemed...... 414,843 207,962 298,489 25,979 1,007,182 108,561
Investment advisory fee payable....... 41,691 34,437 22,858 4,563 12,963 632
Distribution fee payable.............. 22,304 21,278 13,023 2,509 7,401 4,568
Dividends payable..................... -- 7,778 -- -- 117,133 108,198
Other payables and accrued expenses... 103,945 86,098 94,707 53,450 108,653 53,634
------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities................... 6,742,712 2,406,999 1,105,486 735,101 1,450,207 275,593
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS
Par value............................. 20,348,156 108,790 85,536 33,650 121,636 58,013
Paid-in-surplus....................... 184,710,613 191,026,174 130,829,389 31,830,359 145,717,507 60,695,612
Accumulated undistributed net
investment income (loss)............. 1,464,120 1,291,867 (238,336) 127,460 -- --
Accumulated undistributed net realized
gain (loss) on investments........... 16,664,331 7,139,720 3,366,835 1,768,686 (5,000,871) (952,880)
Distributions in excess of net
realized gains....................... -- (1,229) -- (207,273) (297,461) --
Net unrealized appreciation
(depreciation) on investments........ 32,851,915 14,380,423 5,546,376 406,300 (9,247,015) (3,690,594)
------------ ------------ ------------ ------------ ------------ ------------
Total Net Assets.................... $256,039,135 $213,945,745 $139,589,800 $33,959,182 $131,293,796 $56,110,151
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
CLASS A:
Fund shares outstanding............... 18,914,850 8,295,463 7,353,210 3,029,071 11,418,654 4,851,201
------------ ------------ ------------ ------------ ------------ ------------
Net asset value per share............. $ 12.59 $ 19.69 $ 16.33 $ 10.09 $ 10.79 $ 9.67
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Maximum offering price per share*..... $ 13.32 $ 20.84 $ 17.28 $ 10.59 $ 11.33 $ 10.15
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
CLASS B:
Fund shares outstanding............... 1,147,382 2,211,377 994,342 290,685 631,471 682,943
------------ ------------ ------------ ------------ ------------ ------------
Net asset value and offering price per
share................................ $ 12.53 $ 19.59 $ 16.24 $ 10.07 $ 10.79 $ 9.67
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
CLASS C:
Fund shares outstanding............... 285,924 372,202 206,006 45,206 113,464 267,089
------------ ------------ ------------ ------------ ------------ ------------
Net asset value and offering price per
share................................ $ 12.52 $ 19.58 $ 16.23 $ 10.07 $ 10.79 $ 9.67
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
<FN>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
A-10
<PAGE>
YEAR ENDED OCTOBER 31, 1994
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
FUND, INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
----------- ----------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.................................. $4,621,105 $3,199,658 $ 1,319,209 $ 845,665 $ -- $ --
Interest................................... 1,393,271 1,078,724 874,396 709,375 10,262,496 4,659,644
----------- ----------- -------------- ----------- ----------- -----------
Total investment income.................. 6,014,376 4,278,382 2,193,605 1,555,040 10,262,496 4,659,644
----------- ----------- -------------- ----------- ----------- -----------
OPERATING EXPENSES
Investment advisory fee (note 2a).......... 2,479,887 1,555,477 1,260,578 263,469 962,940 359,792
Distribution fee -- Class A (note 2c)...... 1,189,613 683,116 576,382 116,449 465,840 215,221
Distribution fee -- Class B (note 2c)...... 83,411 162,157 94,008 15,858 43,485 41,770
Distribution fee -- Class C (note 2c)...... 17,249 27,089 13,806 2,983 8,616 19,831
Transfer and dividend disbursing agent fees
-- Class A................................ 247,831 117,250 133,738 41,065 130,793 50,526
Transfer and dividend disbursing agent fees
-- Class B................................ 12,766 23,295 20,668 2,659 4,321 4,992
Transfer and dividend disbursing agent fees
-- Class C................................ 3,313 4,335 4,637 1,253 1,658 2,288
Accounting services fee (note 2b).......... -- 108,245 122,578 123,117 135,876 119,080
Registration fees.......................... 84,876 79,103 75,433 66,221 67,461 65,474
Reports and notices to shareholders........ 60,447 37,637 45,104 27,802 39,689 31,342
Custodian fees............................. 42,485 31,578 32,790 17,672 74,885 27,532
Auditing, consulting and tax return
preparation fees.......................... 23,051 18,100 18,101 14,600 38,501 17,100
Directors' (Trustees') fees and expenses... 17,200 17,200 17,200 8,810 17,200 17,200
Legal fees................................. 11,120 6,829 7,410 5,355 7,021 5,752
Amortization of deferred organization
expenses (note 1c)........................ -- 2,461 2,394 19,148 -- 12,374
Miscellaneous.............................. 14,902 7,146 7,114 5,243 10,727 3,951
----------- ----------- -------------- ----------- ----------- -----------
Total operating expenses................. 4,288,151 2,881,018 2,431,941 731,704 2,009,013 994,225
Less: Investment advisory fees waived
(note 2a)............................... -- -- -- (142,772) (38,486) (180,934)
----------- ----------- -------------- ----------- ----------- -----------
Net operating expenses................. 4,288,151 2,881,018 2,431,941 588,932 1,970,527 813,291
----------- ----------- -------------- ----------- ----------- -----------
Net investment income (loss)........... 1,726,225 1,397,364 (238,336) 966,108 8,291,969 3,846,353
----------- ----------- -------------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS -- NET
Net realized gain (loss) on security
transactions.............................. 16,722,091 7,139,720 3,506,967 1,768,686 (6,439,027) (1,053,662)
Net realized gain on option transactions
(note 1f)................................. -- -- 38,999 -- 2,072,188 264,063
Net realized loss on futures transactions
(note 1g)................................. (57,760) -- (179,131) -- -- (163,281)
----------- ----------- -------------- ----------- ----------- -----------
Net realized gain (loss) on
investments............................. 16,664,331 7,139,720 3,366,835 1,768,686 (4,366,839) (952,880)
Net change in unrealized appreciation
(depreciation) on investments............. (6,250,090) 4,721,481 (3,118,979) (189,442) (11,007,688) (9,068,979)
----------- ----------- -------------- ----------- ----------- -----------
Net realized gain (loss) and change in
unrealized appreciation (depreciation)
on investments.......................... 10,414,241 11,861,201 247,856 1,579,244 (15,374,527) (10,021,859)
----------- ----------- -------------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................. $12,140,466 $13,258,565 $ 9,520 $2,545,352 $(7,082,558) $(6,175,506)
----------- ----------- -------------- ----------- ----------- -----------
----------- ----------- -------------- ----------- ----------- -----------
<FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
A-11
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
-------------------------- --------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss)............... $ 1,726,225 $ 815,957 $ 1,397,364 $ 2,369,084
Net realized gain (loss) on investments.... 16,664,331 9,419,025 7,139,720 1,539,178
Net change in unrealized appreciation
(depreciation) on investments............. (6,250,090) 11,586,419 4,721,481 6,462,200
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.... 12,140,466 21,821,401 13,258,565 10,370,462
------------ ------------ ------------ ------------
Dividends and Distributions to Shareholders
Net investment income -- Class A........... (819,873) (608,320) (2,269,483) (220,172)
Net investment income -- Class B........... (11,801) -- (98,258) --
Net investment income -- Class C........... (2,040) -- (21,098) --
Net realized gains -- Class A.............. (9,227,704) (6,984,843) (1,497,052) (945,122)
Net realized gains -- Class B.............. (115,604) -- (30,460) --
Net realized gains -- Class C.............. (11,081) -- (11,467) --
Distributions in excess of net realized
gains -- Class A.......................... -- -- (1,196) --
Distributions in excess of net realized
gains -- Class B.......................... -- -- (24) --
Distributions in excess of net realized
gains -- Class C.......................... -- -- (9) --
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders............................ (10,188,103) (7,593,163) (3,929,047) (1,165,294)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales.................... 61,908,256 115,189,954 90,332,759 92,938,735
Net proceeds from Fund acquisitions (note
9)........................................ -- 8,793,860 -- --
Reinvestment of dividends and
distributions............................. 9,385,655 7,044,627 3,405,284 1,050,792
Cost of shares redeemed.................... (80,014,950) (42,885,888) (65,200,453) (16,545,512)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class A....... (8,721,039) 88,142,553 28,537,590 77,444,015
------------ ------------ ------------ ------------
CLASS B
Net proceeds from sales.................... 12,409,864 2,121,588 40,604,196 2,225,538
Reinvestment of dividends and
distributions............................. 123,599 -- 124,021 --
Cost of shares redeemed.................... (544,061) (97,971) (1,026,439) (99,998)
------------ ------------ ------------ ------------
Net increase -- Class B.................. 11,989,402 2,023,617 39,701,778 2,125,540
------------ ------------ ------------ ------------
CLASS C
Net proceeds from sales.................... 3,521,667 222,635 6,945,412 315,179
Reinvestment of dividends and
distributions............................. 13,020 -- 32,567 --
Cost of shares redeemed.................... (271,901) -- (254,081) --
------------ ------------ ------------ ------------
Net increase -- Class C.................. 3,262,786 222,635 6,723,898 315,179
------------ ------------ ------------ ------------
Total net increase (decrease) in net assets
from fund share transactions.............. 6,531,149 90,388,805 74,963,266 79,884,734
------------ ------------ ------------ ------------
Total increase (decrease) in net
assets.................................. 8,483,512 104,617,043 84,292,784 89,089,902
NET ASSETS
Beginning of year.......................... 247,555,623 142,938,580 129,652,961 40,563,059
------------ ------------ ------------ ------------
End of year (including undistributed net
investment income (loss) of $1,464,120,
$549,014; $1,291,867, $2,283,342;
($238,336); ($315,524); $127,460, $99,804;
$0, ($242,693) and $0, $0; respectively... $256,039,135 $247,555,623 $213,945,745 $129,652,961
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
A-12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION U.S. GOVERNMENT INCOME
FUND GROWTH AND INCOME FUND FUND INVESTMENT QUALITY INCOME
FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
-------------------------- -------------------------- -------------------------- --------------------------
1994 1993 1994 1993 1994 1993 1994 1993
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (238,336) $ (271,130) $ 966,108 $ 633,084 $ 8,291,969 $ 9,429,304 $ 3,846,353 $ 2,883,555
3,366,835 8,302,299 1,768,686 4,437,702 (4,366,839) 4,231,587 (952,880) 376,772
(3,118,979) 8,854,657 (189,442) (2,998,170) (11,007,688) 520,464 (9,068,979) 4,549,804
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
9,520 16,885,826 2,545,352 2,072,616 (7,082,558) 14,181,355 (6,175,506) 7,810,131
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
-- -- (936,128) (536,051) (8,071,564) (9,762,803) (3,482,793) (2,877,023)
-- -- (41,545) (1,573) (196,735) (3,601) (244,424) (5,737)
-- -- (7,305) (631) (39,362) (769) (119,136) (795)
(8,036,736) (3,584,330) (4,079,198) (245,866) (2,925,946) (2,276,286) (367,910) (163,898)
(160,831) -- (145,217) -- (38,935) (956) (10,112) --
(19,543) -- (18,475) -- (6,494) (105) (637) --
-- -- (199,276) -- (292,913) -- -- --
-- -- (7,094) -- (3,898) -- -- --
-- -- (903) -- (650) -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(8,217,110) (3,584,330) (5,435,141) (784,121) (11,576,497) (12,044,520) (4,225,012) (3,047,453)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
127,081,752 71,051,819 5,937,491 9,582,299 17,007,814 95,566,875 12,621,718 36,729,933
-- -- -- 16,543,558 -- -- -- --
7,215,556 3,294,382 5,008,623 741,804 9,588,703 10,124,750 2,758,350 2,116,388
(111,134,238) (22,419,670) (6,040,040) (7,744,229) (74,313,512) (69,938,914) (20,364,228) (12,033,169)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
23,163,070 51,926,531 4,906,074 19,123,432 (47,716,995) 35,752,711 (4,984,160) 26,813,152
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
15,275,222 1,837,990 2,763,975 319,565 6,748,251 1,386,323 6,440,954 1,582,773
148,570 -- 188,513 1,383 187,137 3,658 185,172 3,747
(811,203) (104,955) (260,750) (4,377) (964,994) (99,835) (800,932) (107,360)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
14,612,589 1,733,035 2,691,738 316,571 5,970,394 1,290,146 5,825,194 1,479,160
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
3,345,761 233,009 341,819 101,192 1,424,484 140,626 3,141,700 100,200
18,810 -- 26,593 631 46,127 866 93,436 786
(229,505) -- (4,696) -- (289,465) -- (422,838) --
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
3,135,066 233,009 363,716 101,823 1,181,146 141,492 2,812,298 100,986
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
40,910,725 53,892,575 7,961,528 19,541,826 (40,565,455) 37,184,349 3,653,332 28,393,298
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
32,703,135 67,194,071 5,071,739 20,830,321 (59,224,510) 39,321,184 (6,747,186) 33,155,976
106,886,665 39,692,594 28,887,443 8,057,122 190,518,306 151,197,122 62,857,337 29,701,361
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$139,589,800 $106,886,665 $ 33,959,182 $ 28,887,443 $131,293,796 $190,518,306 $ 56,110,151 $ 62,857,337
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
A-13
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Funds are registered under the Investment Company Act of
1940, as diversified, open-end management investment companies. Quest for Value
Fund, Inc. ("Quest for Value") is a Maryland Corporation. Opportunity Fund
("Opportunity"), Small Capitalization Fund ("Small Capitalization"), Growth and
Income Fund ("Growth and Income"), U.S. Government Income Fund ("U.S.
Government") and Investment Quality Income Fund ("Investment Quality") are five
of eight funds currently offered in the Quest for Value Family of Funds, a
Massachusetts business trust. Quest for Value Advisors (the "Adviser") serves as
investment adviser and provides accounting and administrative services to each
fund. Quest for Value Distributors (the "Distributor") serves as each fund's
distributor. Both the Advisor and Distributor are majority-owned (99%)
subsidiaries of Oppenheimer Capital.
Prior to September 1, 1993, the funds only issued one class of shares which
were redesignated Class A shares. Subsequent to that date all funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charge and distribution fee arrangements. Furthermore, Class B shares will
automatically convert to Class A shares of the same fund eight years after their
respective purchase.
The following is a summary of significant accounting policies consistently
followed by each fund in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment securities listed on a national securities exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such
reported sales, the securites are valued at the last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
approved by the Board of Directors (Trustees) using methods which include
current market quotations from a major market maker in the securities and
trader-reviewed "matrix" prices. Futures contracts are valued based upon their
daily settlement value as of the close of the exchange upon which they trade.
OTC options are valued based upon a formula which utilizes the market value of
the underlying securities, strike prices and expiration of the options.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any securities or other assets for which market quotations are not readily
available are valued at their fair value as determined in good faith under
procedures established by each fund's Board of Directors (Trustees). The ability
of issuers of debt securities held by the funds to meet their obligations may be
affected by economic or political developments in a specific state, industry or
region.
(B) FEDERAL INCOME TAXES
It is each fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders; accordingly, no
Federal income tax provision is required.
(C) DEFERRED ORGANIZATION EXPENSES
In connection with each fund's organization, the following approximate costs
were incurred: Opportunity -- $74,000, Small Capitalization -- $72,000, Growth
and Income -- $96,000 and Investment Quality -- $62,000. These costs have been
deferred and are being amortized to expense on a straight-line basis over sixty
months from commencements of each fund's operations.
(D) SECURITY TRANSACTIONS AND OTHER INCOME
Security transactions are accounted for on the trade date. In determining
the gain or loss from the sale of securities, the cost of securities sold is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend date and interest income is accrued as earned. Discounts or premiums
on debt securities purchased are accreted or
A-14
<PAGE>
- --------------------------------------------------------------------------------
amortized to interest income over the lives of the respective securities. Net
investment income, other than class specific expenses and unrealized gains and
losses are allocated daily to each class of shares based upon the relative
proportion of net assets, as defined, of each class.
(E) DIVIDENDS AND DISTRIBUTIONS
The following table summarizes each fund's dividend and capital gain
declaration policy:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
INCOME CAPITAL CAPITAL
DIVIDENDS GAINS GAINS
--------- ------------ ------------
<S> <C> <C> <C>
Quest for Value annually annually annually
Opportunity annually annually annually
Small Capitalization annually annually annually
Growth and Income quarterly annually annually
U.S. Government daily * quarterly annually
Investment Quality daily * annually annually
* paid monthly.
</TABLE>
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book-tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized gain(loss) and net assets were not affected by this
change.
During the fiscal year ended October 31, 1994, the Funds adopted Statement
of Position 93-2 Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distributions by Investment
Companies. The following table discloses the cumulative effect of such
differences reclassified from undistributed accumulated net investment
income(loss) and accumulated undistributed capital gain(loss) on investments to
paid-in-surplus:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED PAID
NET INVESTMENT NET REALIZED IN
INCOME (LOSS) GAIN (LOSS) SURPLUS
-------------- ------------ ---------
<S> <C> <C> <C>
Quest for Value $ 22,595 $ (50,380) $ 27,785
Opportunity -- 4,061 (4,061)
Small Capitalization 315,524 7,934 (323,458)
Growth and Income 46,526 (198,668) 152,142
U.S. Government 258,385 102,016 (360,401)
Investment Quality -- 3,929 (3,929)
</TABLE>
(F) OPTIONS ACCOUNTING POLICIES
When a fund writes a call option or a put option, an amount equal to the
premium received by the fund is included in the fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. If the option expires on its
A-15
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
stipulated expiration date or if a fund enters into a closing purchase
transaction, the fund will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option will be extinguished. If a call option
which a fund has written is exercised, the fund realizes a gain or loss from the
sale of the underlying security and the proceeds from such sale are increased by
the premium originally received. If a put option which a fund has written is
exercised, the amount of the premium originally received will reduce the cost of
the security which the fund purchases upon exercise of the option.
(G) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash or U.S.
Government securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, a fund agrees to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as "variation margin" and are
recorded by the fund as unrealized appreciation or depreciation. When a contract
is closed, the fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed and reverses any unrealized appreciation or depreciation
previously recorded.
(H) REPURCHASE AGREEMENTS
U.S. Government enters into repurchase agreements as part of its investment
program. The fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to-market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default by the obligor to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(I) EXPENSES
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis.
2. INVESTMENT ADVISORY FEE, ACCOUNTING SERVICES FEE, DISTRIBUTION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(a) The investment advisory fee is payable monthly to the Adviser, and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: 1.00% for Quest for Value, Opportunity
and Small Capitalization, respectively; .85% for Growth and Income and .60% for
U.S. Government and Investment Quality, respectively. For the year ended October
31, 1994, the Adviser voluntarily waived $142,772, $38,486 and $180,934 in
investment advisory fees for Growth and Income, U.S. Government and Investment
Quality, respectively.
(b) A portion of the accounting services fee for Opportunity, Small
Capitalization, Growth and Income, U.S. Government and Investment Quality is
payable monthly to the Adviser. Each fund reimburses the Adviser for a portion
of the salaries of officers and employees of Oppenheimer Capital based upon the
amount of time such persons spend in providing services to each fund in
accordance with the provisions of the Investment Advisory Agreement. For the
year ended October 31, 1994, the Adviser received $53,245, $67,578, $68,117,
$70,876 and $64,080, respectively.
(c) The funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which each fund is permitted to compensate the Distributor
in connection with the distribution of fund shares. Under the Plan, the
A-16
<PAGE>
- --------------------------------------------------------------------------------
Distributor has entered into agreements with securities dealers and other
financial institutions and organizations to obtain various sales-related
services in rendering distribution assistance. To compensate the Distributor for
the services it and other dealers under the Plan provide and for the expenses
they bear under the Plan, the funds pay the Distributor compensation, accrued
daily and payable monthly on each fund's average daily net assets for Class A
shares at the following annual rates: .25% for Quest for Value, Opportunity and
Small Capitalization, respectively; .05% for U.S. Government and .15% for
Investment Quality and Growth and Income, respectively. Each fund's Class A
shares also pay a service fee at the annual rate of .25%. Compensation for Class
B and Class C shares of each fund is at an annual rate of .75% of average daily
net assets. Each fund's Class B and Class C shares also pay a service fee at the
annual rate of .25%. Distribution and service fees may be paid by the
Distributor to broker dealers or others for providing personal service,
maintenance of accounts and ongoing sales or shareholder support functions in
connection with the distribution of fund shares. While payments under the Plan
may not exceed the stated percentage of average daily net assets on an annual
basis, the payments are not limited to the amounts actually incurred by the
Distributor.
(d) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $318,014, $189,860, $300,037 and
$74,334, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $162,914, $94,589, $143,991 and $55,911, respectively, for the
year ended October 31, 1994.
(e) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $344,000, $441,000, $353,000, $43,000, $237,000 and $114,000 in
connection with the sale of Class A shares for Quest for Value, Opportunity,
Small Capitalization, Growth and Income, U.S. Government and Investment Quality,
respectively, for the year ended October 31, 1994.
The Distributor has informed the funds that it received contingent deferred
sales charges on the redemption of Class B and Class C shares of approximately
$10,000, $21,000, $10,000, $1,000, $10,000, and $18,000 for Quest for Value,
Opportunity, Small Capitalization, Growth and Income, U.S. Government and
Investment Quality, respectively, for the year ended October 31, 1994.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1994, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
----------- ----------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Purchases $124,679,001 $96,908,415 $ 101,529,934 $32,706,665 $197,990,061 $26,304,890
Sales 104,609,292 57,124,087 72,829,845 35,060,309 213,763,796 17,448,246
</TABLE>
The following table summarizes activity in written option transactions for
Small Capitalization and U.S. Government for the year ended October 31, 1994:
<TABLE>
<CAPTION>
SMALL CAPITALIZATION U.S. GOVERNMENT
-------------------- -----------------------
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
Option contracts written: Outstanding beginning of year 400 $ 38,999 5 $ 263,438
Options written 450 113,460 51 3,941,836
Options terminated in closing purchase transactions -- -- (22) (1,991,406)
Options exercised (450) (113,460) (6) (245,000)
Options expired (400) (38,999) (26) (1,826,680)
--
--------- --------- ------------
Options contracts written: Outstanding end of year 0 $ 0 2 $ 142,188
--
--
--------- --------- ------------
--------- --------- ------------
</TABLE>
A-17
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the two years
ended October 31, 1994.
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1994 1993 1994 1993 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued..................................... 5,077,999 9,558,313 4,781,210 5,232,397 7,804,081 4,355,629
Fund acquisitions*......................... -- 754,190 -- -- -- --
Dividends and distributions reinvested..... 797,941 605,158 186,714 60,873 450,409 218,171
Redeemed................................... (6,566,112) (3,516,427) (3,470,990) (919,793) (6,835,042) (1,357,953)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease).................. (690,172) 7,401,234 1,496,934 4,373,477 1,419,448 3,215,847
----------- ----------- ----------- ----------- ----------- -----------
CLASS B**
Issued..................................... 1,020,362 168,973 2,145,988 118,495 936,328 105,179
Dividends and distributions reinvested..... 10,514 -- 6,821 -- 9,286 --
Redeemed................................... (44,566) (7,901) (54,500) (5,427) (50,575) (5,876)
----------- ----------- ----------- ----------- ----------- -----------
Net increase............................. 986,310 161,072 2,098,309 113,068 895,039 99,303
----------- ----------- ----------- ----------- ----------- -----------
CLASS C**
Issued..................................... 289,679 17,648 367,367 16,726 205,454 13,299
Dividends and distributions reinvested..... 1,106 -- 1,789 -- 1,176 --
Redeemed................................... (22,509) -- (13,680) -- (13,923) --
----------- ----------- ----------- ----------- ----------- -----------
Net increase............................. 268,276 17,648 355,476 16,726 192,707 13,299
----------- ----------- ----------- ----------- ----------- -----------
Total net increase..................... 564,414 7,579,954 3,950,719 4,503,271 2,507,194 3,328,449
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1994 1993 1994 1993 1994 1993
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Class A
Issued..................................... 591,037 877,614 1,484,549 7,920,117 1,194,443 3,363,019
Fund acquisitions*......................... -- 1,549,022 -- -- -- --
Dividends and distributions reinvested..... 506,743 68,314 839,276 840,464 263,168 192,408
Redeemed................................... (600,435) (709,066) (6,552,668) (5,796,668) (1,940,417) (1,087,300)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease).................. 497,345 1,785,884 (4,228,843) 2,963,913 (482,806) 2,468,127
----------- ----------- ----------- ----------- ----------- -----------
CLASS B**
Issued..................................... 269,571 28,678 594,901 114,413 614,495 136,798
Dividends and distributions reinvested..... 19,104 125 16,698 302 18,150 327
Redeemed................................... (26,407) (386) (86,599) (8,244) (77,488) (9,339)
----------- ----------- ----------- ----------- ----------- -----------
Net increase............................. 262,268 28,417 525,000 106,471 555,157 127,786
----------- ----------- ----------- ----------- ----------- -----------
CLASS C**
Issued..................................... 33,894 9,027 123,553 11,593 290,357 8,698
Dividends and distributions reinvested..... 2,697 57 4,123 72 9,047 68
Redeemed................................... (469) -- (25,877) -- (41,081) --
----------- ----------- ----------- ----------- ----------- -----------
Net increase............................. 36,122 9,084 101,799 11,665 258,323 8,766
----------- ----------- ----------- ----------- ----------- -----------
Total net increase (decrease).......... 795,735 1,823,385 (3,602,044) 3,082,049 330,674 2,604,679
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
<FN>
*See note 9
**Initial offering September 2, 1993.
</TABLE>
A-18
<PAGE>
- --------------------------------------------------------------------------------
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At October 31, 1994, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for Federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Quest for Value $34,762,698 $(2,034,414) $32,728,284 $225,191,866
Opportunity 16,932,676 (2,553,482) 14,379,194 198,907,089
Small Capitalization 11,588,568 (6,208,644) 5,379,924 129,522,331
Growth and Income 1,808,807 (1,464,506) 344,301 32,186,880
U.S. Government 72,722 (14,977,671) (14,904,949) 145,952,876
Investment Quality 330,434 (4,021,028) (3,690,594) 58,448,564
</TABLE>
6. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
QUEST SMALL GROWTH U.S. INVESTMENT
FOR VALUE OPPORTUNITY CAPITALIZATION AND INCOME GOVERNMENT QUALITY
---------- ----------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Authorized fund shares 35,000,000 unlimited unlimited unlimited unlimited unlimited
Par value per share $1.00 $.01 $.01 $.01 $.01 $.01
</TABLE>
7. DIVIDENDS AND DISTRIBUTIONS
The following tables summarize the per share dividends and distributions
made for the two years ended October 31, 1994:
<TABLE>
<CAPTION>
QUEST FOR SMALL
VALUE OPPORTUNITY CAPITALIZATION
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1994 1993 1994 1993 1994 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Class A $ 0.040 $ 0.047 $ 0.326 $ 0.069 -- --
Class B* 0.031 -- 0.313 -- -- --
Class C* 0.033 -- 0.312 -- -- --
Net realized gains:
Class A $ 0.469 $ 0.545 $ 0.219 $ 0.317 $ 1.331 $ 1.137
Class B* 0.469 -- 0.219 -- 1.331 --
Class C* 0.469 -- 0.219 -- 1.331 --
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND U.S. INVESTMENT
INCOME GOVERNMENT QUALITY
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1994 1993 1994 1993 1994 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net investment income:
Class A $ 0.319 $ 0.264 $ 0.593 $ 0.676 $ 0.680 $ 0.683
Class B* 0.265 0.070 0.510 0.076 0.609 0.081
Class C* 0.261 0.070 0.509 0.082 0.608 0.092
Net realized gains:
Class A $ 1.669 $ 0.333 $ 0.213 $ 0.155 $ 0.069 $ 0.056
Class B* 1.669 -- 0.213 0.009 0.069 --
Class C* 1.669 -- 0.213 0.009 0.069 --
<FN>
*Initial offering September 2, 1993.
</TABLE>
A-19
<PAGE>
OCTOBER 31, 1994
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
At October 31, 1994, U.S. Government had written options outstanding.
Written options have elements of risk in excess of the amounts reflected in the
Statement of Assets and Liabilities. The fund, as a writer of an option, has no
control over whether the option is exercised. The underlying security may be
sold and, as a result, the fund bears the market risk of an unfavorable change
in the price of the security underlying the written option.
9. FUND ACQUISITIONS
On December 21, 1992, Growth and Income acquired, in a tax free
reorganization, the net assets of the Unified Income Fund and Unified Mutual
Shares Fund in exchange for 289,151 and 1,259,871 shares, respectively. At that
date, net assets for the Unified Income Fund and Unified Mutual Shares Fund
amounted to $3,088,136 and $13,455,422, respectively, which included $211,357
and $2,822,919, respectively, in unrealized appreciation. These assets were
combined with the net assets of Growth and Income which were $7,881,811,
immediately prior to reorganization. Expenses incurred in connection with this
acquisition approximated $34,000 which include legal costs and independent
accountants' fees. Growth and Income also received $1,168,033 in capital loss
carryovers which can be used as a reduction against future net capital gains.
These carryovers are limited by Section 382 of the Internal Revenue Code to
$188,067 annually as a result of the reorganization.
On December 28, 1992, Quest for Value acquired the net assets of the Unified
Growth Fund in exchange for 754,190 shares. At that date, net assets for Unified
Growth Fund amounted to $8,793,860, which included $486,279 in unrealized
appreciation. These assets were combined with the assets of Quest for Value
which were $157,183,979, immediately prior to reorganization. Expenses incurred
in connection with the acquisition approximated $17,000 which include legal
costs and independent auditors' fees. Quest for Value also received and used
$82,350 in capital loss carryovers to be used as a reduction against future net
capital gains realized before the fiscal year ended 2000.
10. NET CAPITAL LOSS CARRYOVER
For the fiscal year ended October 31, 1994, Growth and Income will utilize
$188,067 of net capital loss carryovers. Growth and Income has net capital loss
carryovers of $791,899 of which $558,150, $177,811 and $55,938 will be available
through the fiscal years ending 1995, 1996 and 2000, respectively, to offset net
capital gains, to the extent provided by regulations. However, due to the
reorganization described in Note 9, the loss carryovers are further limited by
IRC Section 382 to $188,067 annually. To the extent that the capital loss
carryovers are used to offset net capital gains, it is probable that the gains
so offset will not be distributed to shareholders. Also, at October 31, 1994,
Investment Quality had a net capital loss carryover of $952,880 available as a
reduction against future net capital gains realized before the end of fiscal
2002 to the extent provided by regulations.
11. SUBSEQUENT EVENTS
On December 5, 1994, the following funds declared net realized short-term
and long-term capital gain distributions, payable December 5, 1994 to
shareholders of record on the opening of business December 5, 1994 at the
following rates per share, per class:
<TABLE>
<CAPTION>
SHORT-TERM GAIN LONG-TERM GAIN
--------------- ---------------
<S> <C> <C>
Quest for Value $ 0.0924 $ 0.7355
Opportunity 0.2077 0.4058
Small Capitalization 0.3195 0.0959
Growth and Income 0.2351 0.1864
U.S. Government -- 0.0126
</TABLE>
A-20
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------------- ---------------------------
Dividends to Distributions to
Net Asset Net Net Realized Shareholders Shareholders
Value, Investment and Unrealized Total from from Net from Net Total
Beginning Income Gain (Loss) on Investment Investment Realized Gain on Dividends and
of Period (Loss) Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
QUEST FOR VALUE FUND, INC.
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 12.51 $ 0.09 $ 0.50 $ 0.59 $ (0.04) $ (0.47) $ (0.51)
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59)
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71)
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16)
1990(2) 9.85 0.18 (1.38) (1.20) (0.26) (0.55) (0.81)
Class B,
YEAR ENDED OCTOBER 31, 1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- --
Class C,
YEAR ENDED OCTOBER 31, 1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- --
<CAPTION>
RATIOS
---------------------------------------
Ratio of Net Ratio of Net
Net Asset Net Assets Operating Investment
Value, End of Expenses Income (Loss) Portfolio
End of Total Period to Average to Average Turnover
Period Return* (000's) Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
QUEST FOR VALUE FUND, INC.
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 12.59 5.01% $ 238,085 1.71%(1) 0.72%(1) 49%
1993 12.51 12.27% 245,320 1.75% 0.40% 27%
1992 11.71 18.45% 142,939 1.75% 0.53% 41%
1991 10.61 37.94% 79,914 1.83% 1.06% 48%
1990(2) 7.84 (13.43%) 49,740 1.82% 1.71% 51%
Class B,
YEAR ENDED OCTOBER 31, 1994 12.53 4.43% 14,373 2.24%(1) 0.14%(1) 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.51 (1.19%) 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
YEAR ENDED OCTOBER 31, 1994 12.52 4.45% 3,581 2.28%(1) 0.09%(1) 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.50 (1.26%) 221 2.27%(5) (0.90%)(5) 27%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1994, FOR CLASSES A, B,
AND C WERE $237,922,657, $8,341,111, AND $1,724,870, RESPECTIVELY.
(2) SHARE AND PER SHARE DATA HAVE BEEN RETROACTIVELY RESTATED TO REFLECT A 200%
STOCK DIVIDEND AS OF JULY 1, 1991.
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
</TABLE>
OPPORTUNITY FUND
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 18.71 $ 0.18 $ 1.35 $ 1.53 $ (0.33) $ (0.22) $ (0.55)
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39)
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58)
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26)
1990 11.59 0.25 (1.64) (1.39) (0.22) (0.24) (0.46)
Class B,
YEAR ENDED OCTOBER 31, 1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
Class C,
YEAR ENDED OCTOBER 31, 1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1994 $ 19.69 8.41% $ 163,340 1.78%(1) 0.96%(1) 42%
1993 18.71 14.34% 127,225 1.83% 2.69% 24%
1992 16.73 21.93% 40,563 2.27% 0.72% 32%
1991 14.29 50.44% 8,446 2.35%(2) 0.30%(2) 88%
1990 9.74 (12.62%) 4,570 2.00%(2) 2.30%(2) 206%
Class B,
YEAR ENDED OCTOBER 31, 1994 19.59 7.84% 43,317 2.34%(1) 0.43%(1) 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 2,115 2.52%(5) 1.32%(5) 24%
Class C,
YEAR ENDED OCTOBER 31, 1994 19.58 7.78% 7,289 2.35%(1) 0.43%(1) 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 313 2.52%(5) 1.13%(5) 24%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1994, FOR CLASSES A, B,
AND C WERE $136,623,124, $16,215,716, AND $2,708,865, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEES
AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 3.33% AND (0.68%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 3.69% AND 0.61%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990.
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
- ------------------------------
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
A-21
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD--CONTINUED)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------------- ---------------------------
Dividends to Distributions to
Net Asset Net Net Realized Shareholders Shareholders
Value, Investment and Unrealized Total from from Net from Net Total
Beginning Income Gain (Loss) on Investment Investment Realized Gain on Dividends and
of Period (Loss) Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
SMALL CAPITALIZATION FUND
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 17.68 $ (0.03) $ 0.01 $ (0.02) $ -- $ (1.33) $ (1.33)
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14)
1992 13.52 0.00 1.50 1.50 -- (0.42) (0.42)
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08)
1990 10.91 0.07 (2.04) (1.97) (0.08) (0.06) (0.14)
Class B,
YEAR ENDED OCTOBER 31, 1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- --
Class C,
YEAR ENDED OCTOBER 31, 1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- --
<CAPTION>
RATIOS
---------------------------------------
Ratio of Net Ratio of Net
Net Asset Net Assets Operating Investment
Value, End of Expenses Income (Loss) Portfolio
End of Total Period to Average to Average Turnover
Period Return* (000's) Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
SMALL CAPITALIZATION FUND
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 16.33 0.04% $ 120,102 1.88%(1) (0.14%)(1) 67%
1993 17.68 30.21% 104,898 1.89% (0.36%) 74%
1992 14.60 11.60% 39,693 2.11% (0.04%) 95%
1991 13.52 55.01% 20,686 2.25%(2) (0.41%)(2) 103%
1990 8.80 (18.33%) 1,880 2.00%(2) 0.71% (2) 18%
Class B,
YEAR ENDED OCTOBER 31, 1994 16.24 (0.39%) 16,144 2.48%(1) (0.70%)(1) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.66 2.73% 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
YEAR ENDED OCTOBER 31, 1994 16.23 (0.51%) 3,344 2.59%(1) (0.81%)(1) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.67 2.79% 235 2.57%(5) (1.20%)(5) 74%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1994, FOR CLASSES A, B,
AND C WERE $115,276,454, $9,400,776, AND $1,380,547, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEES
AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN 3.27% AND (1.43%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 5.82% AND (3.11%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990.
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
</TABLE>
GROWTH AND INCOME FUND
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 11.24 $ 0.32 $ 0.55 $ 0.87 $ (0.32) $ (1.70) $ (2.02)
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59)
NOVEMBER 4, 1991 (3)
TO OCTOBER 31, 1992 10.00(4) 0.28 0.80 1.08 (0.28) -- (0.28)
Class B,
YEAR ENDED OCTOBER 31, 1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97)
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.21(4) 0.04 0.05 0.09 (0.07) -- (0.07)
Class C,
YEAR ENDED OCTOBER 31, 1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96)
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.21(4) 0.04 0.05 0.09 (0.07) -- (0.07)
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1994 $ 10.09 8.64% $ 30,576 1.86%(1,2) 3.16%(1,2) 113%
1993 11.24 9.93% 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991 (3)
TO OCTOBER 31, 1992 10.80 10.84% 8,057 2.23%(2,6) 2.73%(2,6) 77%
Class B,
YEAR ENDED OCTOBER 31, 1994 10.07 7.96% 2,928 2.47%(1,2) 2.53%(1,2) 113%
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.23 0.81% 319 2.49%(2,6) 1.83%(2,6) 192%
Class C,
YEAR ENDED OCTOBER 31, 1994 10.07 7.91% 455 2.62%(1,2) 2.39%(1,2) 113%
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.23 0.81% 102 2.49%(2,6) 2.18%(2,6) 192%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1994, FOR CLASSES A, B,
AND C WERE $29,112,348, $1,585,755, AND $298,294, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION
OF ITS FEE. IF SUCH WAIVER HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.32% AND 2.70%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 2.18% AND 2.38%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993 AND 2.98% AND 1.98%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD NOVEMBER 4, 1991 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1992. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS WOULD HAVE BEEN 2.93% AND 2.07%, RESPECTIVELY, FOR CLASS B AND 3.10%
AND 1.91%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994
AND 2.88% AND 1.44%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.87% AND
1.80%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2,
1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
(3) COMMENCEMENT OF OPERATIONS.
(4) OFFERING PRICE.
(5) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(6) ANNUALIZED.
- ------------------------------
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
A-22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------------- ---------------------------
Dividends to Distributions to
Net Asset Net Net Realized Shareholders Shareholders
Value, Investment and Unrealized Total from from Net from Net Total
Beginning Income Gain (Loss) on Investment Investment Realized Gain on Dividends and
of Period (Loss) Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT INCOME FUND
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 12.08 $ 0.59 $ (1.08) $ (0.49) $ (0.59) $ (0.21) $ (0.80)
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) (0.84)
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) (0.80)
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) (1.01)
1990 11.50 0.93 (0.06) 0.87 (0.93) (0.09) (1.02)
Class B,
YEAR ENDED OCTOBER 31, 1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) (0.72)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) (0.09)
Class C,
YEAR ENDED OCTOBER 31, 1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) (0.72)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) (0.09)
<CAPTION>
RATIOS
---------------------------------------
Ratio of Net Ratio of Net
Net Asset Net Assets Operating Investment
Value, End of Expenses Income (Loss) Portfolio
End of Total Period to Average to Average Turnover
Period Return* (000's) Net Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT INCOME FUND
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 10.79 (4.15%) $123,257 1.20%(1,2) 5.19%(1,2) 126%
1993 12.08 8.55% 189,091 1.15%(2) 5.33%(2) 315%
1992 11.92 7.98% 151,197 1.15%(2) 6.26%(2) 207%
1991 11.80 13.40% 82,400 1.15%(2) 7.24%(2) 309%
1990 11.35 7.98% 52,742 1.15%(2) 8.21%(2) 101%
Class B,
YEAR ENDED OCTOBER 31, 1994 10.79 (4.84%) 6,813 1.92%(1,2) 4.53%(1,2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.08 0.29% 1,286 1.85%(2,5) 3.07%(2,5) 315%
Class C,
YEAR ENDED OCTOBER 31, 1994 10.79 (4.84%) 1,224 1.94%(1,2) 4.57%(1,2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.08 0.34% 141 1.85%(2,5) 3.89%(2,5) 315%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1994, FOR CLASSES A, B,
AND C WERE $155,279,927, $4,348,538, AND $861,570, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION
OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.23% AND 5.16%,
RESEPCTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.20% AND 5.28%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.17% AND 6.24%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 1.44% AND 7.92%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.93% AND 4.52%, RESPECTIVELY,
FOR CLASS B AND 1.95% AND 4.56%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR
ENDED OCTOBER 31, 1994 AND 1.96% AND 2.96%, ANNUALIZED, RESPECTIVELY, FOR
CLASS B AND 1.96% AND 3.78%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
</TABLE>
INVESTMENT QUALITY INCOME FUND
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1994 $ 11.49 $ 0.68 $ (1.75) $ (1.07) $ (0.68) $ (0.07) $ (0.75)
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) (0.74)
1992 10.06 0.80 0.30 1.10 (0.80) -- (0.80)
DECEMBER 18, 1990 (3)
TO OCTOBER 31, 1991 10.00(4) 0.71 0.06 0.77 (0.71) -- (0.71)
Class B,
YEAR ENDED OCTOBER 31, 1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) (0.68)
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.52(4) 0.08 (0.03) 0.05 (0.08) -- (0.08)
Class C,
YEAR ENDED OCTOBER 31, 1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) (0.68)
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.52(4) 0.09 (0.03) 0.06 (0.09) -- (0.09)
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1994 $ 9.67 (9.61%) $ 46,922 1.29%(1,2) 6.47%(1,2) 33%
1993 11.49 18.64% 61,288 1.20%(2) 6.07%(2) 12%
1992 10.36 11.21% 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990 (3)
TO OCTOBER 31, 1991 10.06 8.11% 17,235 0.82%(2,6) 8.25%(2,6) 19%
Class B,
YEAR ENDED OCTOBER 31, 1994 9.67 (10.22%) 6,605 1.92%(1,2) 5.85%(1,2) 33%
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.49 0.45% 1,468 1.84%(2,6) 3.68%(2,6) 12%
Class C,
YEAR ENDED OCTOBER 31, 1994 9.67 (10.23%) 2,583 1.90%(1,2) 6.01%(1,2) 33%
SEPTEMBER 2, 1993 (5)
TO OCTOBER 31, 1993 11.49 0.55% 101 1.84%(2,6) 4.83%(2,6) 12%
<FN>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1994, FOR CLASSES A, B,
AND C WERE $53,805,286, $4,176,936, AND $1,983,143, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING
EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE
RATIOS OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.59%
AND 6.17%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.50% AND
5.77%, RESEPCTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.72% AND 6.85%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 2.11% AND 6.96%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 18, 1990 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1991. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS WOULD HAVE BEEN 2.23% AND 5.54%, RESPECTIVELY, FOR CLASS B AND 2.21%
AND 5.70%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994
AND 2.07% AND 3.45%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.06% AND
4.61%, ANNUALIZED, RESPECTIVELY, FOR CLASS C FOR THE PERIOD SEPTEMBER 2,
1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
(3) COMMENCEMENT OF OPERATIONS.
(4) OFFERING PRICE.
(5) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(6) ANNUALIZED.
- ------------------------------
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
A-23
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
Quest for Value Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of Quest
for Value Fund, Inc. including the schedule of investments as of October 31,
1994 and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two year
period then ended and the financial highlights for each of the years in the
five year period then ended. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1994 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Quest for Value Fund, Inc. as of October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two year period then ended, and the financial highlights for
each of the years in the five year period then ended in conformity with
genrally accepted accounting principles.
KPMG PEAT Marwick LLP
New York, New York
December 9, 1994
A-24
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED)
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 12.9%
<C> <S> <C>
AUTOMOTIVE -- 0.7%
Ford Motor Credit Co.
$ 1,300,000 5.98%, 5/01/95 $ 1,300,000
578,000 5.98%, 5/15/95 576,656
------------
1,876,656
------------
BANKING -- 4.6%
13,000,000 Norwest Financial, Inc.
5.94%, 5/30/95 12,937,795
------------
COMPUTERS -- 0.5%
IBM Credit Corp.
800,000 5.95%, 5/30/95 796,165
700,000 5.99%, 5/08/95 699,185
------------
1,495,350
------------
INSURANCE -- 2.1%
6,000,000 Prudential Funding Corp.
5.98%, 5/08/95 5,993,023
------------
MACHINERY & ENGINEERING -- 1.3%
3,800,000 Deere (John) Capital Corp.
5.94%, 5/30/95 3,781,817
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.9%
4,800,000 Commercial Credit Co. (A)
5.85%, 5/09/95 4,794,447
Household Finance Corp.
487,000 5.97%, 5/15/95 485,869
3,000,000 5.97%, 5/22/95 2,989,553
------------
8,269,869
------------
OIL/GAS -- 0.8%
2,100,000 Chevron Oil Finance Co.
5.97%, 5/01/95 2,100,000
------------
Total Short-Term Corporate Notes
(cost -- $36,454,510) $ 36,454,510
------------
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
CONVERTIBLE CORPORATE BONDS -- 0.8%
REAL ESTATE
$ 2,314,448 Security Capital Realty, Inc. (B)
12.00%, 6/30/14
(cost -- $2,181,786) $ 2,314,448
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 86.2%
AEROSPACE -- 8.7%
215,000 AlliedSignal, Inc. $ 8,519,375
177,000 McDonnell Douglas Corp. 10,974,000
90,000 Sundstrand Corp. 4,995,000
------------
24,488,375
------------
APPAREL -- 2.3%
372,600 Warnaco Group, Inc. (Class A)* 6,380,775
------------
BANKING -- 2.7%
196,215 Mellon Bank Corp. 7,701,439
------------
CHEMICALS -- 3.3%
81,000 Hercules, Inc. 4,039,875
64,000 Monsanto Co. 5,328,000
------------
9,367,875
------------
CONGLOMERATES -- 1.8%
90,200 General Electric Co. 5,051,200
------------
CONTAINERS -- 1.4%
90,700 Temple-Inland, Inc. 3,990,800
------------
COSMETICS/TOILETRIES -- 1.5%
67,800 Avon Products, Inc. 4,288,350
------------
DRUGS & MEDICAL PRODUCTS -- 4.6%
163,000 Becton, Dickinson & Co. 9,087,250
48,000 Warner-Lambert Co. 3,828,000
------------
12,915,250
------------
ELECTRONICS -- 6.4%
177,000 Arrow Electronics, Inc.* 8,230,500
97,000 Intel Corp. 9,930,375
------------
18,160,875
------------
HOUSEHOLD PRODUCTS -- 0.9%
52,100 Premark International, Inc. 2,513,825
------------
</TABLE>
* Non-income producing security.
A-25
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
INSURANCE -- 16.9%
<C> <S> <C>
66,000 American International Group,
Inc. $ 7,045,500
434,200 EXEL Ltd. 19,756,100
30,000 General Reinsurance Corp. 3,821,250
212,000 Progressive Corp., Ohio 8,003,000
101,000 Transamerica Corp. 5,719,125
76,000 UNUM Corp. 3,258,500
------------
47,603,475
------------
MACHINERY & ENGINEERING -- 1.4%
160,000 Case Corp. 4,060,000
------------
METALS/MINING -- 2.5%
8,518 Freeport McMoRan, Copper &
Gold (Class A) 177,813
398,000 Freeport McMoRan, Inc. 7,014,750
------------
7,192,563
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.4%
200,000 American Express Co. 6,950,000
110,000 Citicorp 5,101,250
270,000 Countrywide Credit Industries,
Inc. 4,961,250
152,000 Federal Home Loan Mortgage
Corp. 9,918,000
50,200 John Alden Financial Corp. 909,875
60,000 Morgan Stanley Group, Inc. 4,170,000
------------
32,010,375
------------
REAL ESTATE -- 1.0%
3,050 Security Capital Realty, Inc.
(B) 2,689,844
------------
RETAIL -- 10.5%
210,000 J.C. Penney Co. 9,187,500
348,000 May Department Stores Co. 12,615,000
175,000 Mercantile Stores Co., Inc. 7,743,750
------------
29,546,250
------------
TELECOMMUNICATIONS -- 1.7%
344 Bell Atlantic Corp. 18,877
145,200 Sprint Corp. 4,791,600
------------
4,810,477
------------
TEXTILES -- 1.4%
300,000 Shaw Industries, Inc. $ 3,937,500
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.2%
116,000 Dole Food Co. 3,465,500
200,000 Sara Lee Corp. 5,575,000
------------
9,040,500
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
TOYS/GAMES/HOBBY -- 2.6%
232,000 Hasbro, Inc. 7,366,000
------------
Total Common Stocks
(cost -- $193,143,927) $243,115,748
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $231,780,223) 99.9 % $ 281,884,706
Other Assets in Excess of
Other Liabilities 0.1 116,210
--------- -------------
TOTAL NET ASSETS 100.0 % $ 282,000,916
--------- -------------
--------- -------------
OPPORTUNITY FUND
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY -- 1.1%
$ 4,020,000 Federal Home Loan Bank
5.93%, 5/01/95
(cost -- $4,020,000) $ 4,020,000
------------
SHORT-TERM CORPORATE NOTES -- 13.8%
AUTOMOTIVE -- 0.4%
$ 1,260,000 Ford Motor Credit Co.
5.96%, 5/01/95 $ 1,260,000
------------
BANKING -- 1.1%
Norwest Financial, Inc.
3,630,000 5.96%, 5/22/95 3,617,380
362,000 5.98%, 5/01/95 362,000
------------
3,979,380
------------
</TABLE>
* Non-income producing security.
(A) Security is segregated as collateral for pending purchase of Security
Capital Realty, Inc.
(B) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DATE OF VALUATION AS OF
DESCRIPTION ACQUISITION PAR AMOUNT SHARES UNIT COST APRIL 30, 1995
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,314,448 -- $ 94 $100
Security Capital
Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 882
</TABLE>
A-26
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
OPPORTUNITY FUND (CONT'D)
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
COMPUTERS -- 0.1%
$ 445,000 IBM Credit Corp.
5.99%, 5/08/95 $ 444,482
------------
INSURANCE -- 2.3%
Prudential Funding Corp.
970,000 5.97%, 5/01/95 970,000
7,027,000 5.98%, 5/08/95 7,018,829
------------
7,988,829
------------
MACHINERY & ENGINEERING -- 0.4%
1,465,000 Deere (John) Capital Corp.
5.92%, 5/22/95 1,459,941
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.4%
4,140,000 Beneficial Corp.
5.95%, 5/08/95 4,135,211
13,690,000 Commercial Credit Co.
5.95%, 5/08/95 13,674,161
11,915,000 Household Finance Corp.
5.97%, 5/15/95 11,887,337
------------
29,696,709
------------
OIL/GAS -- 1.1%
990,000 Chevron Oil Finance Co.
5.97%, 5/01/95 990,000
2,960,000 Texaco, Inc.
5.96%, 5/22/95 2,949,709
------------
3,939,709
------------
Total Short-Term Corporate Notes
(cost -- $48,769,050) $ 48,769,050
------------
U.S. TREASURY NOTES -- 0.9%
$ 1,000,000 7.50%, 11/15/01 $ 1,027,810
1,000,000 7.50%, 5/15/02 1,030,160
550,000 7.875%, 4/15/98 566,588
550,000 7.875%, 8/15/01 575,867
------------
Total U.S. Treasury Notes
(cost -- $3,146,446) $ 3,200,425
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 84.1%
AEROSPACE -- 9.6%
400,000 McDonnell Douglas Corp. $ 24,800,000
120,000 Northrop Grumman Corp. 5,955,000
60,000 Sundstrand Corp. 3,330,000
------------
34,085,000
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
BANKING -- 16.0%
500,000 Citicorp $ 23,187,500
34,000 First Empire State Corp. 5,457,000
420,000 Mellon Bank Corp. 16,485,000
70,000 Wells Fargo & Co. 11,611,250
------------
56,740,750
------------
CASINOS/GAMING -- 1.1%
100,000 Promus Companies, Inc.* 3,850,000
------------
CHEMICALS -- 3.2%
225,000 Hercules, Inc. 11,221,875
------------
CONSUMER PRODUCTS -- 2.6%
300,000 Reebok International Ltd. 9,375,000
------------
COSMETICS/TOILETRIES -- 1.1%
60,000 Avon Products, Inc. 3,795,000
------------
DRUGS & MEDICAL PRODUCTS -- 3.3%
105,000 Becton, Dickinson & Co. 5,853,750
75,000 Warner-Lambert Co. 5,981,250
------------
11,835,000
------------
ELECTRONICS -- 8.6%
190,000 Intel Corp. 19,451,250
50,000 Raychem Corp. 1,781,250
445,000 Unitrode Corp.* 9,233,750
------------
30,466,250
------------
HEALTHCARE SERVICES -- 1.8%
435,000 National Health Laboratories,
Inc.* 6,525,000
------------
INSURANCE -- 5.9%
300,000 EXEL Ltd. 13,650,000
60,000 Transamerica Corp. 3,397,500
90,000 Travelers, Inc. 3,723,750
------------
20,771,250
------------
METALS/MINING -- 2.2%
200,000 Freeport McMoRan, Copper &
Gold (Class A) 4,175,000
202,500 Freeport McMoRan, Inc. 3,569,062
------------
7,744,062
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.4%
230,000 American Express Co. 7,992,500
480,000 Countrywide Credit Industries,
Inc. 8,820,000
230,000 Federal Home Loan Mortgage
Corp. 15,007,500
55,000 Federal National Mortgage
Assoc. 4,853,750
------------
36,673,750
------------
</TABLE>
* Non-income producing security.
A-27
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
OIL/GAS -- 6.0%
<C> <S> <C>
80,000 Mapco, Inc. $ 4,550,000
240,000 Tenneco, Inc. 11,010,000
149,300 Triton Energy Corp.* 5,748,050
------------
21,308,050
------------
PAPER PRODUCTS -- 4.9%
330,000 Champion International Corp. 14,520,000
30,000 Scott Paper Co. 2,673,750
------------
17,193,750
------------
TELECOMMUNICATIONS -- 2.1%
220,000 Sprint Corp. 7,260,000
------------
TEXTILES -- 2.5%
161,500 Collins & Aikman Corp.* 1,211,250
600,000 Shaw Industries, Inc. 7,875,000
------------
9,086,250
------------
TOYS/GAMES/HOBBY -- 2.3%
350,000 Mattel, Inc. 8,312,500
------------
OTHER -- 0.5%
50,000 Alliant Techsystems, Inc.* 1,843,750
------------
Total Common Stocks
(cost -- $250,665,773) $298,087,237
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $306,601,269) 99.9 % $354,076,712
Other Assets in Excess of
Other Liabilities 0.1 248,508
-------- ------------
TOTAL NET ASSETS 100.0 % $354,325,220
-------- ------------
-------- ------------
</TABLE>
SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES -- 18.1%
AUTOMOTIVE -- 0.2%
$ 325,000 Ford Motor Credit Co.
5.96%, 5/01/95 $ 325,000
------------
BANKING -- 1.7%
Norwest Financial, Inc.
1,120,000 5.94%, 5/30/95 1,114,641
1,296,000 5.96%, 5/22/95 1,291,494
------------
2,406,135
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
COMPUTERS -- 1.2%
IBM Credit Corp.
$ 1,123,000 5.93%, 5/22/95 $ 1,119,115
550,000 5.95%, 5/30/95 547,364
------------
1,666,479
------------
CONGLOMERATES -- 1.6%
2,335,000 General Electric Capital Corp.
5.96%, 5/22/95 2,326,882
------------
INSURANCE -- 3.6%
Prudential Funding Corp.
400,000 5.93%, 5/30/95 398,089
4,852,000 5.98%, 5/08/95 4,846,358
------------
5,244,447
------------
MACHINERY & ENGINEERING -- 4.8%
6,910,000 Deere (John) Capital Corp.
5.94%, 5/30/95 6,876,936
------------
MISCELLANEOUS FINANCIAL SERVICES -- 3.6%
Beneficial Corp.
386,000 5.95%, 5/08/95 385,554
1,373,000 5.95%, 5/15/95 1,369,823
Commercial Credit Co.
475,000 5.95%, 5/08/95 474,451
1,500,000 5.97%, 5/22/95 1,494,776
1,432,000 Household Finance Corp.
5.97%, 5/15/95 1,428,675
------------
5,153,279
------------
OIL/GAS -- 1.4%
Chevron Oil Finance Co.
875,000 5.94%, 5/30/95 870,813
1,190,000 6.00%, 5/08/95 1,188,612
------------
2,059,425
------------
Total Short-Term Corporate Notes
(cost -- $26,058,583) $ 26,058,583
------------
CORPORATE NOTES & BONDS -- 0.4%
AUTOMOTIVE -- 0.0%
$ 62,950 Collins Industries, Inc.
8.75%, 1/11/00 $ 55,363
------------
OIL/GAS -- 0.4%
500,000 Global Marine, Inc.
12.75%, 12/15/99 546,875
------------
Total Corporate Notes & Bonds
(cost -- $587,196) $ 602,238
------------
</TABLE>
* Non-income producing security.
A-28
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
SMALL CAPITALIZATION FUND (CONT'D)
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 1.0%
<C> <S> <C>
REAL ESTATE
$ 1,385,009 Security Capital Realty, Inc.
(A)
12.00%, 6/30/14
(cost -- $1,306,709) $ 1,385,009
------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 0.1%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 207,000
------------
COMMON STOCKS -- 78.3%
ADVERTISING -- 5.4%
57,600 Katz Media Group, Inc. $ 928,800
39,000 Omnicom Group, Inc. 2,169,375
246,200 True North Communications 4,677,800
------------
7,775,975
------------
AEROSPACE -- 0.6%
130,000 BE Aerospace, Inc.* 926,250
------------
APPAREL -- 1.5%
128,000 Warnaco Group, Inc. (Class A)* 2,192,000
------------
AUTOMOTIVE -- 1.1%
126,000 Collins Industries, Inc.* 267,750
65,100 Masland Corp. 895,125
70,000 Sudbury, Inc.* 476,875
------------
1,639,750
------------
BUILDING & CONSTRUCTION -- 4.3%
145,000 CRSS, Inc. 1,377,500
132,600 D.R. Horton, Inc. 1,292,850
5,500 Insituform Technologies (Class
A)* 70,812
165,000 Martin Marietta Materials,
Inc. 3,423,750
------------
6,164,912
------------
CHEMICALS -- 2.3%
141,400 OM Group, Inc. 3,375,925
------------
COMPUTER SERVICES -- 2.8%
147,700 BancTec, Inc.* 2,510,900
89,000 Exabyte Corp.* 1,123,625
34,600 Globalink, Inc.* 406,550
------------
4,041,075
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
DRUGS & MEDICAL PRODUCTS -- 3.3%
125,900 Sybron International Corp.* $ 4,674,038
------------
ELECTRONICS -- 6.5%
37,000 Arrow Electronics, Inc.* 1,720,500
37,000 Dionex Corp.* 1,535,500
195,500 Marshall Industries* 5,400,687
35,000 Unitrode Corp.* 726,250
------------
9,382,937
------------
HEALTHCARE SERVICES -- 1.3%
14,000 Community Health Systems,
Inc.* 486,500
54,000 Spacelabs Medical, Inc. 1,323,000
------------
1,809,500
------------
INSURANCE -- 2.1%
55,300 Capsure Holdings Corp. 725,813
23,400 E.W. Blanch Holdings, Inc. 438,750
112,500 Guaranty National Corp. 1,856,250
------------
3,020,813
------------
JEWELRY -- 1.6%
170,000 North American Watch Corp. 2,337,500
------------
LEASING -- 1.3%
121,700 Interpool, Inc.* 1,795,075
------------
MACHINERY & ENGINEERING -- 5.1%
12,700 Baldwin Technologies Co. 74,612
97,100 BWIP Holdings, Inc. (Class A) 1,711,387
160,000 Crane Co. 5,560,000
------------
7,345,999
------------
MANUFACTURING -- 1.4%
50,000 Giddings & Lewis, Inc. 906,250
55,000 Harmon Industries, Inc. 783,750
131,300 Interlake Corp.* 377,488
------------
2,067,488
------------
METALS/MINING -- 0.5%
70,000 Olympic Steel, Inc.* 682,500
------------
MISCELLANEOUS FINANCIAL SERVICES -- 4.2%
150,000 AmeriCredit Corp.* 1,350,000
49,700 John Alden Financial Corp. 900,813
200,000 SafeCard Services, Inc. 3,500,000
24,300 Union Corp.* 337,163
------------
6,087,976
------------
</TABLE>
* Non-income producing security.
A-29
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
OIL/GAS -- 7.5%
136,800 Aquila Gas Pipeline Corp. $ 1,162,800
300,155 Global Natural Resources,
Inc.* 2,964,031
125,000 Nahama & Weagant Energy Co.* 1,250
137,500 Noble Drilling Corp.* 910,937
165,000 Petroleum Heat & Power, Inc.
(Class A) 1,196,250
74,400 St. Mary Land & Exploration
Co. 948,600
116,200 Tesoro Petroleum Corp. 1,147,475
65,000 Triton Energy Corp.* 2,502,500
------------
10,833,843
------------
PAPER PRODUCTS -- 0.9%
61,500 CSS Industries, Inc.* 1,030,125
40,000 Repap Enterprises, Inc. 281,250
------------
1,311,375
------------
PRINTING/PUBLISHING -- 3.4%
72,000 CCH, Inc. (Class B) 1,161,000
119,100 Nu-Kote Holdings, Inc. (Class
A)* 3,275,250
12,250 Pulitzer Publishing Co. 494,594
------------
4,930,844
------------
REAL ESTATE -- 8.7%
151,800 Cousins Properties, Inc. 2,542,650
44,000 Post Properties, Inc. 1,303,500
231,600 Security Capital Industrial
Trust, Inc. 3,618,750
199,363 Security Capital Pacific Trust 3,488,853
1,800 Security Capital Realty, Inc.
(A) 1,587,600
------------
12,541,353
------------
RETAIL -- 4.0%
18,000 Blair Corp. 623,250
64,700 Brookstone, Inc.* 331,587
304,700 Cash America International,
Inc. 2,323,337
173,700 Fingerhut Companies, Inc. 2,019,262
52,500 Freds, Inc. 511,875
------------
5,809,311
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
SECURITY/INVESTIGATION SERVICES -- 0.3%
202,910 Automated Security Holdings
PLC ADS $ 380,456
------------
TEXTILES -- 4.0%
89,000 Collins & Aikman Corp.* 667,500
15,700 Culp, Inc. 153,075
40,000 Dyersburg Corp. 215,000
42,700 Fab Industries, Inc. 1,286,338
244,900 Mohawk Industries, Inc.* 3,367,375
------------
5,689,288
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 1.0%
55,900 Morningstar Group, Inc. 447,200
89,700 Sylvan Food Holdings, Inc.* 1,031,550
------------
1,478,750
------------
UTILITIES -- 2.0%
221,200 Sithe Energies, Inc.* 1,935,500
46,000 UGI Corp. 891,250
------------
2,826,750
------------
OTHER -- 1.2%
107,500 McGrath RentCorp. 1,679,688
------------
Total Common Stocks
(cost -- $110,337,018) $112,801,371
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost --
$138,649,506) 97.9 % $141,054,201
Other Assets in
Excess of
Other Liabilities 2.1 3,089,011
--------- -----------
TOTAL NET ASSETS 100.0 % $144,143,212
--------- -----------
--------- -----------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
DATE OF VALUATION AS OF
DESCRIPTION ACQUISITION PAR AMOUNT SHARES UNIT COST APRIL 30, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,385,009 -- $ 94 $ 100
Security Capital Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 882
</TABLE>
A-30
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY -- 2.0%
$ 755,000 Federal Home Loan Bank
5.93%, 5/01/95
(cost -- $755,000) $ 755,000
------------
SHORT-TERM CORPORATE NOTES -- 27.2%
AUTOMOTIVE -- 3.4%
$ 1,295,000 Ford Motor Credit Co.
5.94%, 5/12/95 $ 1,292,650
------------
COMPUTERS -- 2.6%
1,000,000 IBM Credit Corp.
5.93%, 5/15/95 997,694
------------
CONGLOMERATES -- 4.7%
General Electric Capital Corp.
860,000 5.93%, 5/05/95 859,433
929,000 5.96%, 5/08/95 927,923
------------
1,787,356
------------
MACHINERY/ENGINEERING -- 3.0%
1,133,000 Deere (John) Capital Corp.
5.90%, 5/03/95 1,132,629
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.6%
1,729,000 American Express Credit Corp.
5.95%, 5/02/95 1,728,714
CIT Group Holdings, Inc.
715,000 5.89%, 5/08/95 714,181
1,134,000 5.92%, 5/03/95 1,133,627
860,000 Household Finance Corp.
5.94%, 5/05/95 859,432
------------
4,435,954
------------
OIL/GAS -- 1.9%
716,000 Chevron Oil Finance Co.
5.90%, 5/08/95 715,179
------------
Total Short-Term Corporate Notes
(cost -- $10,361,462) $ 10,361,462
------------
CORPORATE NOTES & BONDS -- 8.6%
ENTERTAINMENT -- 4.2%
$ 5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 $ 1,618,750
------------
TELECOMMUNICATIONS -- 4.4%
3,000,000 Nextel Communications, Inc.
0.00/11.50%, 9/01/03 ** 1,657,500
------------
Total Corporate Notes & Bonds
(cost -- $3,655,626) $ 3,276,250
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 9.9%
OIL/GAS -- 6.0%
180,000 Gerrity Oil & Gas Corp.
$1.50 Conv. Pfd. $ 2,295,000
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.9%
80,000 Flagstar Companies, Inc.
$2.25 Conv. Pfd. 1,500,000
------------
Total Convertible Preferred Stocks
(cost -- $4,504,546) $ 3,795,000
------------
COMMON STOCKS -- 53.7%
AEROSPACE -- 7.4%
20,000 Boeing Co. $ 1,100,000
28,000 McDonnell Douglas Corp. 1,736,000
------------
2,836,000
------------
AUTOMOTIVE -- 1.2%
10,000 General Motors Corp. 451,250
------------
BANKING -- 7.4%
35,000 Citicorp 1,623,125
5,000 First Interstate Bancorp 384,375
10,000 Mellon Bank Corp. 392,500
15,000 U.S. Bancorp 414,375
------------
2,814,375
------------
CONGLOMERATES -- 1.6%
40,000 Canadian Pacific Ltd. 610,000
------------
CONTAINERS -- 6.2%
30,000 Stone Container Corp.* 596,250
40,000 Temple-Inland, Inc. 1,760,000
------------
2,356,250
------------
ELECTRONICS -- 4.3%
16,000 Intel Corp. 1,638,000
------------
HEALTHCARE SERVICES -- 1.1%
10,000 Columbia/HCA Healthcare Corp. 420,000
------------
HOUSEHOLD PRODUCTS -- 4.4%
35,000 Premark International, Inc. 1,688,750
------------
</TABLE>
<TABLE>
<C> <S> <C>
INSURANCE -- 4.3%
10,000 AFLAC, Inc. 412,500
10,000 Progressive Corp., Ohio 377,500
20,000 Travelers, Inc. 827,500
------------
1,617,500
------------
METALS/MINING -- 5.1%
93,687 Freeport McMoRan, Copper &
Gold (Class A) 1,955,716
------------
</TABLE>
* Non-income producing security.
** Represents a step-up floater which will receive 0.00% interest until 9/01/98,
then will "step-up" to 11.50% until maturity.
A-31
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
METALS/MINING (CONT'D)
<C> <S> <C>
MISCELLANEOUS FINANCIAL SERVICES -- 2.0%
20,000 Countrywide Credit Industries,
Inc. $ 367,500
6,000 Federal Home Loan Mortgage
Corp. 391,500
------------
759,000
------------
OIL/GAS -- 1.9%
5,000 McMoRan Oil & Gas Corp. 13,750
10,000 Triton Energy Corp.* 385,000
15,000 Union Texas Petroleum
Holdings, Inc. 320,625
------------
719,375
------------
TELECOMMUNICATIONS -- 4.8%
55,000 Sprint Corp. 1,815,000
------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TEXTILES -- 2.0%
20,000 Shaw Industries, Inc. 262,500
20,000 Unifi, Inc. 502,500
-------------
765,000
-------------
Total Common Stocks
(cost -- $17,690,285) $ 20,446,216
-------------
Total Investments
(cost -- $36,966,919) 101.4% $ 38,633,928
Other Liabilities in Excess of
Other Assets (1.4) (536,829)
------- -------------
TOTAL NET ASSETS 100.0 % $ 38,097,099
------- -------------
------- -------------
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 24.1%
$30,850,000 Lehman Brothers, 5.90%,
5/02/95
(proceeds at maturity:
$30,855,056, collateralized
by $19,275,000 and
$10,940,000 par, $20,423,790
and $11,051,588 value, U.S.
Treasury Notes, 7.50%,
10/31/99 and 6.875%,
8/31/99, respectively.)
(cost -- $30,850,000) $ 30,850,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 735,108 9.50%, 12/01/02 - 11/01/03
(cost -- $740,736) $ 763,593
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 47.6%
$20,299,186 7.00%, 10/15/22 - 11/15/23 (A) $ 19,214,398
16,436,078 7.50%, 2/15/22 - 2/15/24 16,030,271
13,594,094 8.00%, 4/15/02 - 2/15/23 (A) 13,617,665
11,189,477 8.50%, 6/15/01 - 9/15/24 (A) 11,412,022
566,178 10.50%, 1/15/98 - 12/15/00 596,961
------------
Total Government National Mortgage
Association I (cost -- $63,765,062) $ 60,871,317
------------
U.S. TREASURY BOND -- 7.8%
$10,000,000 7.50%, 11/15/16 (A)
(cost -- $9,314,127) $ 10,045,300
------------
U.S. TREASURY NOTES -- 26.9%
$20,000,000 6.625%, 3/31/97 (A) $ 20,012,400
14,000,000 7.75%, 11/30/99 14,468,160
------------
(cost -- $34,434,623) $ 34,480,560
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments
(cost -- $139,104,548) 107.0% $137,010,770
----- ------------
- ------------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO CALL VALUE
- ------------------------------------------------------
WRITTEN CALL OPTIONS OUTSTANDING -- (0.2%)
$10,000,000 Government National
Mortgage Association I,
7.00%, expiring May '95,
strike @ $94.22 $ (68,750)
10,000,000 Government National
Mortgage Association I,
8.00%, expiring May '95,
strike @ $100.06 (31,250)
10,000,000 Government National
Mortgage Association I,
8.50%, expiring May '95,
strike @ $101.56 (59,375)
10,000,000 U.S. Treasury Bonds,
7.50%, expiring May '95,
strike @ $100.67 (78,125)
20,000,000 U.S. Treasury Notes,
6.625%, expiring May '95,
strike @ $100.34 (12,500)
------------
Total Written Call Options
Outstanding (premiums
received: $301,562) $ (250,000)
------------
Other Liabilities in Excess of
Other Assets (6.8 ) (8,710,696)
----- ------------
TOTAL NET ASSETS 100.0 % $128,050,074
----- ------------
----- ------------
</TABLE>
* Non-income producing security.
(A) Securities segregated (full or partial) as collateral for written call
options outstanding. The aggregate market value of such segregated
securities is $60,393,531.
A-32
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
INVESTMENT QUALITY INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES -- 5.8%
AUTOMOTIVE -- 2.4%
$ 1,430,000 Ford Motor Credit Co.
5.92%, 5/09/95 $ 1,428,119
------------
COMPUTERS -- 0.8%
455,000 IBM Credit Corp.
5.93%, 5/15/95 453,951
------------
OIL/GAS -- 2.6%
1,500,000 Chevron Oil Finance Co.
5.96%, 5/02/95 1,499,751
------------
Total Short-Term Corporate Notes
(cost -- $3,381,821) $ 3,381,821
------------
CORPORATE NOTES & BONDS -- 91.5%
AEROSPACE -- 3.1%
$ 2,000,000 Boeing Co.
7.50%, 8/15/42 $ 1,835,260
------------
AIRLINES -- 2.8%
1,000,000 American Airlines
9.73%, 9/29/14 1,028,920
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 598,812
------------
1,627,732
------------
BANKING -- 6.4%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 77,305
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,510,223
500,000 RBSG Capital Corp.
10.125%, 3/01/04 568,735
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,603,080
------------
3,759,343
------------
CHEMICALS -- 0.9%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 554,480
------------
CONGLOMERATES -- 3.8%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,241,860
------------
ENTERTAINMENT -- 5.0%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 2,898,900
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
INSURANCE -- 11.3%
$ 1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 $ 937,090
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,247,928
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,653,300
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 2,759,130
------------
6,597,448
------------
LEASING -- 2.8%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,619,008
------------
MACHINERY & ENGINEERING -- 3.3%
1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 1,940,452
------------
MISCELLANEOUS FINANCIAL SERVICES -- 13.9%
20,000 Beneficial Corp.
12.875%, 8/01/13 23,819
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,557,030
1,000,000 ITT Financial Corp.
6.50%, 5/01/11 808,410
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 919,063
115,000 10.00%, 5/15/99 121,478
205,000 Midland American Capital Corp.
12.75%, 11/15/03 238,251
800,000 Paine Webber Group, Inc.
9.25%, 12/15/01 835,136
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 2,400,900
1,250,000 Source One Mortgage Services
Corp.
9.00%, 6/01/12 1,212,450
------------
8,116,537
------------
OIL/GAS -- 6.0%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,507,540
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 111,152
------------
PIPELINES -- 3.0%
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,747,020
------------
</TABLE>
A-33
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
RETAIL -- 1.3%
<C> <S> <C>
May Department Stores Co.
$ 250,000 9.875%, 6/01/17 $ 272,925
405,000 10.625%, 11/01/10 496,137
------------
769,062
------------
TELECOMMUNICATIONS -- 12.5%
420,000 GTE Corp.
10.25%, 11/01/20 472,492
2,500,000 New York Telephone Co.
9.375%, 7/15/31 2,708,775
2,000,000 Pacific Bell
8.50%, 8/15/31 2,015,700
2,000,000 Southern New England Telephone
Co.
8.70%, 8/15/31 2,123,880
------------
7,320,847
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.3%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 1,920,560
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
UTILITIES -- 6.9%
$ 2,000,000 Hydro-Quebec
8.50%, 12/01/29 $ 1,987,680
2,000,000 Southern California Edison Co.
8.875%, 6/01/24 2,039,640
------------
4,027,320
------------
OTHER -- 5.0%
1,468,228 DLJ Mortgage Acceptance Corp.
8.75%, 11/25/24 1,408,122
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,524,345
------------
2,932,467
------------
Total Corporate Notes & Bonds
(cost -- $53,950,659) $ 53,526,988
------------
Total Investments
(cost -- $57,332,480) 97.3 % $ 56,908,809
Other Assets in Excess of
Other Liabilities 2.7 1,549,987
----- ------------
TOTAL NET ASSETS 100.0 % $ 58,458,796
----- ------------
----- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
A-34
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE FUND, OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
------------ ------------ ------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost --
$231,780,223, $306,601,269,
$138,649,506, $36,966,919,
$108,254,548 and $57,332,480,
respectively)........................ $281,884,706 $354,076,712 $141,054,201 $38,633,928 $106,160,770 $56,908,809
Repurchase agreement (cost --
$30,850,000)......................... -- -- -- -- 30,850,000 --
Cash.................................. 192,917 6,009 7,649 4,785 42,627 7,874
Receivable for investments sold....... 6,121,804 4,960,166 4,386,238 -- -- --
Receivable for fund shares sold....... 1,373,346 7,437,751 530,404 161,403 552,378 344,370
Dividends receivable.................. 490,541 682,550 99,920 106,583 -- --
Interest receivable................... 18,808 80,066 81,628 -- 1,266,952 1,415,841
Receivable for mortgage prepayments... -- -- -- -- 8,659 --
Receivable for options written........ -- -- -- -- 81,250 --
Deferred organization expenses........ -- -- -- 29,014 -- 7,835
Other assets.......................... 43,688 27,106 18,450 22,152 33,006 18,897
------------ ------------ ------------- ----------- ------------ -----------
Total Assets........................ 290,125,810 367,270,360 146,178,490 38,957,865 138,995,642 58,703,626
------------ ------------ ------------- ----------- ------------ -----------
LIABILITIES
Written call options outstanding, at
value (premiums received:
$301,562)............................ -- -- -- -- 250,000 --
Payable for investments purchased..... 7,304,992 11,854,122 1,469,403 773,238 10,006,250 --
Payable for fund shares redeemed...... 637,029 825,136 417,908 19,581 466,636 70,490
Investment advisory fee payable....... 38,549 48,250 19,738 4,507 10,495 4,781
Distribution fee payable.............. 36,734 95,043 24,513 5,223 13,601 10,314
Dividends payable..................... -- -- -- -- 96,618 96,734
Other payables and accrued expenses... 107,590 122,589 103,716 58,217 101,968 62,511
------------ ------------ ------------- ----------- ------------ -----------
Total Liabilities................... 8,124,894 12,945,140 2,035,278 860,766 10,945,568 244,830
------------ ------------ ------------- ----------- ------------ -----------
NET ASSETS
Par value............................. 22,152,829 166,616 89,258 36,874 115,966 57,361
Paid-in-surplus....................... 203,275,875 304,361,426 136,615,872 34,963,133 139,644,958 60,186,256
Accumulated undistributed net
investment income.................... 857,581 1,269,754 89,051 116,490 -- --
Accumulated undistributed net realized
gain (loss) on investments........... 5,610,148 1,053,210 4,944,336 1,520,866 (9,371,173) (1,361,150 )
Distributions in excess of
undistributed net realized gains..... -- (1,229) -- (207,273 ) (297,461) --
Net unrealized appreciation
(depreciation) on investments........ 50,104,483 47,475,443 2,404,695 1,667,009 (2,042,216) (423,671 )
------------ ------------ ------------- ----------- ------------ -----------
Total Net Assets.................... $282,000,916 $354,325,220 $144,143,212 $38,097,099 $128,050,074 $58,458,796
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
CLASS A:
Fund shares outstanding............... 19,766,758 10,873,320 7,345,404 3,189,862 10,497,081 4,499,943
------------ ------------ ------------- ----------- ------------ -----------
Net asset value per share............. $ 12.74 $ 21.33 $ 16.18 $ 10.34 $ 11.04 $ 10.19
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
Maximum offering price per share*..... $ 13.48 $ 22.57 $ 17.12 $ 10.86 $ 11.59 $ 10.70
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
CLASS B:
Fund shares outstanding............... 1,881,688 4,838,180 1,225,644 410,588 930,025 911,890
------------ ------------ ------------- ----------- ------------ -----------
Net asset value and offering price per
share................................ $ 12.65 $ 21.16 $ 16.03 $ 10.31 $ 11.04 $ 10.19
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
CLASS C:
Fund shares outstanding............... 504,383 950,086 354,729 86,947 169,500 324,279
------------ ------------ ------------- ----------- ------------ -----------
Net asset value and offering price per
share................................ $ 12.64 $ 21.15 $ 16.03 $ 10.32 $ 11.04 $ 10.19
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
<FN>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
A-35
<PAGE>
SIX MONTHS ENDED APRIL 30, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
FUND, INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
----------- ----------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................... $2,464,480 $2,280,636 $ 1,042,987 $ 460,092 $ -- $ --
Interest.................... 932,852 1,585,855 590,633 507,119 4,558,825 2,416,775
----------- ----------- --------------- ------------ ------------ ------------
Total investment income... 3,397,332 3,866,491 1,633,620 967,211 4,558,825 2,416,775
----------- ----------- --------------- ------------ ------------ ------------
OPERATING EXPENSES
Investment advisory fees
(note 2a).................. 1,277,397 1,301,376 691,364 143,923 377,214 164,771
Distribution fees (note
2c)........................ 695,255 840,342 400,554 79,492 223,379 141,037
Transfer and dividend
disbursing agent fees (note
1i)........................ 145,940 121,890 93,680 31,356 62,635 29,006
Accounting service fees
(note 2b).................. -- 51,874 54,475 56,400 60,655 52,681
Registration fees........... 24,615 54,230 19,488 15,018 17,130 16,605
Reports and notices to
shareholders............... 18,150 14,988 14,257 9,430 13,141 11,207
Custodian fees.............. 16,433 12,971 8,306 9,529 34,387 11,110
Auditing, consulting and tax
return preparation fees.... 11,800 9,188 9,858 7,939 18,160 8,652
Directors'(Trustees') fees
and expenses............... 8,574 8,535 8,535 4,369 8,534 8,530
Legal fees.................. 5,604 3,720 3,720 2,655 3,490 2,852
Amortization of deferred
organization expenses (note
1c)........................ -- -- -- 9,495 -- 6,136
Miscellaneous............... 12,664 10,106 1,996 9,352 13,715 8,818
----------- ----------- --------------- ------------ ------------ ------------
Total operating
expenses................. 2,216,432 2,429,220 1,306,233 378,958 832,440 461,405
Less: Investment advisory
fees waived (note 2a).... -- -- -- (41,225) -- (42,245)
----------- ----------- --------------- ------------ ------------ ------------
Net operating
expenses............... 2,216,432 2,429,220 1,306,233 337,733 832,440 419,160
----------- ----------- --------------- ------------ ------------ ------------
Net investment income... 1,180,900 1,437,271 327,387 629,478 3,726,385 1,997,615
----------- ----------- --------------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -- NET
Net realized gain (loss) on
security transactions...... 5,717,144 1,058,240 5,111,342 1,177,023 (3,993,026) (299,770)
Net realized loss on option
transactions (note 1f)..... -- -- -- -- (227,109) --
Net realized loss on futures
transactions (note 1g)..... -- -- -- -- -- (108,500)
----------- ----------- --------------- ------------ ------------ ------------
Net realized gain (loss)
on investments........... 5,717,144 1,058,240 5,111,342 1,177,023 (4,220,135) (408,270)
Net change in unrealized
appreciation (depreciation)
on investments............. 17,252,568 33,095,020 (3,141,681) 1,260,709 7,204,799 3,266,923
----------- ----------- --------------- ------------ ------------ ------------
Net realized gain (loss)
and change in unrealized
appreciation
(depreciation) on
investments.............. 22,969,712 34,153,260 1,969,661 2,437,732 2,984,664 2,858,653
----------- ----------- --------------- ------------ ------------ ------------
Net increase in net assets
resulting from
operations................. $24,150,612 $35,590,531 $ 2,297,048 $ 3,067,210 $ 6,711,049 $ 4,856,268
----------- ----------- --------------- ------------ ------------ ------------
----------- ----------- --------------- ------------ ------------ ------------
<FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
A-36
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss).......... $ 1,180,900 $ 1,726,225 $ 1,437,271 $ 1,397,364
Net realized gain (loss) on
investments.......................... 5,717,144 16,664,331 1,058,240 7,139,720
Net change in unrealized appreciation
(depreciation) on investments........ 17,252,568 (6,250,090) 33,095,020 4,721,481
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations... 24,150,612 12,140,466 35,590,531 13,258,565
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income -- Class A...... (1,649,576) (819,873) (1,066,642) (2,269,483)
Net investment income -- Class B...... (108,497) (11,801) (335,822) (98,258)
Net investment income -- Class C...... (29,366) (2,040) (56,920) (21,098)
Net realized gains -- Class A......... (15,501,438) (9,227,704) (5,314,298) (1,497,052)
Net realized gains -- Class B......... (1,014,005) (115,604) (1,562,718) (30,460)
Net realized gains -- Class C......... (255,884) (11,081) (267,734) (11,467)
Distributions in excess of net
realized gains -- Class A............ -- -- -- (1,196)
Distributions in excess of net
realized gains -- Class B............ -- -- -- (24)
Distributions in excess of net
realized gains -- Class C............ -- -- -- (9)
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders....................... (18,558,766) (10,188,103) (8,604,134) (3,929,047)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales............... 22,813,206 61,908,256 62,597,373 90,332,759
Reinvestment of dividends and
distributions........................ 16,047,556 9,385,655 6,034,648 3,405,284
Cost of shares redeemed............... (29,730,613) (80,014,950) (18,132,883) (65,200,453)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class
A.................................. 9,130,149 (8,721,039) 50,499,138 28,537,590
------------ ------------ ------------ ------------
CLASS B
Net proceeds from sales............... 8,806,276 12,409,864 53,070,214 40,604,196
Reinvestment of dividends and
distributions........................ 1,045,812 123,599 1,804,130 124,021
Cost of shares redeemed............... (1,208,420) (544,061) (3,356,853) (1,026,439)
------------ ------------ ------------ ------------
Net increase -- Class B............. 8,643,668 11,989,402 51,517,491 39,701,778
------------ ------------ ------------ ------------
CLASS C
Net proceeds from sales............... 2,794,417 3,521,667 11,871,650 6,945,412
Reinvestment of dividends and
distributions........................ 280,898 13,020 314,273 32,567
Cost of shares redeemed............... (479,197) (271,901) (809,474) (254,081)
------------ ------------ ------------ ------------
Net increase -- Class C............. 2,596,118 3,262,786 11,376,449 6,723,898
------------ ------------ ------------ ------------
Total net increase (decrease) in net
assets from fund share
transactions......................... 20,369,935 6,531,149 113,393,078 74,963,266
------------ ------------ ------------ ------------
Total increase (decrease) in net
assets............................. 25,961,781 8,483,512 140,379,475 84,292,784
NET ASSETS
Beginning of period................... 256,039,135 247,555,623 213,945,745 129,652,961
------------ ------------ ------------ ------------
End of period (including undistributed
net investment income (loss) of
$857,581, $1,464,120; $1,269,754,
$1,291,867; $89,051, ($238,336);
$116,490, $127,460; $0, $0 and $0,
$0, respectively..................... $282,000,916 $256,039,135 $354,325,220 $213,945,745
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<FN>
*Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
A-37
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION FUND GROWTH AND INCOME FUND
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net investment income (loss).......... $ 327,387 $ (238,336) $ 629,478 $ 966,108
Net realized gain (loss) on
investments............................. 5,111,342 3,366,835 1,177,023 1,768,686
Net change in unrealized appreciation
(depreciation) on investments........... (3,141,681) (3,118,979) 1,260,709 (189,442)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations........ 2,297,048 9,520 3,067,210 2,545,352
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income -- Class A...... -- -- (571,223) (936,128)
Net investment income -- Class B...... -- -- (59,120) (41,545)
Net investment income -- Class C...... -- -- (10,105) (7,305)
Net realized gains -- Class A......... (3,008,172) (8,036,736) (1,274,907) (4,079,198)
Net realized gains -- Class B......... (433,897) (160,831) (129,812) (145,217)
Net realized gains -- Class C......... (91,772) (19,543) (20,124) (18,475)
Distributions in excess of net
realized gains -- Class A............... -- -- -- (199,276)
Distributions in excess of net
realized gains -- Class B............... -- -- -- (7,094)
Distributions in excess of net
realized gains -- Class C............... -- -- -- (903)
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders............................ (3,533,841) (8,217,110) (2,065,291) (5,435,141)
------------ ------------ ------------ ------------
Fund Share Transactions
CLASS A
Net proceeds from sales............... 18,655,389 127,081,752 2,360,697 5,937,491
Reinvestment of dividends and
distributions........................... 2,840,961 7,215,556 1,765,990 5,008,623
Cost of shares redeemed............... (21,690,503) (111,134,238) (2,560,041) (6,040,040)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class A.. (194,153) 23,163,070 1,566,646 4,906,074
------------ ------------ ------------ ------------
CLASS B
Net proceeds from sales............... 4,874,110 15,275,222 1,175,765 2,763,975
Reinvestment of dividends and
distributions........................ 408,265 148,570 174,643 188,513
Cost of shares redeemed............... (1,631,572) (811,203) (185,264) (260,750)
------------ ------------ ------------ ------------
Net increase -- Class B............... 3,650,803 14,612,589 1,165,144 2,691,738
------------ ------------ ------------ ------------
CLASS C
Net proceeds from sales............... 2,624,975 3,345,761 395,836 341,819
Reinvestment of dividends and
distributions........................... 88,907 18,810 28,952 26,593
Cost of shares redeemed............... (380,327) (229,505) (20,580) (4,696)
------------ ------------ ------------ ------------
Net increase -- Class C............. 2,333,555 3,135,066 404,208 363,716
------------ ------------ ------------ ------------
Total net increase (decrease) in net
assets from fund share transactions..... 5,790,205 40,910,725 3,135,998 7,961,528
------------ ------------ ------------ ------------
Total increase (decrease) in net
assets.................................. 4,553,412 32,703,135 4,137,917 5,071,739
NET ASSETS
Beginning of period................... 139,589,800 106,886,665 33,959,182 28,887,443
------------ ------------ ------------ ------------
End of period (including undistributed
net investment income (loss) of
$857,581, $1,464,120; $1,269,754,
$1,291,867; $89,051, ($238,336);
$116,490, $127,460; $0, $0 and $0, $0,
respectively............................ $144,143,212 $139,589,800 $ 38,097,099 $ 33,959,182
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<CAPTION>
INVESTMENT QUALITY INCOME
U.S. GOVERNMENT INCOME FUND FUND
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net investment income (loss).......... $ 3,726,385 $ 8,291,969 $ 1,997,615 $ 3,846,353
Net realized gain (loss) on
investments............................. (4,220,135) (4,366,839) (408,270) (952,880)
Net change in unrealized appreciation
(depreciation) on investments........... 7,204,799 (11,007,688) 3,266,923 (9,068,979)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations........ 6,711,049 (7,082,558) 4,856,268 (6,175,506)
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income -- Class A...... (3,470,735) (8,071,564) (1,649,048) (3,482,793)
Net investment income -- Class B...... (220,601) (196,735) (252,908) (244,424)
Net investment income -- Class C...... (36,512) (39,362) (95,659) (119,136)
Net realized gains -- Class A......... (140,061) (2,925,946) -- (367,910)
Net realized gains -- Class B......... (8,675) (38,935) -- (10,112)
Net realized gains -- Class C......... (1,431) (6,494) -- (637)
Distributions in excess of net
realized gains -- Class A............... -- (292,913) -- --
Distributions in excess of net
realized gains -- Class B............... -- (3,898) -- --
Distributions in excess of net
realized gains -- Class C............... -- (650) -- --
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders............................ (3,878,015) (11,576,497) (1,997,615) (4,225,012)
------------ ------------ ------------ ------------
Fund Share Transactions
CLASS A
Net proceeds from sales............... 8,337,955 17,007,814 3,437,254 12,621,718
Reinvestment of dividends and
distributions........................... 3,118,963 9,588,703 1,160,982 2,758,350
Cost of shares redeemed............... (21,385,264) (74,313,512) (7,963,295) (20,364,228)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class A.. (9,928,346) (47,716,995) (3,365,059) (4,984,160)
------------ ------------ ------------ ------------
CLASS B
Net proceeds from sales............... 3,810,282 6,748,251 2,929,597 6,440,954
Reinvestment of dividends and
distributions........................ 163,256 187,137 203,461 185,172
Cost of shares redeemed............... (734,031) (964,994) (846,378) (800,932)
------------ ------------ ------------ ------------
Net increase -- Class B............... 3,239,507 5,970,394 2,286,680 5,825,194
------------ ------------ ------------ ------------
CLASS C
Net proceeds from sales............... 668,202 1,424,484 576,084 3,141,700
Reinvestment of dividends and
distributions........................... 36,507 46,127 40,824 93,436
Cost of shares redeemed............... (92,626) (289,465) (48,537) (422,838)
------------ ------------ ------------ ------------
Net increase -- Class C............. 612,083 1,181,146 568,371 2,812,298
------------ ------------ ------------ ------------
Total net increase (decrease) in net
assets from fund share transactions..... (6,076,756) (40,565,455) (510,008) 3,653,332
------------ ------------ ------------ ------------
Total increase (decrease) in net
assets.................................. (3,243,722) (59,224,510) 2,348,645 (6,747,186)
NET ASSETS
Beginning of period................... 131,293,796 190,518,306 56,110,151 62,857,337
------------ ------------ ------------ ------------
End of period (including undistributed
net investment income (loss) of
$857,581, $1,464,120; $1,269,754,
$1,291,867; $89,051, ($238,336);
$116,490, $127,460; $0, $0 and $0, $0,
respectively............................ $128,050,074 $131,293,796 $ 58,458,796 $ 56,110,151
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
A-38
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Funds are registered under the Investment Company Act of
1940, as diversified, open-end management investment companies. Quest for Value
Fund, Inc. ("Quest for Value") is a Maryland corporation. Opportunity Fund
("Opportunity"), Small Capitalization Fund ("Small Capitalization"), Growth and
Income Fund ("Growth and Income"), U.S. Government Income Fund ("U.S.
Government") and Investment Quality Income Fund ("Investment Quality") are five
of nine funds currently offered in the Quest for Value Family of Funds, a
Massachusetts business trust. Quest for Value Advisors (the "Adviser") serves as
investment adviser and provides accounting and administrative services to each
fund. Quest for Value Distributors (the "Distributor") serves as each fund's
distributor. Both the Advisor and Distributor are majority-owned (99%)
subsidiaries of Oppenheimer Capital.
Prior to September 1, 1993, the funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date all funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charges and distribution fee arrangements. Furthermore, Class B shares will
automatically convert to Class A shares of the same fund eight years after their
respective purchase.
The following is a summary of significant accounting policies consistently
followed by each fund in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment securities listed on a national securities exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such
reported sales, the securites are valued at the last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
approved by the Board of Directors (Trustees) using methods which include
current market quotations from a major market maker in the securities and
trader-reviewed "matrix" prices. Futures contracts are valued based upon their
daily settlement value as of the close of the exchange upon which they trade.
OTC options are valued based upon formulas which utilize the market value of the
underlying securities, strike prices and expiration dates of the options.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any securities or other assets for which market quotations are not readily
available are valued at their fair values as determined in good faith under
procedures established by each fund's Board of Directors (Trustees). The ability
of issuers of debt securities held by the funds to meet their obligations may be
affected by economic or political development in a specific state, industry or
region.
(B) FEDERAL INCOME TAXES
It is each fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders; accordingly, no
Federal income tax provision is required.
(C) DEFERRED ORGANIZATION EXPENSES
The following approximate costs were incurred in connection with their
organization: Growth and Income -- $96,000 and Investment Quality -- $62,000.
These costs have been deferred and are being amortized to expense on a
straight-line basis over sixty months from commencement of each fund's
operations.
(D) SECURITY TRANSACTIONS AND OTHER INCOME
Security transactions are accounted for on the trade date. In determining
the gain or loss from the sale of securities, the cost of securities sold is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend date and interest income is accrued as earned. Discounts or premiums
on debt securities purchased are accreted or
A-39
<PAGE>
- --------------------------------------------------------------------------------
amortized to interest income over the lives of the respective securities. Net
investment income, other than class specific expenses and unrealized gains and
losses are allocated daily to each class of shares based upon the relative
proportion of net assets, as defined, of each class.
(E) DIVIDENDS AND DISTRIBUTIONS
The following table summarizes each fund's dividend and capital gain
declaration policy:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
INCOME CAPITAL CAPITAL
DIVIDENDS GAINS GAINS
--------- ------------ ------------
<S> <C> <C> <C>
Quest for Value annually annually annually
Opportunity annually annually annually
Small
Capitalization annually annually annually
Growth and
Income quarterly annually annually
U.S. Government daily * quarterly annually
Investment
Quality daily * annually annually
* paid monthly.
</TABLE>
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book-tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized gain(loss) and net assets were not affected by this
change.
(F) WRITTEN OPTIONS ACCOUNTING POLICIES
When a fund writes a call option or a put option, an amount equal to the
premium received by the fund is included in the fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. If the option expires on its stipulated expiration date or if a
fund enters into a closing purchase transaction, the fund will realize a gain
(or loss if the cost of a closing purchase tranaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option will
be extinguished. If a call option which a fund has written is exercised, the
fund realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received. If a
put option which a fund has written is exercised, the amount of the premium
originally received will reduce the cost of the security which the fund
purchases upon exercise of the option.
(G) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash or U.S.
Government securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, a fund agrees to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as "variation margin" and are
recorded by the fund as unrealized appreciation or
A-40
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
depreciation. When a contract is closed, the fund records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed and reverses any unrealized
appreciation or depreciation previously recorded.
(H) REPURCHASE AGREEMENTS
U.S. Government enters into repurchase agreements as part of its investment
program. The fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to-market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default by the obligor to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(I) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the six months ended April 30, 1995,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$129,947, $12,171 and $3,822, respectively, for Quest for Value; $75,445,
$38,525 and $7,920, respectively, for Opportunity; $68,052, $19,412 and $6,216,
respectively, for Small Capitalization; $27,244, $3,447 and $665, respectively,
for Growth and Income; $55,832, $4,401 and $2,402, respectively, for U.S.
Government and $22,873, $4,242 and $1,891, respectively, for Investment Quality
Income.
2. INVESTMENT ADVISORY FEE, ACCOUNTING SERVICES FEE, DISTRIBUTION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(a) The investment advisory fee is payable monthly to the Adviser, and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: 1.00% for Quest for Value, Opportunity
and Small Capitalization, respectively; .85% for Growth and Income and .60% for
U.S. Government and Investment Quality, respectively. For the six months ended
April 30, 1995, the Adviser voluntarily waived $41,225 and $42,245 in investment
advisory fees for Growth and Income and Investment Quality, respectively.
(b) A portion of the accounting services fee for Opportunity, Small
Capitalization, Growth and Income, U.S. Government and Investment Quality is
payable monthly to the Adviser. These funds reimburse the Adviser for a portion
of the salaries of officers and employees of Oppenheimer Capital based upon the
amount of time such persons spend in providing services to each fund in
accordance with the provisions of the Investment Advisory Agreement. For the six
months ended April 30, 1995, the Adviser received $24,374, $26,976, $28,900,
$28,155 and $25,181, respectively.
(c) The funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which each fund is permitted to compensate the Distributor
in connection with the distribution of fund shares. Under the Plan, the
Distributor has entered into agreements with securities dealers and other
financial institutions and organizations to obtain various sales-related
services in rendering distribution assistance. To compensate the Distributor for
the services it and other dealers under the Plan provide and for the expenses
they bear under the Plan, the funds pay the Distributor compensation, accrued
daily and payable monthly on each fund's average daily net assets for Class A
shares at the following annual rates: .25% for Quest for Value, Opportunity and
Small Capitalization, respectively, .05% for U.S. Government and .15% for
Investment Quality and Growth and Income, respectively. Each fund's Class A
shares also pay a service fee at the annual rate of .25%. Compensation for Class
B and Class C shares of each fund is at an annual rate of .75% of average daily
net assets. Each fund's Class B and Class C shares also pay a service fee at the
annual rate of .25%. Distribution and service fees may be paid by the
Distributor to broker dealers or others for providing personal service,
maintenance of accounts and ongoing sales or shareholder support functions in
connection with the distribution of fund shares. While payments under the plan
may not exceed the stated percentage of average daily net assets on an annual
basis, the payments are not limited to the amounts actually incurred by the
Distributor.
A-41
<PAGE>
- --------------------------------------------------------------------------------
For the six months ended April 30, 1995, distribution and service fees
charged to classes A, B and C were $582,142, $90,112 and $23,001, respectively,
for Quest for Value; $461,034, $320,958 and $58,350, respectively, for
Opportunity; $290,811, $87,657 and $22,086, respectively, for Small
Capitalization; $59,886, $16,582 and $3,024, respectively, for Growth and
Income; $173,704, $42,572 and $7,103, respectively, for for U.S. Government and
$89,054, $37,698 and $14,285, respectively, for Investment Quality Income.
(d) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $133,585, $220,756, $192,780 and
$56,481, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $72,545, $95,213, $87,012 and $37,521, respectively, for the
six months ended April 30, 1995.
(e) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $175,000, $324,000, $122,000, $15,000, $88,000 and $39,000 in
connection with the sale of Class A shares for Quest for Value, Opportunity,
Small Capitalization, Growth and Income, U.S. Government and Investment Quality,
respectively, for the six months ended April 30, 1995.
The Distributor has informed the funds that it received contingent deferred
sales charges on the redemption of Class C shares of approximately $200, $1,800,
$700, $200, and $200 for Quest for Value, Opportunity, Small Capitalization,
U.S. Government and Investment Quality, respectively, for the six months ended
April 30, 1995.
(f) The Distributor has assigned the right to receive the compensation and
contingent deferred sales charge on the Class B shares to a bank in return for
the banks reimbursement to the Distributor of commissions paid by the
Distributor to broker/dealers on Class B shares.
3. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1995, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
----------- ----------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Purchases $38,600,646 $118,902,351 $ 36,306,804 $15,994,318 $220,176,718 $3,096,231
Sales 46,184,287 20,875,977 46,436,460 19,114,061 246,008,186 1,990,980
</TABLE>
The following table summarizes activity in written option transactions for
U.S. Government for the six months ended April 30, 1995:
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
---------- ------------
<S> <C> <C>
Option contracts written: Outstanding beginning of period 2 $ 142,188
Options written 34 2,465,702
Options terminated in closing purchase transaction (20) (1,501,640)
Options exercised (7) (503,125)
Options expired (4) (301,563)
--
------------
Option contracts written: Outstanding end of period 5 $ 301,562
--
--
------------
------------
</TABLE>
A-42
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the six months
ended April 30, 1995 and the year ended October 31, 1994:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
---------------------------- ---------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued.................... 1,887,076 5,077,999 3,177,603 4,781,210 1,168,097 7,804,081
Dividends and
distributions
reinvested............... 1,440,961 797,941 328,864 186,714 181,647 450,409
Redeemed.................. (2,476,129) (6,566,112) (928,610) (3,470,990) (1,357,550) (6,835,042)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease)............. 851,908 (690,172) 2,577,857 1,496,934 (7,806) 1,419,448
------------ ------------ ------------ ------------ ------------ ------------
CLASS B
Issued.................... 740,489 1,020,362 2,702,721 2,145,988 308,792 936,328
Dividends and
distributions
reinvested............... 94,418 10,514 98,923 6,821 26,272 9,286
Redeemed.................. (100,601) (44,566) (174,841) (54,500) (103,762) (50,575)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 734,306 986,310 2,626,803 2,098,309 231,302 895,039
------------ ------------ ------------ ------------ ------------ ------------
CLASS C
Issued.................... 231,783 289,679 600,865 367,367 166,967 205,454
Dividends and
distributions
reinvested............... 25,381 1,106 17,240 1,789 5,721 1,176
Redeemed.................. (38,705) (22,509) (40,221) (13,680) (23,965) (13,923)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 218,459 268,276 577,884 355,476 148,723 192,707
------------ ------------ ------------ ------------ ------------ ------------
Total net increase.... 1,804,673 564,414 5,782,544 3,950,719 372,219 2,507,194
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
---------------------------- ---------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued.................... 240,232 591,037 764,507 1,484,549 347,221 1,194,443
Dividends and
distributions
reinvested............... 186,609 506,743 286,809 839,276 116,979 263,168
Redeemed.................. (266,050) (600,435) (1,972,889) (6,552,668) (815,458) (1,940,417)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease)............. 160,791 497,345 (921,573) (4,228,843) (351,258) (482,806)
------------ ------------ ------------ ------------ ------------ ------------
CLASS B
Issued.................... 121,157 269,571 350,917 594,901 294,053 614,495
Dividends and
distributions
reinvested............... 18,473 19,104 15,011 16,698 20,468 18,150
Redeemed.................. (19,727) (26,407) (67,374) (86,599) (85,574) (77,488)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 119,903 262,268 298,554 525,000 228,947 555,157
------------ ------------ ------------ ------------ ------------ ------------
CLASS C
Issued.................... 40,779 33,894 61,226 123,553 58,013 290,357
Dividends and
distributions
reinvested............... 3,054 2,697 3,354 4,123 4,105 9,047
Redeemed.................. (2,092) (469) (8,544) (25,877) (4,928) (41,081)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 41,741 36,122 56,036 101,799 57,190 258,323
------------ ------------ ------------ ------------ ------------ ------------
Total net increase
(decrease)........... 322,435 795,735 (566,983) (3,602,044) (65,121) 330,674
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
<FN>
*Unaudited.
</TABLE>
A-43
<PAGE>
- --------------------------------------------------------------------------------
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At April 30, 1995, the composition of unrealized appreciation (depreciation)
of investment securities and the cost of investments for Federal income tax
purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Quest for Value $51,733,096 $ (1,752,244) $ 49,980,852 $ 231,903,854
Opportunity 49,286,577 (1,812,363) 47,474,214 306,602,498
Small Capitalization 10,004,767 (7,766,524) 2,238,243 138,815,958
Growth and Income 2,889,041 (1,284,031) 1,605,010 37,028,918
U.S. Government 966,818 (8,766,967) (7,800,149) 144,810,919
Investment Quality 1,588,495 (2,012,166) (423,671) 57,332,480
</TABLE>
6. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
QUEST SMALL GROWTH U.S. INVESTMENT
FOR VALUE OPPORTUNITY CAPITALIZATION AND INCOME GOVERNMENT QUALITY
----------- ------------ --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Authorized fund shares 35,000,000 unlimited unlimited unlimited unlimited unlimited
Par value per share $1.00 $.01 $.01 $.01 $.01 $.01
</TABLE>
7. DIVIDENDS AND DISTRIBUTIONS
The following tables summarize the per share dividends and distributions
made for the six months ended April 30, 1995 and the year ended October 31,
1994:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
------------------------- ------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A................... $ 0.083 $ 0.040 $ 0.117 $ 0.326 -- --
Class B................... 0.074 0.031 0.117 0.313 -- --
Class C................... 0.081 0.033 0.117 0.312 -- --
NET REALIZED GAINS:
Class A................... $ 0.828 $ 0.469 $ 0.614 $ 0.219 $ 0.415 $ 1.331
Class B................... 0.828 0.469 0.614 0.219 0.415 1.331
Class C................... 0.828 0.469 0.614 0.219 0.415 1.331
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A................... $ 0.182 $ 0.319 $ 0.322 $ 0.593 $ 0.362 $ 0.680
Class B................... 0.162 0.265 0.284 0.510 0.332 0.609
Class C................... 0.142 0.261 0.279 0.509 0.329 0.608
NET REALIZED GAINS:
Class A................... $ 0.422 $ 1.669 $ 0.013 $ 0.213 -- $ 0.069
Class B................... 0.422 1.669 0.013 0.213 -- 0.069
Class C................... 0.422 1.669 0.013 0.213 -- 0.069
<FN>
*Unaudited.
</TABLE>
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
At April 30, 1995, U.S. Government had written options outstanding. Written
options have elements of risk in excess of the amounts reflected in the
Statement of Assets and Liabilities. The fund, as a writer of an option, has no
control over whether the option is exercised. The underlying security may be
sold and, as a result, the fund bears the market risk of an unfavorable change
in the price of the security underlying the written option.
A-44
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized Dividends to
and to Shareholders Net
Net Asset Net Unrealized Shareholders from Net Total Asset
Value, Investment Gain Total from from Net Realized Dividends Value,
Beginning Income (Loss) on Investment Investment Gain on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
Quest for Value Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $12.59 $ 0.06 $ 1.00 $ 1.06 $(0.08) $(0.83) $(0.91) $12.74 9.52%
YEAR ENDED
OCTOBER 31,
1994 12.51 0.09 0.50 0.59 (0.04) (0.47) (0.51) 12.59 5.01%
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59) 12.51 12.27%
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71) 11.71 18.45%
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16) 10.61 37.94%
1990 (2) 9.85 0.18 (1.38) (1.20) (0.26) (0.55) (0.81) 7.84 (13.43%)
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 12.53 0.03 0.99 1.02 (0.07) (0.83) (0.90) 12.65 9.23%
YEAR ENDED
OCTOBER 31, 1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50) 12.53 4.43%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- -- 12.51 (1.19%)
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 12.52 0.03 1.00 1.03 (0.08) (0.83) (0.91) 12.64 9.31%
YEAR ENDED
OCTOBER 31, 1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50) 12.52 4.45%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- -- 12.50 (1.26%)
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses to (Loss) to Portfolio
Period Average Net Average Net Turnover
(000's) Assets Assets Rate
Quest for Value Fund, Inc.
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 251,821 1.69%(1,5) 0.97%(1,5) 17%
YEAR ENDED
OCTOBER 31,
1994 238,085 1.71% 0.72% 49%
1993 245,320 1.75% 0.40% 27%
1992 142,939 1.75% 0.53% 41%
1991 79,914 1.83% 1.06% 48%
1990 (2) 49,740 1.82% 1.71% 51%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 23,805 2.21%(1,5) 0.45%(1,5) 17%
YEAR ENDED
OCTOBER 31, 1994 14,373 2.24% 0.14% 49%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 6,375 2.24%(1,5) 0.43%(1,5) 17%
YEAR ENDED
OCTOBER 31, 1994 3,581 2.28% 0.09% 49%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 221 2.27%(5) (0.90%)(5) 27%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $234,786,678, $18,171,756, $4,638,234, RESPECTIVELY.
(2) SHARE AND PER SHARE DATA HAVE BEEN RETROACTIVELY RESTATED TO REFLECT A 200%
STOCK DIVIDEND AS OF JULY 1, 1991.
</TABLE>
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------- DIVIDENDS AND DISTRIBUTIONS
Net ---------------------------------------
Realized Distributions
and Dividends to
Unreal- to Shareholders Net
Net Asset Net In- ized Gain Shareholders from Net Asset
Value, Be- vestment (Loss) on Total from from Net Realized Total Divi- Value, Total
ginning of Income In- Investment Investment Gain on dends and End of Re-
Period (Loss) vestments Operations Income Investments Distributions Period turn*
Opportunity Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS
ENDED APRIL 30,
1995 (6) $19.69 $ 0.12 $ 2.25 $ 2.37 $(0.12) $(0.61) $(0.73) $ 21.33 12.66%
YEAR ENDED
OCTOBER 31,
1994 18.71 0.18 1.35 1.53 (0.33) (0.22) (0.55) 19.69 8.41%
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39) 18.71 14.34%
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58) 16.73 21.93%
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26) 14.29 50.44%
1990 11.59 0.25 (1.64) (1.39) (0.22) (0.24) (0.46) 9.74 (12.62%)
Class B,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 19.59 0.07 2.23 2.30 (0.12) (0.61) (0.73) 21.16 12.36%
YEAR ENDED
OCTOBER 31,
1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53) 19.59 7.84%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 18.73(3) 0.02 (0.05) (0.03) -- -- -- 18.70 (0.16%)
Class C,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 19.58 0.07 2.23 2.30 (0.12) (0.61) (0.73) 21.15 12.37%
YEAR ENDED
OCTOBER 31,
1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53) 19.58 7.78%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 18.73(3) 0.02 (0.05) (0.03) -- -- -- 18.70 (0.16%)
<CAPTION>
RATIOS
-------------------------------------------
Ratio of
Ratio of Net
Net Net Investment
Assets Operating Income
End of Expenses to (Loss) to Portfolio
Period Average Net Average Net Turnover
Opportunity Fund (000's) Assets Assets Rate
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS
ENDED APRIL 30,
1995 (6) $ 231,881 1.71%(1,5) 1.25%(1,5) 10%
YEAR ENDED
OCTOBER 31,
1994 163,340 1.78% 0.96% 42%
1993 127,225 1.83% 2.69% 24%
1992 40,563 2.27% 0.72% 32%
1991 8,446 2.35%(2) 0.30%(2) 88%
1990 4,570 2.00%(2) 2.30%(2) 206%
Class B,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 102,353 2.24%(1,5) 0.75%(1,5) 10%
YEAR ENDED
OCTOBER 31,
1994 43,317 2.34% 0.43% 42%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 2,115 2.52%(5) 1.32%(5) 24%
Class C,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 20,091 2.26%(1,5) 0.73%(1,5) 10%
YEAR ENDED
OCTOBER 31,
1994 7,289 2.35% 0.43% 42%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 313 2.52%(5) 1.13%(5) 24%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $185,941,734, $64,723,666, $11,766,750, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEES
AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN 3.33% AND (0.68%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 3.69% AND 0.61%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990.
- ------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) UNAUDITED.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
A-45
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized to
and Dividends Shareholders
Unrealized to from Net Net
Net Asset Net Gain Shareholders Realized Total Asset
Value, Investment (Loss) Total from from Net Gain Dividends Value,
Beginning Income on Investment Investment on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
Small Capitalization Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $16.33 $ 0.05 $ 0.22 $ 0.27 $-- $(0.42) $(0.42) $16.18 1.71%
YEAR ENDED
OCTOBER 31,
1994 17.68 (0.03) 0.01 (0.02) -- (1.33) (1.33) 16.33 0.04%
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14) 17.68 30.21%
1992 13.52 0.00 1.50 1.50 -- (0.42) (0.42) 14.60 11.60%
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08) 13.52 55.01%
1990 10.91 0.07 (2.04) (1.97) (0.08) (0.06) (0.14) 8.80 (18.33%)
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 16.24 (0.01) 0.22 0.21 -- (0.42) (0.42) 16.03 1.35%
YEAR ENDED
OCTOBER 31, 1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33) 16.24 (0.39%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- -- 17.66 2.73%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 16.23 0.00 0.22 0.22 -- (0.42) (0.42) 16.03 1.41%
YEAR ENDED
OCTOBER 31, 1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33) 16.23 (0.51%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- -- 17.67 2.79%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
Small Capitalization Fund
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 118,909 1.80%(1,5) 0.56%(1,5) 29%
YEAR ENDED
OCTOBER 31,
1994 120,102 1.88% (0.14%) 67%
1993 104,898 1.89% (0.36%) 74%
1992 39,693 2.11% (0.04%) 95%
1991 20,686 2.25%(2) (0.41%)(2) 103%
1990 1,880 2.00%(2) 0.71%(2) 18%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 19,564 2.37%(1,5) (0.01%)(1,5) 29%
YEAR ENDED
OCTOBER 31, 1994 16,144 2.48% (0.70%) 67%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 5,670 2.35%(1,5) (0.01%)(1,5) 29%
YEAR ENDED
OCTOBER 31, 1994 3,344 2.59% (0.81%) 67%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 235 2.57%(5) (1.20%)(5) 74%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $117,288,229, $17,676,777, $4,453,700, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEES
AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN 3.27% AND (1.43%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 5.82% AND (3.11%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990.
</TABLE>
Growth and Income Fund
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized to
and Dividends Shareholders
Unrealized to from Net Net
Net Asset Net Gain Shareholders Realized Total Asset
Value, Investment (Loss) Total from from Net Gain Dividends Value,
Beginning Income on Investment Investment on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
Growth and Income Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $10.09 $ 0.18 $ 0.67 $ 0.85 $(0.18) $(0.42) $(0.60) $10.34 9.11%
YEAR ENDED
OCTOBER 31,
1994 11.24 0.32 0.55 0.87 (0.32) (1.70) (2.02) 10.09 8.64%
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59) 11.24 9.93%
NOVEMBER 4, 1991
(7) TO OCTOBER
31, 1992 10.00(3) 0.28 0.80 1.08 (0.28) -- (0.28) 10.80 10.84%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.07 0.16 0.66 0.82 (0.16) (0.42) (0.58) 10.31 8.79%
YEAR ENDED
OCTOBER 31, 1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97) 10.07 7.96%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07) 11.23 0.81%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.07 0.14 0.67 0.81 (0.14) (0.42) (0.56) 10.32 8.67%
YEAR ENDED
OCTOBER 31, 1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96) 10.07 7.91%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07) 11.23 0.81%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
Growth and Income Fund
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 32,969 1.92%(1,2,5) 3.78%(1,2,5) 63%
YEAR ENDED
OCTOBER 31,
1994 30,576 1.86%(2) 3.16%(2) 113%
1993 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991
(7) TO OCTOBER
31, 1992 8,057 2.23%(2,5) 2.73%(2,5) 77%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 4,231 2.49%(1,2,5) 3.25%(1,2,5) 63%
YEAR ENDED
OCTOBER 31, 1994 2,928 2.47%(2) 2.53%(2) 113%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 319 2.49%(2,5) 1.83%(2,5) 192%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 897 2.77%(1,2,5) 3.00%(1,2,5) 63%
YEAR ENDED
OCTOBER 31, 1994 455 2.62%(2) 2.39%(2) 113%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 102 2.49%(2,5) 2.18%(2,5) 192%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $30,191,320, $3,343,785, $609,761, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A
PORTION OF ITS FEES. IF SUCH WAIVER HAD NOT BEEN IN EFFECT, THE RATIOS OF
NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.17%
AND 3.53%, ANNUALIZED, RESPECTIVELY, FOR THE SIX MONTHS ENDED APRIL 30,
1995, 2.32% AND 2.70%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994
AND 2.18% AND 2.38%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993 AND
2.98% AND 1.98%, ANNUALIZED, RESPECTIVELY, FOR THE PERIOD NOVEMBER 4, 1991
(COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1992. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.73% AND 3.01%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 3.00% AND 2.77%, ANNUALIZED, RESPECTIVELY,
FOR CLASS C, FOR THE SIX MONTHS ENDED APRIL 30, 1995, 2.93% AND 2.07%,
RESPECTIVELY, FOR CLASS B AND 3.10% AND 1.91%, RESPECTIVELY, FOR CLASS C,
FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.88% AND 1.44%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 2.87% AND 1.80%, ANNUALIZED, RESPECTIVELY,
FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER
31, 1993.
- ------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) UNAUDITED.
(7) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
A-46
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized Dividends to
and to Shareholders Net
Net Asset Net Unrealized Shareholders from Net Total Asset
Value, Investment Gain Total from from Net Realized Dividends Value,
Beginning Income (Loss) on Investment Investment Gain on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
U.S. Government Income F und
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $10.79 $ 0.32 $ 0.26 $ 0.58 $(0.32) $(0.01) $(0.33) $11.04 5.50%
YEAR ENDED
OCTOBER 31,
1994 12.08 0.59 (1.08) (0.49) (0.59) (0.21) (0.80) 10.79 (4.15%)
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) (0.84) 12.08 8.55%
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) (0.80) 11.92 7.98%
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) (1.01) 11.80 13.40%
1990 11.50 0.93 (0.06) 0.87 (0.93) (0.09) (1.02) 11.35 7.98%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.79 0.28 0.26 0.54 (0.28) (0.01) (0.29) 11.04 5.14%
YEAR ENDED
OCTOBER 31, 1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) (0.72) 10.79 (4.84%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) (0.09) 12.08 0.29%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.79 0.28 0.26 0.54 (0.28) (0.01) (0.29) 11.04 5.09%
YEAR ENDED
OCTOBER 31, 1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) (0.72) 10.79 (4.84%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) (0.09) 12.08 0.34%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
U.S. Government Income Fund
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 115,898 1.27%(1,5) 5.99%(1,5) 205%
YEAR ENDED
OCTOBER 31,
1994 123,257 1.20%(2) 5.19%(2) 126%
1993 189,091 1.15%(2) 5.33%(2) 315%
1992 151,197 1.15%(2) 6.26%(2) 207%
1991 82,400 1.15%(2) 7.24%(2) 309%
1990 52,742 1.15%(2) 8.21%(2) 101%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10,280 1.93%(1) 5.18%(1) 205%
YEAR ENDED
OCTOBER 31, 1994 6,813 1.92%(2) 4.53%(2) 126%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 1,286 1.85%(2,5) 3.07%(2,5) 315%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 1,872 2.05%(1) 5.14%(1) 205%
YEAR ENDED
OCTOBER 31, 1994 1,224 1.94%(2) 4.57%(2) 126%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 141 1.85%(2,5) 3.89%(2,5) 315%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $116,762,622, $8,585,009, $1,432,342, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A
PORTION OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF
NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.23%
AND 5.16%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.20% AND
5.28%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.17% AND 6.24%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 1.44% AND 7.92%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.93% AND 4.52%, RESPECTIVELY,
FOR CLASS B AND 1.95% AND 4.56%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR
ENDED OCTOBER 31, 1994 AND 1.96% AND 2.96%, ANNUALIZED, RESPECTIVELY, FOR
CLASS B AND 1.96% AND 3.78%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
</TABLE>
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized Dividends to
and to Shareholders Net
Net Asset Net Unrealized Shareholders from Net Total Asset
Value, Investment Gain Total from from Net Realized Dividends Value,
Beginning Income (Loss) on Investment Investment Gain on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Quality Income Fund
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 9.67 $ 0.36 $ 0.52 $ 0.88 $(0.36) $-- $(0.36) $10.19 9.28%
YEAR ENDED
OCTOBER 31,
1994 11.49 0.68 (1.75) (1.07) (0.68) (0.07) (0.75) 9.67 (9.61%)
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) (0.74) 11.49 18.64%
1992 10.06 0.80 0.30 1.10 (0.80) -- (0.80) 10.36 11.21%
DECEMBER 18, 1990
(7) TO OCTOBER
31, 1991 10.00(3) 0.71 0.06 0.77 (0.71) -- (0.71) 10.06 8.11%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 9.67 0.33 0.52 0.85 (0.33) -- (0.33) 10.19 8.96%
YEAR ENDED
OCTOBER 31, 1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) (0.68) 9.67 (10.22%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.52(3) 0.08 (0.03) 0.05 (0.08) -- (0.08) 11.49 0.45%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 9.67 0.33 0.52 0.85 (0.33) -- (0.33) 10.19 8.92%
YEAR ENDED
OCTOBER 31, 1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) (0.68) 9.67 (10.23%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.52(3) 0.09 (0.03) 0.06 (0.09) -- (0.09) 11.49 0.55%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
<S> <C> <C> <C> <C>
Investment Quality Income Fund
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 45,860 1.41%(1,2,5) 7.41%(1,2,5) 4%
YEAR ENDED
OCTOBER 31,
1994 46,922 1.29%(2) 6.47%(2) 33%
1993 61,288 1.20%(2) 6.07%(2) 12%
1992 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990
(7) TO OCTOBER
31, 1991 17,235 0.82%(2,5) 8.25%(2,5) 19%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 9,293 2.01%(1,2,5) 6.71%(1,2,5) 4%
YEAR ENDED
OCTOBER 31, 1994 6,605 1.92%(2) 5.85%(2) 33%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 1,468 1.84%(2,5) 3.68%(2,5) 12%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 3,306 2.07%(1,2,5) 6.70%(1,2,5) 4%
YEAR ENDED
OCTOBER 31, 1994 2,583 1.90%(2) 6.01%(2) 33%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 101 1.84%(2,5) 4.83%(2,5) 12%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $44,895,780, $7,602,107, $2,880,817, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING
EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE
RATIOS OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF
NET INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN
1.26% AND 7.56%, ANNUALIZED, RESPECTIVELY, FOR THE SIX MONTHS ENDED APRIL
30, 1995, 1.59% AND 6.17%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31,
1994, 1.50% AND 5.77%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993,
1.72% AND 6.85%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND
2.11% AND 6.96%, ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 18, 1990
(COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1991. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.86% AND 6.86%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 1.92% AND 6.85%, ANNUALIZED, RESPECTIVELY FOR
CLASS C, FOR THE SIX MONTHS ENDED APRIL 30, 1995, 2.23% AND 5.54%,
RESPECTIVELY, FOR CLASS B AND 2.21% AND 5.70%, RESPECTIVELY, FOR CLASS C,
FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.07% AND 3.45%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 2.06% AND 4.61%, ANNUALIZED, RESPECTIVELY,
FOR CLASS C FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER
31, 1993.
- ------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) UNAUDITED.
(7) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
A-47
<PAGE>
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS:
Included in the Prospectus:
Financial Highlights
Included in Part B:
AUDITED FINANCIALS: Schedule of Investments, Statement of
Assets and Liabilities, Statement of Operations, Statement
of Changes in Net Assets for the two fiscal years ended
October 31, 1994, Notes to Financial Statements, Financial
Highlights, and Independent Auditors' Report for the fiscal
year ended October 31, 1994.
UNAUDITED FINANCIALS: Schedule of Investments, Statement of
Assets and Liabilities, Statement of Operations, Statement
of Changes in Net Assets, Motes to Financial Statements and
Financial Highlights for the six-month period ended April
30, 1995.
Included in Part C:
None
EXHIBITS:
(1) Articles of Incorporation; previously filed as Exhibit 1 to
the original Registration Statement on Form N-1 filed on
August 10, 1979.
(2) By Laws; previously filed as Exhibit 2 to the original
Registration Statement on Form N-1 filed on August 10, 1979.
(3) Not Applicable.
(4) Specimen Share Certificate; previously filed as Exhibit 4 to
the original Registration Statement on Form N-1 filed on
August 10, 1979.
(5)(a) Investment Advisory Agreement
C-1
<PAGE>
(5(b) Subadvisory Agreement
(6)(a) General Distributor's Agreement
(6)(b) Dealer Agreement
(7) Not Applicable.
(8) Custody Agreement; previously filed as Exhibit 8 to Post-
Effective Amendment No. 17.
(9) Not Applicable.
(10) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will
when sold be legally issued, fully paid and non-assessable;
previously filed as Exhibit 10 to Pre-Effective Amendment
No. 1.
(11) Consent of Independent Auditors..
(12) Not Applicable.
(13) Copy of Investment Letter; previously filed with Post-
Effective Amendment No. 25 to the Registration Statement for
Oppenheimer Time Fund, Inc.
(14) Model Retirement Plans; previously filed as Exhibit 20 to
Post-Effective Amendment No. 20.
(15)(a) Amended and Restated Distribution and Service Plan and
Agreement with respect to Class A shares.
(15(b) (1) Amended and Restated Distribution and Service Plan and
Agreement in respect of Class B shares.
(15)(c) Amended and Restated Distribution and Service Plan and
Agreement with respect to Class C shares.
(16) Total return information. Previously filed as Exhibit 16 to
Post-Effective Amendment No. 16.
C-2
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
No person is presently controlled by or under common control with
Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Number of Record
Holders as of
Title of Class September 26, 1995
-------------- ------------------
Common Stock . . . . . . . . . . . . . . . 15,370
ITEM 27. INDEMNIFICATION
See Registration Statement, Form N-1A, File No. 2-65223, August 16,
1991, Item No. 27, which is incorporated herein by reference.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Oppenheimer Management Corporation is the investment adviser of the
Registrant; it and certain subsidiaries and affiliates act in the same capacity
to other registered investment companies as described in Parts A and B hereof
and listed in Item 28(b) below.
(b) There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each officer
and director of Oppenheimer Management Corporation is, or at any time during the
past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.
Name & Current Position
with Oppenheimer Other Business and Connections
Management Corporation During the Past Two Years
- ----------------------- ------------------------------
Lawrence Apolito, None.
Vice President
James C. Ayer, Jr., Vice President and Portfolio Manager of
Assistant Vice President Oppenheimer Gold & Special Minerals Fund and
Oppenheimer Global Emerging Growth Fund.
Victor Babin, None.
Senior Vice President
C-3
<PAGE>
Bruce Bartlett, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, Inc. and
Oppenheimer Variable Account Funds; formerly
a Vice President and Senior Portfolio Manager
at First of America Investment Corp.
Robert J. Bishop Assistant Treasurer of the OppenheimerFunds
Assistant Vice President (listed below); previously a Fund Controller
for Oppenheimer Management Corporation (the
"Manager").
George Bowen Treasurer of the New York-based
Senior Vice President OppenheimerFunds; Vice President, Secretary
and Treasurer and Treasurer of the Denver-based
OppenheimerFunds. Vice President and
Treasurer of Oppenheimer Funds Distributor,
Inc. (the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment adviser
subsidiary of OMC; Senior Vice President,
Treasurer, Assistant Secretary and a
director of Centennial Asset Management
Corporation ("Centennial"), an investment
adviser subsidiary of the Manager; Vice
President, Treasurer and Secretary of
Shareholder Services, Inc. ("SSI") and
Shareholder Financial Services, Inc.
("SFSI"), transfer agent subsidiaries of
OMC; President, Treasurer and Director of
Centennial Capital Corporation; Vice
President and Treasurer of Main Street
Advisers; formerly Senior Vice President/
Comptroller and Secretary of Oppenheimer
Asset Management Corporation ("OAMC"), an
investment adviser which was a subsidiary of
the OMC.
Michael A. Carbuto, Vice President and Portfolio Manager of
Vice President Oppenheimer Tax-Exempt Cash Reserves,
Centennial California Tax Exempt Trust,
C-4
<PAGE>
Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice President
of Centennial.
William Colbourne, Formerly, Director of Alternative Staffing
Assistant Vice President Resources, and Vice President of Human
Resources, American Cancer Society.
Lynn Coluccy, Vice President Formerly Vice President\Director of Internal
Audit of the Manager.
O. Leonard Darling, Formerly Co-Director of Fixed Income for
Executive Vice President State Street Research & Management Co.
Robert A. Densen, None.
Senior Vice President
Robert Doll, Jr., Vice President and Portfolio Manager of
Executive Vice President Oppenheimer Growth Fund, Oppenheimer
Target Fund and Oppenheimer Variable Account
Funds; Senior Vice President and
Portfolio Manager of Strategic Income &
Growth Fund.
John Doney, Vice President Vice President and Portfolio Manager of
Oppenheimer Equity Income Fund.
Andrew J. Donohue, Secretary of the New York-based
Executive Vice President OppenheimerFunds; Vice President of the
& General Counsel Denver-based OppenheimerFunds; Executive
Vice President, Director and General Counsel
of the Distributor; formerly Senior Vice
President and Associate General Counsel of
the Manager and the Distributor.
Kenneth C. Eich, Treasurer of Oppenheimer Acquisition
Executive Vice President/ Corporation
Chief Financial Officer
George Evans, Vice President Vice President and Portfolio Manager of
Oppenheimer Global Securities Fund.
C-5
<PAGE>
Scott Farrar, Assistant Treasurer of the OppenheimerFunds;
Assistant Vice President previously a Fund Controller for the
Manager.
Katherine P.Feld Vice President and Secretary of Oppenheimer
Vice President and Funds Distributor, Inc.; Secretary of
Secretary HarbourView, Main Street Advisers, Inc. and
Centennial; Secretary, Vice President and
Director of Centennial Capital Corp.
Jon S. Fossel, President and director of Oppenheimer
Chairman of the Board, Acquisition Corp. ("OAC"), the Manager's
Chief Executive Officer parent holding company; President, CEO and
and Director a director of HarbourView; a director of SSI
and SFSI; President, Director, Trustee, and
Managing General Partner of the Denver-based
OppenheimerFunds; formerly President of the
Manager. President and Chairman of the Board
of Main Street Advisers, Inc.
Robert G. Galli, Trustee of the New York-based
Vice Chairman OppenheimerFunds; Vice President and Counsel
of OAC; formerly he held the following
positions: a director of the Distributor,
Vice President and a director of HarbourView
and Centennial, a director of SFSI and SSI,
an officer of other OppenheimerFunds and
Executive Vice President & General Counsel
of the Manager and the Distributor.
Linda Gardner, None.
Assistant Vice President
Ginger Gonzalez, Formerly 1st Vice President/Director of
Vice President Creative Services for Shearson Lehman
Brothers.
Dorothy Grunwager, None.
Assistant Vice President
C-6
<PAGE>
Caryn Halbrecht, Vice President and Portfolio Manager of
Vice President Oppenheimer Insured Tax-Exempt Bond Fund and
Oppenheimer Intermediate Tax Exempt Bond
Fund; an officer of other OppenheimerFunds;
formerly Vice President of Fixed Income
Portfolio Management at Bankers Trust.
Barbara Hennigar, President and Director of Shareholder
President and Chief Financial Service, Inc.
Executive Officer of
Oppenheimer Shareholder
Services, a division of OMC.
Alan Hoden, Vice President None.
Merryl Hoffman, None.
Vice President
Scott T. Huebl, None.
Assistant Vice President
Jane Ingalls, Formerly a Senior Associate with Robinson,
Assistant Vice President Lake/Sawyer Miller.
Bennett Inkeles, Formerly employed by Doremus & Company, an
Assistant Vice President advertising agency.
Stephen Jobe, None.
Vice President
Heidi Kagan None.
Assistant Vice President
Avram Kornberg, Formerly a Vice President with Bankers
Vice President Trust.
C-7
<PAGE>
Paul LaRocco, Portfolio Manager of Oppenheimer Capital
Assistant Vice President Appreciation Fund; Associate Portfolio
Manager of Oppenheimer Discovery Fund and
Oppenheimer Time Fund. Formerly a
Securities Analyst for Columbus Circle
Investors.
Mitchell J. Lindauer, None.
Vice President
Loretta McCarthy, None.
Senior Vice President
Bridget Macaskill, Director of HarbourView; Director of Main
President and Director Street Advisers, Inc.; and Chairman of
Shareholder Services, Inc.
Sally Marzouk, None.
Vice President
Marilyn Miller, Formerly a director of marketing for
Vice President TransAmerica Fund Management Company.
Denis R. Molleur, None.
Vice President
Kenneth Nadler, None.
Vice President
David Negri, Vice President and Portfolio Manager of
Vice President Oppenheimer Strategic Bond Fund, Oppenheimer
Multiple Strategies Fund, Oppenheimer
Strategic Investment Grade Bond Fund,
Oppenheimer Asset Allocation Fund,
Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Short-Term Income
Fund, Oppenheimer High Income Fund and
Oppenheimer Bond Fund; an officer of other
OppenheimerFunds.
C-8
<PAGE>
Barbara Niederbrach, None.
Assistant Vice President
Stuart Novek, Formerly a Director Account Supervisor for
Vice President J. Walter Thompson.
Robert A. Nowaczyk, None.
Vice President
Robert E. Patterson, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Main Street California Tax-
Exempt Fund, Oppenheimer Insured Tax-Exempt
Bond Fund, Oppenheimer Intermediate Tax-
Exempt Bond Fund, Oppenheimer Florida Tax-
Exempt Fund, Oppenheimer New Jersey Tax-
Exempt Fund, Oppenheimer Pennsylvania Tax-
Exempt Fund, Oppenheimer California Tax-
Exempt Fund, Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond Fund;
Vice President of the New York Tax-Exempt
Income Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust.
Tilghman G. Pitts III, Chairman and Director of the Distributor.
Executive Vice President
and Director
Jane Putnam, Associate Portfolio Manager of Oppenheimer
Assistant Vice President Growth Fund and Oppenheimer Target Fund and
Portfolio Manager for Oppenheimer Variable
Account Funds-Growth Fund; Senior Investment
Officer and Portfolio Manager with Chemical
Bank.
Russell Read, Formerly an International Finance Consultant
Vice President for Dow Chemical.
C-9
<PAGE>
Thomas Reedy, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust; an officer of other
OppenheimerFunds; formerly a Securities
Analyst for the Manager.
David Robertson, None.
Vice President
Adam Rochlin, Formerly a product manager for Metropolitan
Assistant Vice President Life Insurance Company.
David Rosenberg, Vice President and Portfolio Manager of
Vice President Oppenheimer Limited-Term Government Fund and
Oppenheimer U.S. Government Trust. Formerly
Vice President and Senior Portfolio Manager
for Delaware Investment Advisors.
Richard H. Rubinstein, Vice President and Portfolio Manager of
Vice President Oppenheimer Asset Allocation Fund,
Oppenheimer Fund and Oppenheimer Multiple
Strategies Fund; an officer of other
OppenheimerFunds; formerly Vice President
and Portfolio Manager/Security Analyst for
Oppenheimer Capital Corp., an investment
adviser.
Lawrence Rudnick, Formerly Vice President of Dollar Dry Dock
Assistant Vice President Bank.
James Ruff, None.
Executive Vice President
Ellen Schoenfeld, None.
Assistant Vice President
C-10
<PAGE>
Diane Sobin, Vice President and Portfolio Manager of
Vice President Oppenheimer Total Return Fund, Inc. and
Oppenheimer Variable Account Funds; formerly
a Vice President and Senior Portfolio Manager
for Dean Witter InterCapital, Inc.
Nancy Sperte, None.
Senior Vice President
Donald W. Spiro, President and Trustee of the New York-based
Chairman Emeritus OppenheimerFunds; formerly Chairman of the
and Director Manager and the Distributor.
Arthur Steinmetz, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Strategic Diversified Income
Fund, Oppenheimer Strategic Income Fund,
Oppenheimer Strategic Income & Growth Fund,
Oppenheimer Strategic Investment Grade Bond
Fund, Oppenheimer Strategic Short-Term
Income Fund; an officer of other
OppenheimerFunds.
Ralph Stellmacher, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Champion High Yield Fund and
Oppenheimer High Yield Fund; an officer of
other OppenheimerFunds.
John Stoma, Vice President Formerly Vice President of Pension Marketing
with Manulife Financial.
James C. Swain, Chairman, CEO and Trustee, Director or
Vice Chairman of the Managing Partner of the Denver-based
Board of Directors OppenheimerFunds; President and a Director
and Director of Centennial; formerly President and
Director of OAMC, and Chairman of the Board
of SSI.
James Tobin, Vice President None.
Jay Tracey, Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
C-11
<PAGE>
Oppenheimer Discovery Fund. Formerly
Managing Director
of Buckingham Capital Management.
Gary Tyc, Vice President, Assistant Treasurer of the Distributor and
Assistant Secretary SFSI.
and Assistant Treasurer
Ashwin Vasan, Vice President of Oppenheimer Multi-Sector
Vice President Income Trust and Oppenheimer Multi-
Government Trust: an officer of other
OppenheimerFunds.
Valerie Victorson, None.
Vice President
Dorothy Warmack, Vice President and Portfolio Manager of
Vice President Daily Cash Accumulation Fund, Inc.,
Oppenheimer Cash Reserves, Centennial
America Fund, L.P., Centennial Government
Trust and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells, None.
Vice President
William L. Wilby, Vice President and Portfolio Manager of
Senior Vice President Oppenheimer Global Fund and Oppenheimer
Global Growth & Income Fund; Vice President
of HarbourView; an officer of other
OppenheimerFunds.
C-12
<PAGE>
Susan Wilson-Perez, None.
Vice President
Carol Wolf, Vice President and Portfolio Manager of
Vice President Oppenheimer Money Market Fund, Inc.,
Centennial America Fund, L.P., Centennial
Government Trust, Centennial Money Market
Trust and Daily Cash Accumulation Fund,
Inc.; Vice President of Oppenheimer Multi-
Sector Income Trust; Vice President of
Centennial.
Robert G. Zack, Associate General Counsel of the Manager;
Senior Vice President Assistant Secretary of the OppenheimerFunds;
and Assistant Secretary Assistant Secretary of SSI, SFSI; an officer
of other OppenheimerFunds.
Eva A. Zeff, An officer of certain OppenheimerFunds;
Assistant Vice Presidentformerly a Securities
Analyst for the Manager.
Arthur J. Zimmer, Vice President and Portfolio Manager of
Vice President Centennial America Fund, L.P., Oppenheimer
Money Fund, Centennial Government Trust,
Centennial Money Market Trust and Daily Cash
Accumulation Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income Trust; Vice
President of Centennial; an officer of other
OppenheimerFunds.
The OppenheimerFunds include the New York-based OppenheimerFunds and
the Denver-based OppenheimerFunds set forth below:
New York-based OppenheimerFunds
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
C-13
<PAGE>
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Trust
Oppenheimer Fund
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based OppenheimerFunds
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion High Yield Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Strategic Investment Grade Bond Fund
Oppenheimer Strategic Short-Term Income Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
The address of Oppenheimer Management Corporation, the New York-based
OppenheimerFunds, Oppenheimer Funds Distributor, Inc., Harbourview Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-0203.
C-14
<PAGE>
The address of the Denver-based OppenheimerFunds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Shareholder
Services, Centennial Asset Management Corporation, Centennial Capital Corp., and
Main Street Advisers, Inc. is 3410 South Galena Street, Denver, Colorado 80231.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Oppenheimer Funds Distributor, Inc. is the Distributor of Registrant's
shares. It is also the Distributor of each of the other registered open-end
investment companies for which Oppenheimer Management Corporation is the
investment adviser, as described in Part A and B of this Registration Statement
and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal underwriter
are:
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
George Clarence Bowen+ Vice President & Treasurer Vice
President,
Secretary and
Treasurer
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
C-15
<PAGE>
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Mary Crooks+ Vice President None
Paul Della Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Vice President
President & Director
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
C-16
<PAGE>
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Wendy Fishler* Vice President- None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Michael Keogh* Vice President None
C-17
<PAGE>
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
C-18
<PAGE>
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
664 Circuit Road
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
C-19
<PAGE>
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
Paul Stickney Vice President None
1314 Log Cabin Lane
St. Louis, MO 63124
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
C-20
<PAGE>
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
Dave Thomas Vice President - None
3410 South Galena St. Financial Institution Div.
Executive Suites, 3rd Fl.
Denver, CO 80231
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
Bernard J. Wolocko Vice President None
33915 Grand River
Farmington, MI 48335
William Harvey Young+ Vice President None
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
rules promulgated thereunder are in the possession of both Oppenheimer
Management Corporation at its offices at 3410 South Galena Street, Denver,
Colorado 80231 and MassMutual at its offices at 1295 State Street, Springfield,
Massachusetts 01111.
C-21
<PAGE>
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Not Applicable.
(b) Not Applicable.
(c) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered, a copy of the Registrant's latest annual report to
shareholders upon request and without charge, if the information called for by
Item 5A of Form N-1A is contained in the latest annual report to shareholders.
C-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned thereto
duly authorized in the City of New York, and State of New York on the 29th
day of September, 1995.
QUEST FOR VALUE FUND, INC.
/s/ Joseph M. La Motta, President
---------------------------------------
Joseph M. La Motta, President
Attest:
/s/ Deborah Kaback, Secretary
- -------------------------------------
Deborah Kaback, Secretary
Pursuant to the requirements of the Securities Act of 1933 this
registration statement has been signed below by the following persons
in the capacities and on the date indicated:
QUEST FOR VALUE FUND, INC.
DATE
/s/ Joseph M. La Motta September 29, 1995
- --------------------------------------- -------------------
Joseph M. La Motta, President, Director
/s/ Paul Y. Clinton, September 29, 1995
- --------------------------------------- -------------------
Paul Y. Clinton, Director
/s/ Thomas W. Courtney September 29, 1995
- --------------------------------------- -------------------
Thomas W. Courtney, Director
/s/ Lacy B. Herrmann September 29, 1995
- --------------------------------------- -------------------
Lacy B. Herrmann, Director
/s/ George Loft September 29, 1995
- --------------------------------------- -------------------
George Loft, Director
/s/ Deborah Kaback September 29, 1995
- --------------------------------------- -------------------
Deborah Kaback, Secretary
/s/ Sheldon Siegel September 29, 1995
- --------------------------------------- -------------------
Sheldon Siegel, Treasurer
C-23
<PAGE>
QUEST FOR VALUE FUND, INC.
INDEX TO EXHIBITS
EXHIBIT NO.
5(a) Investment Advisory Agreement
5(b) Subadvisory Agreement
6(a) General Distributor's Agreement
6(b) Dealer Agreement
(11) Consent of Independent Accountants
(15)(a) Amended and Restated Distribution and Service Plan and Agreement in
respect of Class A shares
(15)(b) Amended and Restated Distribution and Service Plan and Agreement in
respect of Class B shares
(15)(c) Amended and Restated Distribution and Service Plan and Agreement with
respect to Class C shares.
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the ____ day of October, 1995, by and between
OPPENHEIMER/QUEST FOR VALUE FUND, INC., a Maryland corporation (hereinafter
referred to as the ("Company"), and OPPENHEIMER MANAGEMENT CORPORATION
(hereinafter referred to as "OMC").
WHEREAS, the Company is an open-end, diversified management investment
company registered as such with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "Investment
Company Act"), and OMC is an investment adviser registered as such with the
Commission under the Investment Advisors Act of 1940;
WHEREAS, the Company desires that OMC shall act as its investment adviser
with respect to each Series pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, it is agreed by and between the parties, as follows:
1. GENERAL PROVISIONS:
The Company hereby employs OMC and OMC hereby undertakes to act as the
investment adviser of the Company in connection with and for the benefit of each
Series, including any Series hereafter created and to perform for the Company
such other duties and functions in connection with each Series for the period
and on such terms as set forth in this Agreement. OMC shall, in all matters,
give to the Company and its Board of Directors (the "Directors") the benefit of
its best judgement, effort, advice and recommendations and shall, at all times
conform to, and use its best efforts to enable the Company to conform to (i) the
provisions of the Investment Company Act and any rules or regulations
thereunder; (ii) any
1
<PAGE>
other applicable provisions of state or Federal law; (iii) the provisions of the
Certificate of Incorporation and By-Laws of the Company as amended from time to
time; (iv) policies and determinations of the Directors; (v) the fundamental
policies and investment restrictions of each Series as reflected in the
registration statement of the Company under the Investment Company Act or as
such policies may, from time to time, be amended and (vi) the Prospectus and
Statement of Additional Information of each Series in effect from time to time.
The appropriate officers and employees of OMC shall be available upon reasonable
notice for consultation with any of the Directors and officers of the Company
with respect to any matters dealing with the business and affairs of the Company
including the valuation of portfolio securities of the Company which are either
not registered for public sale or not traded on any securities market.
2. INVESTMENT MANAGEMENT:
(a) OMC shall, subject to the direction and control by the Directors,
(i) regularly provide investment advise and recommendations to the Company with
respect to the investments, investment policies and the purchase and sale of
securities for each Series; (ii) supervise continuously the investment program
of each Series of the Company and the composition of its portfolio and determine
what securities shall be purchased or sold by; and(iii) arrange, subject to the
provisions of paragraph 7 hereof, for the purchase of securities and other
investments for each Series of the Company and the sale of securities and other
investments held in the portfolio of each Series.
(b) Provided that the Company shall not be required to pay any
compensation for services under this Agreement other than as provided by the
terms of the Agreement and subject to the provisions of paragraph 7 hereof, OMC
may obtain investment information,
2
<PAGE>
research or assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services including
entering into sub-advisory agreements with other affiliated or unaffiliated
registered investment advisors to obtain specialized services.
(c) Provided that nothing herein shall be deemed to protect OMC from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or reckless disregard of its obligations and duties under this
Agreement, OMC shall not be liable for any loss sustained by reason of good
faith errors or omissions in connection with any matters to which this Agreement
relates.
(d) Nothing in this Agreement shall prevent OMC or any entity
controlling, controlled by or under common control with OMC or any officer
thereof from acting as investment adviser for any other person, firm or
corporation or in any way limit or restrict OMC or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities for its or their own account or for the account of others for whom it
or they may be acting, provided that such activities will not adversely affect
or otherwise impair the performance by OMC of its duties and obligations under
this Agreement.
3. OTHER DUTIES OF OMC:
OMC shall, at its own expense, provide and supervise the activities of
all administrative and clerical personnel as shall be required to provide
effective corporate administration for the Company, including the compilation
and maintenance of such records with respect to its operations as may reasonably
be required; the preparation and filing of such reports with respect thereto as
shall be required by the Commission; composition of periodic reports with
respect to operations of each Series of the Company for its shareholders;
3
<PAGE>
composition of proxy materials for meetings of the Company's shareholders; and
the composition of such registration statements as may be required by Federal
and state securities laws for continuous public sale of Shares of each Series
and the Company. OMC shall, at its own cost and expense, also provide the
Company with adequate office space, facilities and equipment. OMC shall, at its
own expense, provide such officers for the Company as the Board of Directors may
request.
4. ALLOCATION OF EXPENSES:
All other costs and expenses of the Fund not expressly assumed by OMC
under this Agreement, or to be paid by the Distributor of the Shares of the
Fund, shall be paid by the Fund, including, but not limited to: (i) interest,
taxes and governmental fees; (ii) brokerage commissions and other expenses
incurred in acquiring or disposing of the portfolio securities and other
investments of each Series; (iii) insurance premiums for fidelity and other
coverage requisite to its operations; (iv) compensation and expenses of its
Directors other than those affiliated with OMC; (v) legal and audit expenses;
(vi) custodian and transfer agent fees and expenses; (vii) expenses incident to
the redemption of its Shares; (viii) expenses incident to the issuance of its
Shares against payment therefor by or on behalf of the subscribers thereto; (ix)
fees and expenses, other than as hereinabove provided, incident to the
registration under Federal and state securities laws of Shares of the Company
and Series for public sale; (x) expenses of printing and mailing reports,
notices and proxy materials to shareholders of the Company and each Series; (xi)
except as noted above, all other expenses incidental to holding meetings of the
Company's shareholders; and (xii) such extraordinary non-recurring expenses as
may arise, including litigation, affecting the Company or any Series thereof and
any legal obligation
4
<PAGE>
which the Company, or any Series of the Company, may have to indemnify its
officers and Directors with respect thereto. Any officers or employees of OMC
or any entity controlling, controlled by, or under common control with, OMC who
also serve as officers, Directors or employees of the Company shall not receive
any compensation from the Company or any Series thereof for their services.
5. COMPENSATION OF OMC:
The Company agrees to pay OMC and OMC agrees to accept as full
compensation for the performance of all functions and duties on its part to be
performed pursuant to the provisions hereof, a fee computed on the total net
asset value of each Series of the Company as of the close of each business day
and payable monthly at the annual rate for each Series set forth on Schedule A
hereto.
6. USE OF NAME "OPPENHEIMER" OR "QUEST FOR VALUE":
OMC hereby grants to the Company a royalty-free, non-exclusive license
to use the name "Oppenheimer" or "Quest For Value" in the name of the Company
for the duration of this Agreement and any extensions or renewals thereof. To
the extent necessary to protect OMC's rights to the name "Oppenheimer" or "Quest
For Value" under applicable law, such license shall allow OMC to inspect and,
subject to control by the Company's Board, control the nature and quality of
services offered by the Company under such name and may, upon termination of
this Agreement, be terminated by OMC, in which event the Company shall promptly
take whatever action may be necessary to change its name and discontinue any
further use of the name "Oppenheimer" or "Quest For Value" in the name of the
Company or otherwise. The name "Oppenheimer" and "Quest For Value" may be used
or licensed by OMC in connection with any of its activities, or licensed by OMC
to any other party.
5
<PAGE>
7. PORTFOLIO TRANSACTIONS AND BROKERAGE:
(a) OMC (and any Sub Advisor) is authorized, in arranging the
purchase and sale of the portfolio securities of each Series of the Company to
employ or deal with such members of securities or commodities exchanges, brokers
or dealers (hereinafter "broker-dealers"), including "affiliated" broker-dealers
(as that term is defined in the Investment Company Act), as may, in its best
judgment, implement the policy of the Fund to obtain, at reasonable expense, the
"best execution" (prompt and reliable execution at the most favorable security
price obtainable) of the portfolio transactions of each Series of the Company as
well as to obtain, consistent with the provisions of subparagraph (c) of this
paragraph 7, the benefit of such investment information or research as will be
of significant assistance to the performance by OMC of its investment management
functions.
(b) OMC (and any Sub Advisor) shall select broker-dealers to effect
the portfolio transactions of each Series of the Company on the basis of its
estimate of their ability to obtain best execution of particular and related
portfolio transactions. The abilities of a broker-dealer to obtain best
execution of particular portfolio transaction(s) will be judged by OMC (or any
Sub Advisor) on the basis of all relevant factors and considerations including,
insofar as feasible, the execution capabilities required by the transaction or
transactions; the ability and willingness of the broker-dealer to facilitate the
portfolio transactions of each Series of the Company by participating therein
for its own account; the importance to the Company of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with sources from or
to whom particular securities might be purchased or sold; as well as any other
matters relevant to the selection of a broker-dealer for particular and related
transactions of each Series of the Company.
6
<PAGE>
(c) OMC (and any Sub Advisor) shall have discretion, in the interest
of the Company and each Series, to allocate brokerage on the portfolio
transactions of each Series of the Company to broker-dealers, other than an
affiliated broker-dealers, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such services
are defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for the
Fund and/or other accounts for which OMC or its affiliates (or any Sub Advisor)
exercise "investment discretion" (as that term is defined in Section 3(a)(35) of
the Securities Exchange Act of 1934) and to cause the Company or a Series to
pay such broker-dealers a commission for effecting a portfolio transaction for
the Company or a Series that is in excess of the amount of commission another
broker-dealer adequately qualified to effect such transaction would have charged
for effecting that transaction, if OMC (or any Sub Advisor) determines, in good
faith, that such commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker-dealer viewed in
terms of either that particular transaction or the overall responsibilities of
OMC or its affiliates (or any Sub Advisor) with respect to accounts as to which
they exercise investment discretion. In reaching such determination, OMC (or
any Sub Advisor) will not be required to place or attempt to place a specific
dollar value on the brokerage and for research services provided or being
provided by such broker-dealer. In demonstrating that such determinations were
made in good faith, OMC (and any Sub Advisor) shall be prepared to show that all
commissions were allocated for purposes contemplated by this Agreement and that
the total commissions paid by the Company and each Series over a representative
period selected by the Company's Directors were reasonable in relation to the
benefits to the Company and each Series.
7
<PAGE>
(d) OMC (or any Sub Advisor) shall have no duty or obligation to
seek advance competitive bidding for the most favorable commission rate
applicable to any particular portfolio transactions or to select any broker-
dealer on the basis of its purported or "posted" commission rate but will, to
the best of its ability, endeavor to be aware of the current level of the
charges of eligible broker-dealers and to minimize the expense incurred by the
Company and each Series for effecting its portfolio transactions to the extent
consistent with the interests and policies of the Company and each Series as
established by the determinations of the Board of Directors of the Company and
the provisions of this paragraph 7.
(e) The Company recognizes that an affiliated broker-dealer: (i) may
act as one of the Company's regular brokers for the Company or a Series thereof
so long as it is lawful for it so to act; (ii) may be a major recipient of
brokerage commissions paid by the Company or a Series; and (iii) may effect
portfolio transactions for the Company or a Series thereof only if the
commissions, fees or other renumeration received or to be received by it are
determined in accordance with procedures contemplated by any rule, regulation or
order adopted under the Investment Company Act for determined the permissible
level of such commissions.
(f) Subject to the foregoing provisions of this paragraph 7, OMC
(and any Sub Advisor) may also consider sales of Shares of the Company, each
Series thereof and the other funds advised by OMC and its affiliates as a
factor in the selection of broker-dealers for its portfolio transactions.
8. DURATION:
This Agreement will take effect on the date first set forth above.
Unless earlier terminated pursuant to paragraph 10 hereof, this Agreement shall
remain in effect from year to year, so long as such continuance shall be
approved at least annually by the Company's
8
<PAGE>
Board of Directors, including the vote of the majority of the Directors of the
Company who are not parties to this Agreement or "interested persons" (as
defined in the Investment Company Act) of any such party, cast in person at a
meeting called for the purpose of voting on such approval, or by the holders of
a "majority" (as defined in the Investment Company Act) of the outstanding
voting securities of the Company, or each Series thereof, and by such a vote of
the Company's Board of Directors.
9. TERMINATION.
This Agreement may be terminated (i) by OMC at any time without
penalty upon sixty days' written notice to the Company (which notice may be
waived by the Company); or (ii) by the Company at any time without penalty upon
sixty days' written notice to OMC (which notice may be waived by OMC) provided
that such termination by the Company shall be directed or approved by the vote
of a majority of all of the Directors of the Company then in office or by the
vote of the holders of a "majority" of the outstanding voting securities of the
Company (as defined in the Investment Company Act).
10. ASSIGNMENT OR AMENDMENT:
This Agreement may not be amended or the rights of OMC hereunder sold,
transferred, pledged or otherwise in any manner encumbered without the
affirmative vote or written consent of the holders of the "majority" of the
outstanding voting securities of the Company. This Agreement shall
automatically and immediately terminate in the event of its "assignment," as
defined in the Investment Company Act.
11. DEFINITIONS:
9
<PAGE>
The terms and provisions of the Agreement shall be interpreted and
defined in a manner consistent with the provisions and definitions contained in
the Investment Company Act.
10
<PAGE>
OPPENHEIMER/QUEST FOR VALUE
FUND, INC.
Attest: By:
-------------------- ---------------------------
Title:
-------------------------
OPPENHEIMER MANAGEMENT
CORPORATION
Attest: By:
-------------------- ------------------------------
Katherine P. Feld Andrew J. Donohue
Secretary Executive Vice President
11
<PAGE>
SCHEDULE A
TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AND
OPPENHEIMER MANAGEMENT CORPORATION
- -------------------------------------------------------------------------------
NAME OF SERIES ANNUAL FEE AS A PERCENTAGE OF
DAILY TOTAL NET ASSETS
- -------------------------------------------------------------------------------
Oppenheimer/Quest For Value Fund, Inc. 1.00% of first $400 million of all
net assets
0.90% of next $400 million of all net
assets
0.85% of net assets over $800 million
- -------------------------------------------------------------------------------
12
<PAGE>
FORM OF
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management Corporation, a
Colorado corporation (the "Adviser"), and Advisors, a
Delaware general partnership (the "Subadviser"), as of the date set forth below.
RECITAL
WHEREAS, Oppenheimer/Quest For Value Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, diversified management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Adviser has entered into an Investment Advisory Agreement as
of the date hereof with the Fund (the "Investment Advisory Agreement"), pursuant
to which the Adviser shall act as investment adviser with respect to the Fund;
and
WHEREAS, pursuant to Paragraph ___ of the Investment Advisory Agreement,
the Adviser wishes to retain the Subadviser for purposes of rendering investment
advisory services to the Adviser in connection with the Fund upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which are hereby
acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER.
The Adviser hereby appoints the Subadviser to render, to the Adviser with
respect to the Fund, investment research and advisory services as set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Fund's Board of Directors (the "Board"), and the
Subadviser hereby accepts such appointment, all subject to the terms and
conditions contained herein. The Subadviser shall, for all purposes herein, be
deemed an independent contractor and shall not have, unless otherwise expressly
provided or authorized, any authority to act for or represent the Fund in any
way or otherwise to serve as or be deemed an agent of the Fund.
<PAGE>
II. DUTIES OF THE SUBADVISER AND THE ADVISER.
A. DUTIES OF THE SUBADVISER.
The Subadviser shall regularly provide investment advice with respect to
the Fund and shall, subject to the terms of this Agreement, continuously
supervise the investment and reinvestment of cash, securities and instruments or
other property comprising the assets of the Fund, and in furtherance thereof,
the Subadviser's duties shall include:
1. Obtaining and evaluating pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Fund, and whether concerning the individual issuers whose securities
are included in the Fund or the activities in which such issuers
engage, or with respect to securities which the Subadviser considers
desirable for inclusion in the Fund's investment portfolio;
2. Determining which securities shall be purchased, sold or
exchanged by the Fund or otherwise represented in the Fund's
investment portfolio and regularly reporting thereon to the Adviser
and, at the request of the Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and regularly
reporting thereon to the Adviser and, at the request of the Adviser,
to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program,
including the placing of purchase and sale orders, and making
appropriate reports thereon to the Adviser and the Board.
B. DUTIES OF THE ADVISER.
The Adviser shall retain responsibility for, among other things, providing
the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so
comply, the Adviser shall monitor the investment program
maintained by the Subadviser for the Fund to ensure that the
Fund's assets are invested in compliance with this Agreement and
the Fund's Registration Statement, as currently in effect from
time to time; and
-2-
<PAGE>
2. The Adviser shall oversee matters relating to Fund
promotion, including, but not limited to, marketing materials
and the Subadviser's reports to the Board.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBADVISER.
1. ORGANIZATION. The Subadviser is now, and will continue to be, a
general partnership duly formed and validly existing under the laws of
its jurisdiction of formation, fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. REGISTRATION. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the "SEC") under
the Advisers Act, and is registered or licensed as an investment
adviser under the laws of all jurisdictions in which its activities
require it to be so registered or licensed, except where the failure
to be so licensed would not have a material adverse effect on the
Subadviser. The Subadviser shall maintain such registration or
license in effect at all times during the term of this Agreement.
3. BEST EFFORTS. The Subadviser at all times shall provide its best
judgment and effort to the Adviser and the Fund in carrying out its
obligations hereunder.
4. OTHER COVENANTS. The Subadviser further agrees that:
a. it will use the same skill and care in providing such
services as it uses in providing services to other accounts
for which it has investment management responsibilities;
b. it will not make loans to any person to purchase or
carry shares of the Fund or make loans to the Fund;
c. it will report regularly to the Fund and to the Adviser
and will make appropriate persons available for the purpose
of reviewing with representatives of the Adviser on a
regular basis the management of the Fund, including, without
limitation, review of the general investment strategy of the
Fund, economic considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and regulations, it will
maintain books and records with respect to the Fund's
securities transactions and it will furnish to the Adviser
and to the Board such periodic and special reports as the
Adviser or the Board may reasonably request;
-3-
<PAGE>
e. it will treat confidentially and as proprietary
information of the Fund all records and other information
relative to the Fund, and will not use records and
information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Fund or when
so requested by the Fund or required by law or regulation;
f. it will, on a continuing basis and at its own expense,
(1) provide the distributor of the Fund (the "Distributor")
with assistance in the distribution and marketing of the
Fund in such amount and form as the Adviser may reasonably
request from time to time, and (2) use its best efforts to
cause the portfolio manager or other person who manages or
is responsible for overseeing the management of the Fund's
portfolio (the "Portfolio Manager") to provide marketing and
distribution assistance to the Distributor, including,
without limitation, conference calls, meetings and road
trips, provided that each Portfolio Manager shall not be
required to devote more than 10% of his or her time to such
marketing and distribution activities;
g. it will use its reasonable best efforts (i) to retain
the services of the Portfolio Manager who manages the
portfolio of the Fund, from time to time and (ii) to
promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the Portfolio
Manager are no longer available to the Subadviser;
h. it will, from time to time, assure that each Portfolio
Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser
prior to designating a new Portfolio Manager; provided,
however, that, if the services of a Portfolio Manager are no
longer available to the Subadviser due to circumstances
beyond the reasonable control of the Subadviser (e.g.,
voluntary resignation, death or disability), the Subadviser
may designate an interim Portfolio Manager who (a) shall be
reasonably acceptable to the Adviser and (b) shall function
for a reasonable period of time until the Subadviser
designates an acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending
change in Portfolio Manager, portfolio management or any
other material matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
-4-
<PAGE>
B. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ADVISER.
1. ORGANIZATION. The Adviser is now, and will continue to be, duly
organized and in good standing under the laws of its state of
incorporation, fully authorized to enter into this Agreement and carry
out its duties and obligations hereunder.
2. REGISTRATION. The Adviser is registered as an investment adviser
with the SEC under the Advisers Act, and is registered or licensed as
an investment adviser under the laws of all jurisdictions in which its
activities require it to be so registered or licensed. The Adviser
shall maintain such registration or license in effect at all times
during the term of this Agreement.
3. BEST EFFORTS. The Adviser at all times shall provide its best
judgment and effort to the Fund in carrying out its obligations
hereunder. For a period of five years from the date hereof, and
subject to the Adviser's fiduciary obligations to the Fund and its
shareholders, the Adviser will not recommend to the Board that the
Fund be reorganized into another Fund unless the total net assets of
the Fund are less than $100 million at the time of such
reorganization.
IV. COMPLIANCE WITH APPLICABLE REQUIREMENTS.
In carrying out its obligations under this Agreement, the Subadviser shall
at all times conform to:
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Fund, as the
same may be amended from time to time, under the Securities Act of
1933, as amended, and the 1940 Act;
C. the provisions of the Fund's Certificate of Incorporation or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Fund, as amended from time
to time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Fund or the Adviser from time to
time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions of B., C., D. and F. above when such changes or
amendments relate to the obligations of the Subadviser.
-5-
<PAGE>
V. CONTROL BY THE BOARD.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Adviser and the Board.
VI. BOOKS AND RECORDS.
The Subadviser agrees that all records which it maintains for the Fund on
behalf of the Adviser are the property of the Fund and further agrees to
surrender promptly to the Fund or to the Adviser any of such records upon
request. The Subadviser further agrees to preserve for the periods prescribed
by applicable laws, rules and regulations all records required to be maintained
by the Subadviser on behalf of the Adviser under such applicable laws, rules and
regulations, or such longer period as the Adviser may reasonably request from
time to time.
VII. BROKER-DEALER RELATIONSHIPS.
A. PORTFOLIO TRADES.
The Subadviser, at its own expense, and to the extent appropriate, in
consultation with the Adviser, shall place all orders for the purchase and sale
of portfolio securities for the Fund with brokers or dealers selected by the
Subadviser, which may include, to the extent permitted by the Adviser and the
Fund, brokers or dealers affiliated with the Subadviser. The Subadviser shall
use its best efforts to seek to execute portfolio transactions at prices that
are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
B. SELECTION OF BROKER-DEALERS.
With respect to the execution of particular transactions, the
Subadviser may, to the extent permitted by the Adviser and the Fund, select
brokers or dealers who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended) to the Fund and/or the other accounts over which the Subadviser or its
affiliates exercise investment discretion. The Subadviser is authorized to pay
a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund that is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if the Subadviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities that the Subadviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Adviser,
Subadviser and the Board shall periodically review the commissions paid by the
Fund to determine, among other things, if the commissions paid over
representative periods of time were reasonable in relation to the benefits
received.
-6-
<PAGE>
C. SOFT DOLLAR ARRANGEMENTS.
The Subadviser may enter into "soft dollar" arrangements through the
agency of third parties on behalf of the Adviser. Soft dollar arrangements for
services may be entered into in order to facilitate an improvement in
performance in respect of the Subadviser's service to the Adviser with respect
to the Fund. The Subadviser makes no direct payments but instead undertakes to
place business with broker-dealers who in turn pay third parties who provide
these services. Soft dollar transactions will be conducted on an arm's-length
basis, and the Subadviser will secure best execution for the Adviser. Any
arrangements involving soft dollars and/or brokerage services shall be effected
in compliance with Section 28(e) of the Securities Exchange Act of 1934, as
amended, and the policies that the Adviser and the Board may adopt from time to
time. The Subadviser agrees to provide reports to the Adviser as necessary for
purposes of providing information on these arrangements to the Board.
VIII. COMPENSATION.
A. AMOUNT OF COMPENSATION. The Adviser shall pay the Subadviser, as
compensation for services rendered hereunder, from its own assets, an
annual fee, payable monthly, equal to 40% of the investment advisory
fee collected by the Adviser from the Fund, based on the total net
assets of the Fund existing as of the date hereof (the "base amount"),
plus 30% of the advisory fee collected by the Adviser, based on the
total net assets of the Fund that exceed the base amount (the
"marginal amount"), in each case calculated after any waivers,
voluntary or otherwise.
B. CALCULATION OF COMPENSATION. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued on
the same basis as the advisory fee paid to the Adviser by the Fund.
If this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees set
forth above.
C. PAYMENT OF COMPENSATION: Subject to the provisions of this
paragraph, payment of the Subadviser's compensation for the preceding
month shall be made within 15 days after the end of the preceding
month.
-7-
<PAGE>
D. REORGANIZATION OF THE FUND. If the Fund is reorganized with
another investment company for which the Subadviser does not serve as
an investment adviser or subadviser, and the Fund is the surviving
entity, the subadvisory fee payable under this section shall be
adjusted in an appropriate manner as the parties may agree.
IX. ALLOCATION OF EXPENSES.
The Subadviser shall pay the expenses incurred in providing services in
connection with this Agreement, including, but not limited to, the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to the Fund hereunder, including, without
limitation, office space, office equipment, telephone and postage costs and
other expenses. In the event of an "assignment" of this Agreement, other than
an assignment resulting solely by action of the Adviser or an affiliate thereof,
the Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but not
limited to, reasonable legal, accounting, printing and mailing costs related to
obtaining approval of Fund shareholders.
X. NON-EXCLUSIVITY.
The services of the Subadviser with respect to the Fund are not to be
deemed to be exclusive, and the Subadviser shall be free to render investment
advisory and administrative or other services to others (including other
investment companies) and to engage in other activities, subject to the
provisions of a certain Agreement Not to Compete dated as of _______, 1995 among
the Adviser, Oppenheimer Capital, the Subadviser and Quest For Value
Distributors (the "Agreement Not to Compete"). It is understood and agreed
that officers or directors of the Subadviser may serve as officers or directors
of the Adviser or of the Fund; that officers or directors of the Adviser or of
the Fund may serve as officers or directors of the Subadviser to the extent
permitted by law; and that the officers and directors of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors
or trustees of any other firm or trust, including other investment advisory
companies (subject to the provisions of the Agreement Not to Compete), provided
it is permitted by applicable law and does not adversely affect the Fund.
XI. TERM.
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect, subject to Paragraphs XII.A and
XII.B hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XII. RENEWAL.
Following the expiration of its initial two-year term, the Agreement shall
continue in full force and effect from year to year for a period of eight
years, provided that such continuance is specifically approved:
-8-
<PAGE>
A. at least annually (1) by the Board or by the vote of a majority
of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), and (2) by the affirmative vote of a
majority of the directors who are not parties to this Agreement or
interested persons of a party to this Agreement (other than as a
director of the Fund), by votes cast in person at a meeting
specifically called for such purpose; or
B. by such method required by applicable law, rule or regulation
then in effect.
XIII. TERMINATION.
A. TERMINATION BY THE FUND. This Agreement may be terminated at any
time, without the payment of any penalty, by vote of the Board or by
vote of a majority of the Fund's outstanding voting securities, on
sixty (60) days' written notice. The notice provided for herein may
be waived by the party required to be notified.
B. ASSIGNMENT. This Agreement shall automatically terminate in the
event of its "assignment," as defined in Section 2 (a) (4) of the 1940
Act. In the event of an assignment that occurs solely due to the
change in control of the Subadviser (provided that no condition exists
that permits, or, upon the consummation of the assignment, will
permit, the termination of this Agreement by the Adviser pursuant to
Section XIII. D. hereof), the Adviser and the Subadviser, at the sole
expense of the Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory Agreement on
substantially the same terms as contained in this Agreement.
C. PAYMENT OF FEES AFTER TERMINATION. Notwithstanding the
termination of this Agreement prior to the tenth anniversary of the
date hereof, the Adviser shall continue to pay to the Subadviser the
subadvisory fee for the term of this Agreement and any renewals
thereof through such tenth anniversary, if: (1) the Adviser or the
Fund terminates this Agreement for a reason other than the reasons set
forth in Section XIII.D. hereof, provided the Investment Advisory
Agreement remains in effect; (2) the Fund reorganizes with another
investment company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as an investment
adviser or subadviser and such other investment company is the
surviving entity; or (3) the Investment Advisory Agreement terminates
(i) by reason of an "assignment;" (ii) because the Adviser is
disqualified from serving as an investment adviser; or (iii) by reason
of a voluntary termination by the Adviser; provided that the
Subadviser does not serve as the investment adviser or subadviser of
the Fund after such termination of the Investment Advisory Agreement.
The amount of the subadvisory fee paid pursuant to this section shall
be calculated on the basis of the Fund's net assets measured at the
time of such termination or such reorganization. Notwithstanding
anything to the contrary, if the Subadviser terminates this Agreement
or if this Agreement is terminated by operation of law, due solely to
an act or omission by the Subadviser, Oppenheimer Capital ("OpCap") or
their respective partners, subsidiaries,
-9-
<PAGE>
directors, officers, employees or agents (other than by reason of
an "assignment"of this Agreement), then the Adviser shall not be
liable for any further payments under this Agreement, provided,
however, that if at any time prior to the end of the term of the
Agreement Not to Compete any event that would have permitted the
termination of this Agreement by the Adviser pursuant to Section
XIII. D. (3) hereof occurs, the Adviser shall be under no further
obligation to pay any subadvisory fees.
D. TERMINATION BY THE ADVISER. The Adviser may terminate this
Agreement without penalty and without the payment of any fee or
penalty, immediately after giving written notice, upon the occurrence
of any of the following events:
1. The Fund's investment performance of the Fund's Class A
shares compared to the appropriate universe of Class A shares (or
their equivalent), as set forth on Schedule D-1, as amended from
time to time, ranks in the bottom quartile for two consecutive
calendar years (beginning with the calendar year 1995) and earns
a Morningstar three-year rating of less than three (3) stars at
the time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents engages in an action or omits to take an action that would
cause the Subadviser or OpCap to be disqualified in any manner
under Section 9(a) of the 1940 Act, if the SEC were not to grant
an exemptive order under Section 9(c) thereof or that would
constitute grounds for the SEC to deny, revoke or suspend the
registration of the Subadviser as an investment adviser with the
SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees or
agents causes a material violation of the Agreement Not to
Compete which is not cured in accordance with the provisions of
that agreement; or
4. The Subadviser breaches the representations contained in
Paragraph III.A.4.i. of this Agreement or any other material
provision of this Agreement, and any such breach is not cured
within a reasonable period of time after notice thereof from the
Adviser to the Subadviser. However, consistent with its
fiduciary obligations, for a period of seven months the Adviser
will not terminate this Agreement solely because the Subadviser
has failed to designate an acceptable permanent replacement to a
Portfolio Manager whose services are no longer available to the
Subadviser due to circumstances beyond the reasonable control of
the Subadviser, provided that the Subadviser uses its reasonable
best efforts to promptly obtain the services of a Portfolio
Manager acceptable to the Adviser and further provided that the
Adviser has not unreasonably withheld approval of such
replacement Portfolio Manager.
-10-
<PAGE>
E. TRANSACTIONS IN PROGRESS UPON TERMINATION. The Adviser and
Subadviser will cooperate with each other to ensure that portfolio or
other transactions in progress at the date of termination of this
Agreement shall be completed by the Adviser in accordance with the
terms of such transactions, and to this end the Subadviser shall
provide the Adviser with all necessary information and documentation
to secure the implementation thereof.
XIV. NON-SOLICITATION.
During the term of this Agreement, the Adviser (and its affiliates under
its control) shall not solicit or knowingly assist in the solicitation of any
Portfolio Manager of the Fund or any portfolio assistant of the Fund then
employed by the Subadviser or OpCap, provided, however, that the Adviser (or its
affiliates) may solicit or hire any such individual who (A) the Subadviser or
OpCap (or its affiliates) has terminated or (B) has voluntarily terminated his
or her employment with the Subadviser, OpCap (or its affiliates) without
inducement of the Adviser (or its affiliates under its control) prior to the
time of such solicitation. Advertising in general circulation newspapers or
industry newsletters by the Adviser shall not constitute "inducement" by the
Adviser (or its affiliates under its control).
XV. LIABILITY OF THE SUBADVISER.
In the absence of willful misfeasance, bad faith, negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser or
any of its officers, directors or employees, the Subadviser shall not be subject
to liability to the Adviser for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security; PROVIDED, HOWEVER,
that the foregoing shall not be construed to relieve the Subadviser of any
liability it may have arising under the Agreement Not to Compete or the
Acquisition Agreement dated August 15, 1995, among the Subadviser, the Adviser
and certain affiliates of the Subadviser.
XVI. NOTICES.
Any notice or other communication required or that may be given hereunder
shall be in writing and shall be delivered personally, telecopied, sent by
certified, registered or express mail, postage prepaid or sent by national next-
day delivery service and shall be deemed given when so delivered personally or
telecopied, or if mailed, two days after the date of mailing, or if by next-day
delivery service, on the business day following delivery thereto, as follows or
to such other location as any party notifies any other party:
-11-
<PAGE>
A. if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York (without regard to any conflicts of law principles thereof). Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
XVIII. FORM ADV - DELIVERY.
The Adviser hereby acknowledges that it has received from the Subadviser a
copy of the Subadviser's Form ADV, Part II as currently filed, at least 48 hours
prior to entering into this Agreement and that it has read and understood the
disclosures set forth in the Subadviser's Form ADV, Part II.
XIX. MISCELLANEOUS.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule
-12-
<PAGE>
or otherwise, the remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors.
XX. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall
constitute an original and both of which, collectively, shall constitute one
agreement.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the _____ day of
October, 1995.
OPPENHEIMER MANAGEMENT CORPORATION
By:___________________________________
Name: Andrew J. Donohue
Title: Executive Vice President
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.
a general partner
By:____________________________________
Name:
Title:
-14-
<PAGE>
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
QUEST FOR VALUE FUND, INC
AND
OPPENHEIMER FUND MANAGEMENT, INC.
Date:
OPPENHEIMER FUND MANAGEMENT, INC.
Two World Trade Center, Suite 3400
New York, NY 10048
Dear Sirs:
QUEST FOR VALUE FUND, INC., a Maryland corporation (the "Fund"), is
registered as an investment company under the Investment Company Act of 1940
(the "1940 Act"), and an indefinite number of one or more classes of its shares
of beneficial interest ("Shares") have been registered under the Securities Act
of 1933 (the "1933 Act") to be offered for sale to the public in a continuous
public offering in accordance with the terms and conditions set forth in the
Prospectus and Statement of Additional Information ("SAI") included in the
Fund's Registration Statement as it may be amended from time to time (the
"current Prospectus and/or SAI").
In this connection, the Fund desires that your firm (the "General
Distributor") act in a principal capacity as General Distributor for the sale
and distribution of Shares which have been registered as described above and of
any additional Shares which may become registered during the term of this
Agreement. You have advised the Fund that you are willing to act as such
General Distributor, and it is accordingly agreed by and between us as follows:
1. APPOINTMENT OF THE DISTRIBUTOR. The Fund hereby appoints you as the
sole General Distributor, pursuant to the aforesaid continuous public offering
of its Shares, and the Fund further agrees from and after the date of this
Agreement, that it will not, without your consent, sell or agree to sell any
Shares otherwise than through you, except (a) the Fund may itself sell shares
without sales charge as an investment to the officers, trustees or directors and
bona fide present and former full-time employees of the Fund, the Fund's
Investment Adviser and affiliates thereof, and to other investors who are
identified in the current Prospectus and/or SAI as having the privilege to buy
Shares at net asset value; (b) the Fund may issue shares in connection with a
merger, consolidation or acquisition of assets on such basis as may be
authorized or permitted under the 1940 Act; (c) the Fund may issue shares for
the reinvestment of dividends and other distributions of the Fund or of any
other Fund if permitted by the current Prospectus and/or SAI; and (d) the Fund
may issue shares as underlying securities of a unit investment trust if such
unit investment trust has elected to use Shares as an underlying investment;
-1-
<PAGE>
provided that in no event as to any of the foregoing exceptions shall Shares be
issued and sold at less than the then-existing net asset value.
2. SALE OF SHARES. You hereby accept such appointment and agree to use
your best efforts to sell Shares, provided, however, that when requested by the
Fund at any time because of market or other economic considerations or abnormal
circumstances of any kind, or when agreed to by mutual consent of the Fund and
the General Distributor, you will suspend such efforts. The Fund may also
withdraw the offering of Shares at any time when required by the provisions of
any statute, order, rule or regulation of any governmental body having
jurisdiction. It is understood that you do not undertake to sell all or any
specific number of Shares.
3. SALES CHARGE. Shares shall be sold by you at net asset value plus a
front-end sales charge not in excess of 8.5% of the offering price, but which
front-end sales charge shall be proportionately reduced or eliminated for larger
sales and under other circumstances, in each case on the basis set forth in the
current Prospectus and/or SAI. The redemption proceeds of shares offered and
sold at net asset value with or without a front-end sales charge may be subject
to a contingent deferred sales charge ("CDSC") under the circumstances described
in the current Prospectus and\or SAI. You may reallow such portion of the
front-end sales charge to dealers or cause payment (which may exceed the front-
end sales charge, if any) of commissions to brokers through which sales are
made, as you may determine, and you may pay such amounts to dealers and brokers
on sales of shares from your own resources (such dealers and brokers shall
collectively include all domestic or foreign institutions eligible to offer and
sell the Shares), and in the event the Fund has more than one class of Shares
outstanding, then you may impose a front-end sales charge and/or a CDSC on
Shares of one class that is different from the charges imposed on Shares of the
Fund's other class(es), in each case as set forth in the current Prospectus
and/or SAI, provided the front-end sales charge and CDSC to the ultimate
purchaser do not exceed the respective levels set forth for such category of
purchaser in the current Prospectus and/or SAI.
4. PURCHASE OF SHARES.
(a) As General Distributor, you shall have the right to accept or
reject orders for the purchase of Shares at your discretion. Any
consideration which you may receive in connection with a rejected
purchase order will be returned promptly.
(b) You agree promptly to issue or to cause the duly appointed
transfer or shareholder servicing agent of the Fund to issue as
your agent confirmations of all accepted purchase orders and to
transmit a copy of such confirmations to the Fund. The net asset
value of all Shares which are the subject of such confirmations,
computed in accordance with the applicable rules under the 1940
Act, shall be a liability of the General Distributor to the Fund
to be paid promptly after receipt of payment from the originating
dealer or broker (or investor, in the case of direct purchases)
and not later than eleven business days after such confirmation
even if you have not actually received payment from the
originating dealer or broker, or investor. In no event shall the
General Distributor make payment to the Fund later than permitted
by applicable rules of the National Association of Securities
Dealers, Inc.
-2-
<PAGE>
(c) If the originating dealer or broker shall fail to make timely
settlement of its purchase order in accordance with applicable
rules of the National Association of Securities Dealers, Inc., or
if a direct purchaser shall fail to make good payment for shares
in a timely manner, you shall have the right to cancel such
purchase order and, at your account and risk, to hold responsible
the originating dealer or broker, or investor. You agree
promptly to reimburse the Fund for losses suffered by it that
are attributable to any such cancellation, or to errors on your
part in relation to the effective date of accepted purchase
orders, limited to the amount that such losses exceed
contemporaneous gains realized by the Fund for either of such
reasons with respect to other purchase orders.
(d) In the case of a canceled purchase for the account of a directly
purchasing shareholder, the Fund agrees that if such investor
fails to make you whole for any loss you pay to the Fund on such
canceled purchase order, the Fund will reimburse you for such
loss to the extent of the aggregate redemption proceeds of any
other shares of the Fund owned by such investor, on your demand
that the Fund exercise its right to claim such redemption
proceeds. The Fund shall register or cause to be registered all
Shares sold to you pursuant to the provisions hereof in such
names and amounts as you may request from time to time and the
Fund shall issue or cause to be issued certificates evidencing
such Shares for delivery to you or pursuant to your direction if
and to the extent that the shareholder account in question
contemplates the issuance of such certificates. All Shares, when
so issued and paid for, shall be fully paid and non-assessable by
the Fund (which shall not prevent the imposition of any CDSC that
may apply) to the extent set forth in the current Prospectus
and/or SAI.
5. REPURCHASE OF SHARES.
(a) In connection with the repurchase of Shares, you are appointed
and shall act as Agent of the Fund. You are authorized, for so
long as you act as General Distributor of the Fund, to
repurchase, from authorized dealers, certificated or
uncertificated shares of the Fund ("Shares") on the basis of
orders received from each dealer ("authorized dealer") with which
you have a dealer agreement for the sale of Shares and permitting
resales of Shares to you, provided that such authorized dealer,
at the time of placing such resale order, shall represent (i) if
such Shares are represented by certificate(s), that
certificate(s) for the Shares to be repurchased have been
delivered to it by the registered owner with a request for the
redemption of such Shares executed in the manner and with the
signature guarantee required by the then-currently effective
prospectus of the Fund, or (ii) if such Shares are
uncertificated, that the registered owner(s) has delivered to the
dealer a request for the redemption of such Shares executed in
the manner and with the signature guarantee required by the then-
currently effective prospectus of the Fund.
(b) You shall (a) have the right in your discretion to accept or
reject orders for the repurchase of Shares; (b) promptly transmit
confirmations of all accepted repurchase orders; and (c)
transmit a copy of such confirmation to the Fund, or, if
-3-
<PAGE>
so directed, to any duly appointed transfer or shareholder
servicing agent of the Fund. In your discretion, you may accept
repurchase requests made by a financially responsible dealer
which provides you with indemnification in form satisfactory to
you in consideration of your acceptance of such dealer's request
in lieu of the written redemption request of the owner of the
account; you agree that the Fund shall be a third party
beneficiary of such indemnification.
(c) Upon receipt by the Fund or its duly appointed transfer or
shareholder servicing agent of any certificate(s) (if any has
been issued) for repurchased Shares and a written redemption
request of the registered owner(s) of such Shares executed in the
manner and bearing the signature guarantee required by the then-
currently effective Prospectus or SAI of the Fund, the Fund will
pay or cause its duly appointed transfer or shareholder servicing
agent promptly to pay to the originating authorized dealer the
redemption price of the repurchased Shares (other than
repurchased Shares subject to the provisions of part (d) of
Section 5 of this Agreement) next determined after your receipt
of the dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of Section 5 of this
Agreement, repurchase orders received from an authorized dealer
after the determination of the Fund's redemption price on a
regular business day will receive that day's redemption price if
the request to the dealer by its customer to arrange such
repurchase prior to the determination of the Fund's redemption
price that day complies with the requirements governing such
requests as stated in the current Prospectus and/or SAI.
(e) You will make every reasonable effort and take all reasonably
available measures to assure the accurate performance of all
services to be performed by you hereunder within the requirements
of any statute, rule or regulation pertaining to the redemption
of shares of a regulated investment company and any requirements
set forth in the then-current Prospectus and/or SAI of the Fund.
You shall correct any error or omission made by you in the
performance of your duties hereunder of which you shall have
received notice in writing and any necessary substantiating data;
and you shall hold the Fund harmless from the effect of any
errors or omissions which might cause an over- or under-
redemption of the Fund's Shares and/or an excess or non-payment
of dividends, capital gains distributions, or other
distributions.
(f) In the event an authorized dealer initiating a repurchase order
shall fail to make delivery or otherwise settle such order in
accordance with the rules of the National Association of
Securities Dealers, Inc., you shall have the right to cancel such
repurchase order and, at your account and risk, to hold
responsible the originating dealer. In the event that any
cancellation of a Share repurchase order or any error in the
timing of the acceptance of a Share repurchase order shall result
in a gain or loss to the Fund, you agree promptly to reimburse
the Fund for any amount by which any losses shall exceed then-
existing gains so arising.
-4-
<PAGE>
6. 1933 ACT REGISTRATION. The Fund has delivered to you a copy of its
current Prospectus and SAI. The Fund agrees that it will use its best efforts
to continue the effectiveness of the Registration Statement under the 1933 Act.
The Fund further agrees to prepare and file any amendments to its Registration
Statement as may be necessary and any supplemental data in order to comply with
the 1933 Act. The Fund will furnish you at your expense with a reasonable
number of copies of the Prospectus and SAI and any amendments thereto for use in
connection with the sale of Shares.
7. 1940 ACT REGISTRATION. The Fund has already registered under the 1940
Act as an investment company, and it will use its best efforts to maintain such
registration and to comply with the requirements of the 1940 Act.
8. STATE BLUE SKY QUALIFICATION. At your request, the Fund will take
such steps as may be necessary and feasible to qualify Shares for sale in
states, territories or dependencies of the United States, the District of
Columbia, the Commonwealth of Puerto Rico and in foreign countries, in
accordance with the laws thereof, and to renew or extend any such qualification;
provided, however, that the Fund shall not be required to qualify shares or to
maintain the qualification of shares in any jurisdiction where it shall deem
such qualification disadvantageous to the Fund.
9. DUTIES OF DISTRIBUTOR. You agree that:
(a) Neither you nor any of your officers will take any long or short
position in the Shares, but this provision shall not prevent you
or your officers from acquiring Shares for investment purposes
only;
(b) You shall furnish to the Fund any pertinent information required
to be inserted with respect to you as General Distributor within
the purview of the Securities Act of 1933 in any reports or
registration required to be filed with any governmental
authority; and
(c) You will not make any representations inconsistent with the
information contained in the current Prospectus and/or SAI.
(d) You shall maintain such records as may be reasonably required for
the Fund or its transfer or shareholder servicing agent to
respond to shareholder requests or complaints, and to permit the
Fund to maintain proper accounting records, and you shall make
such records available to the Fund and its transfer agent or
shareholder servicing agent upon request.
(e) In performing under this Agreement, you shall comply with all
requirements of the Fund's current Prospectus and/or SAI and all
applicable laws, rules and regulations with respect to the
purchase, sale and distribution of Shares.
10. ALLOCATION OF COSTS. The Fund shall pay the cost of composition and
printing of sufficient copies of its Prospectus and SAI as shall be required for
periodic distribution to its shareholders and the expense of registering Shares
for sale under federal securities laws. You shall pay the expenses normally
attributable to the sale of Shares, other than as paid under the Fund's
-5-
<PAGE>
Distribution Plan under Rule 12b-1 of the 1940 Act, including the cost of
printing and mailing of the Prospectus (other than those furnished to existing
shareholders) and any sales literature used by you in the public sale of the
Shares and for registering such shares under state blue sky laws pursuant to
paragraph 8.
11. DURATION. This Agreement shall take effect on the date first written
above, and shall supersede any and all prior General Distributor's Agreements by
and among the Fund and you. Unless earlier terminated pursuant to paragraph 12
hereof, this Agreement shall remain in effect until September 30, 1994. This
Agreement shall continue in effect from year to year thereafter, provided that
such continuance shall be specifically approved at least annually: (a) by the
Fund's Board of Trustees or by vote of a majority of the voting securities of
the Fund; and (b) by the vote of a majority of the Trustees, who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of any
such person, cast in person at a meeting called for the purpose of voting on
such approval.
12. TERMINATION. This Agreement may be terminated (a) by the General
Distributor at any time without penalty by giving sixty days' written notice
(which notice may be waived by the Fund); (b) by the Fund at any time without
penalty upon sixty days' written notice to the General Distributor (which notice
may be waived by the General Distributor); or (c) by mutual consent of the Fund
and the General Distributor, provided that such termination by the Fund shall be
directed or approved by the Board of Trustees of the Fund or by the vote of the
holders of a majority of the outstanding voting securities of the Fund. In the
event this Agreement is terminated by the Fund, the General Distributor shall be
entitled to be paid the CDSC under paragraph 3 hereof on the redemption proceeds
of Shares sold prior to the effective date of such termination.
13. ASSIGNMENT. This Agreement may not be amended or changed except in
writing and shall be binding upon and shall enure to the benefit of the parties
hereto and their respective successors; however, this Agreement shall not be
assigned by either party and shall automatically terminate upon assignment.
14. DISCLAIMER OF SHAREHOLDER LIABILITY. The General Distributor
understands and agrees that the obligations of the Fund under this Agreement are
not binding upon any Trustee or shareholder of the Fund personally, but bind
only the Fund and the Fund's property; the General Distributor represents that
it has notice of the provisions of the Declaration of Trust of the Fund
disclaiming shareholder liability for acts or obligations of the Fund.
15. SECTION HEADINGS. The headings of each section is for descriptive
purposes only, and such headings are not to be construed or interpreted as part
of this Agreement.
-6-
<PAGE>
If the foregoing is in accordance with your understanding, so indicate by
signing in the space provided below.
QUEST FOR VALUE FUND, INC.
By:
------------------------------
Accepted:
OPPENHEIMER FUND MANAGEMENT, INC.
By:
--------------------------------
-7-
<PAGE>
OPPENHEIMERFUNDS
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
P.O. BOX 5270
DENVER, CO 80217-5270
From: DEALER AGREEMENT
FOR THE OPPENHEIMERFUNDS
To: OPPENHEIMER FUNDS DISTRIBUTOR, INC.
P.O. BOX 5270
DENVER, CO 80217-5270
Gentlemen:
We desire to enter into an agreement with you whereby we will act as
principal for the sale, distribution and resale of the shares of each of the
open-end investment companies of which you are, or may become, Distributor or
Sub-Distributor (hereinafter collectively referred to as the "Funds" and
individually as a "Fund") and whose shares are offered to the public at an
offering price which may or may not include a sales charge (hereinafter referred
to as "Shares"). Upon acceptance of this Agreement by you, we understand that we
may offer and sell Shares, subject, however, to all of the following terms and
conditions and to your right, without notice, to suspend or terminate the sale
of the Shares of any one or more of the Funds; and
1. Shares will be offered and sold at the current offering price in effect
at the time the order for such Shares is confirmed and accepted by you at your
office in Denver, Colorado. All purchase orders, resale orders and applications
submitted by us are subject to acceptance or rejection in your sole discretion
and, if accepted, each purchase or resale order will be deemed to have been
consummated at your office in Denver, Colorado.
2. We represent and warrant to you: (a) that we are a member of the
National Association of Securities Dealers, Inc. ("NASD"), that such membership
has not been suspended, and that we agree to maintain membership in the NASD, or
(b) in the alternative, that we are a foreign dealer not eligible for membership
in the NASD, and are fully licensed and legally empowered to act as a securities
broker-dealer under the laws of each jurisdiction in which we conduct such
business. In either case, we agree to abide by the provisions of the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and all the rules
and regulations of the Securities and Exchange Commission and the NASD which are
binding upon underwriters and dealers in the distribution of the securities of
open-end investment companies, including without limitation, the NASD Rules of
Fair Practice.
<PAGE>
We further agree to comply with all other state and Federal laws and the rules
and regulations of authorized regulatory agencies applicable to the sale of
Shares. We agree that we will not sell or offer for sale Shares in any state or
other jurisdiction where they have not been qualified for sale or if you have
not advised us in advance that such sale is exempt from such qualification
requirements. We are responsible under this Agreement for inquiring of you as
to the jurisdictions in which such Shares have been qualified for sale.
3. We will offer and sell Shares of any Fund only in accordance with the
terms and conditions of its then current Prospectus and Statement of Additional
Information (collectively referred to as the "Prospectus") and we will make no
representations about such Shares not included in said Prospectus or in any
authorized supplemental material supplied or authorized by you. We will not use
any other offering materials for the Funds without your written consent. We
will use our best efforts in the development and promotion of sales of Shares
and agree to be responsible for the proper instruction and training of all sales
personnel employed by us, in order that the Shares will be offered and sold in
accordance with the terms and conditions of this Agreement and all applicable
laws, rules and regulations. We agree to hold harmless and indemnify you, the
Funds, and your and their respective officers, directors, trustees and employees
in the event that we, or any of our current or former representatives, should
violate any law, rule or regulation, or any provisions of this Agreement, which
violation may result in any loss or liability to you, your affiliates or any
Fund. If you determine to refund any amounts paid by any investor by reason of
any such violation on our part, we shall promptly return to you on demand any
commissions previously paid or discounts allowed by you to us with respect to
the transaction for which the refund is made. Furthermore, we agree to
indemnify you, your affiliates and the Funds against any and all claims,
demands, controversies, actions, losses, damages, liabilities, expenses,
arbitrations, complaints or investigations, including without limitation,
reasonable attorneys' fees and court costs that are the result of or arise
directly or indirectly, in whole or in part, from you, your affiliates or the
Funds acting upon instructions for the purchase, exchange or resale of
uncertificated book shares received through your manual or automated phone
system or the Fund/SERV program of National Securities Clearing Corporation;
provided such loss, liability or damages are not the result of the gross
negligence, recklessness or intentional misconduct of you, your affiliates or
the Funds. All expenses which we incur in connection with our activities under
this Agreement shall be borne by us. Termination or cancellation of this
Agreement shall not relieve us from the requirements of this paragraph as to
transactions or occurrences arising prior to such termination.
4. Any applicable sales charge and dealer commission relative to any sales
of Shares made by us will only be at a rate or rates set forth in the then
current Prospectus of such Fund. In the event the Prospectus or Statement of
Additional Information provides for a minimum holding period in order for us to
receive an agency commission, asset-based sales charge, service fee or other
payment and Shares relating to that payment are redeemed prior to the
termination of that holding period, we are obligated to repay you a pro rata
portion of such payment, based on the ratio of (i) the difference in the period
of time such Shares were held and the minimum holding period to (ii) the holding
period. You may recoup some or all of such amounts from and to the extent there
are any other commissions or payments due and owing from you to us at any time,
provided, however, that you are not obligated to accept repayment only out of
such other commissions or payments and may demand payment directly from us at
any time until such amounts are repaid in full. To secure our obligation to
repay such payments, we hereby grant you, and you shall have, a security
interest in any and all commissions and other payments due us under this
Agreement or under any Distribution and Service Plan and Agreement for any of
the Funds.
<PAGE>
5. The rate(s) of any commission for sales of such Shares are subject to
change by you from time to time, and any decreases in such commissions shall be
made upon 30 days' written notice, and any orders placed after the effective
date of such change, will be subject to the rate(s) in effect at the time of
receipt of the payment by you. Such notice requirement shall not apply to any
changes in the asset-based sales charges or service fees paid for such shares.
6. Payments for the purchase of Shares made by us by telephone or wire
order (including purchase orders received through your manual or automated phone
system, or via the Fund/SERV program of National Securities Clearing
Corporation), and all necessary account information required by you to establish
an account or to settle a resale order, including, without limitation, the tax
identification number of the purchaser, certified either by the purchaser or by
us, shall be provided to you and received by you within three business days
after your acceptance of our order or such shorter time as may be required by
law. If such payment or other settlement information are not timely received by
you, we understand that you reserve the right, without notice, to cancel the
purchase or resale order, or, at your option in the case of a purchase order, to
sell the Shares ordered by us back to the Fund, and in either case we shall
promptly reimburse you for any loss to you or the Fund, including without
limitation loss of your profit, suffered by you resulting from our failure to
make the aforesaid timely payment or settlement. If sales of any Fund's Shares
are contingent upon the Fund's receipt of Federal Funds in payment therefor, we
will forward promptly to you any purchase orders and/or payments received by us
for such Shares from our customers. With respect to purchase orders of
uncertificated book shares placed via Fund/SERV, we shall retain in our files
all applications and other documents required by you to establish an account or
to settle a resale order. We will provide you with the original of such
documents at your request.
7. We agree to purchase Shares only from you or from our customers. If we
purchase Shares from you, we agree that all such purchases shall be made only
to cover orders received by us from our customers, or for our own bona fide
investment. If we purchase Shares from our customers, we agree to pay such
customers not less than the applicable redemption or repurchase price then
quoted by the Fund.
8. You may consider any order we place for Fund shares to be the total
holding of Shares by the investor, and you may assume that the investor is not
entitled to any reduction in sales price beyond that accorded to the amount of
that purchase order as determined by the schedule set forth in the then current
Prospectus, unless we advise you otherwise when we place the order.
9. We may place resale orders with you for Shares owned by our customers,
but only in accordance with the terms of the applicable Fund Prospectus. We
understand and agree that by placing a resale order with you by wire or
telephone (including resale orders for uncertificated book shares placed via
your manual or automated phone system or via the Fund/SERV program of National
Securities Clearing Corporation) we represent to you that a request for the
redemption of the shares covered by the resale order has been delivered to us by
the registered owner(s) of such shares, and that such request has been executed
in the manner and with the signature(s) of such registered owner(s) guaranteed
as required by the then-current Prospectus of the applicable Fund. Such resale
orders shall be subject to the following additional conditions:
(a) We shall furnish you with the exact registration, account number
and Class of
<PAGE>
Shares to be redeemed at the time we place a resale order by wire or
telephone. Other than for resale orders of uncertificated book shares
placed via Fund/SERV, we shall tender to you, within three business
days of our placing such resale order: (i) a stock power or letter,
duly signed by the registered owner(s) of the Shares which are the
subject of the order, duly guaranteed, (ii) any Share certificates
required for such redemption, and (iii) any additional documents which
may be required by the applicable Fund or its transfer agent, in
accordance with the terms of the then-current Prospectus of the
applicable Fund and the policies of the transfer agent. With respect
to resale orders of uncertificated book shares placed via Fund/SERV,
we shall retain in our files all documents required by you to effect
such transaction. We will provide you with the original of such
documents at your request.
(b) The resale price will be the next net asset value per share of
the Shares computed after your receipt, prior to the close of the New
York Stock Exchange ("NYSE"), of an order placed by us to resell such
Shares, except that orders placed by us after the close of the NYSE on
a business day will be based on the Fund's net asset value per share
determined that day, but only if such orders were received by us from
our customer prior to the close of business of the NYSE that day and
if we placed our resale order with you prior to your normal close of
business that day.
(c) In connection with a resale order we have placed, if we fail to
make delivery of all required certificates and documents in a timely
manner as stated above (other than for resale orders placed via
Fund/SERV), or if the registered owner of the Shares subject to the
resale order redeems such Shares prior to our settlement of the order,
you have the right to cancel our resale order. If any cancellation of
a resale order or if any error in the timing of the acceptance of a
resale order placed by us shall result in a loss to you or the
applicable Fund, we shall promptly reimburse you for such loss.
10. If any Shares sold by us under the terms of this Agreement are
redeemed by any of the Funds (including without limitation redemptions resulting
from an exchange for Shares of another Fund) or are repurchased by you as agent
for the Fund or are tendered to a Fund for redemption within seven business days
after your confirmation to us of our original purchase order for such Shares, we
shall promptly repay you the full amount of the commission (including any
supplemental commission) allowed to us on the original sale, provided you notify
us of such repurchase or redemption. Termination, amendment or cancellation of
this Agreement shall not relieve us from the requirements of this paragraph.
11. We will comply with, and conform our selling practices to, any and all
written compliance standards and policies and procedures that you may from time
to time provide to us.
12. Your obligations to us under this Agreement are subject to the
provisions of any distributorship agreements entered into between you and the
Funds and any plans adopted by the Funds under Rule 12b-1 under the 1940 Act.
If we are paid a service fee by you or by any of the Funds, we agree to provide,
at the request of you or such Funds, verification that such payments were used
for personal services and/or the maintenance of personal accounts, related to
the Shares held by your customers. We understand and agree that you are in no
way responsible for the manner of our performance of, or for any of our acts or
omissions in connection with, the services we
<PAGE>
provide under this Agreement. Nothing in this Agreement shall be construed to
constitute us or any of our agents, employees or representatives as the agent or
employee of you or any of the Funds.
13. We undertake to promptly notify you if we are not now a member of the
Securities Investor Protection Corporation (or its successor) ("SIPC"), or if at
any time during the term of the Dealer Agreement we cease being a member of
SIPC. Such notice shall be in writing and shall be sent via first class mail
to:
Oppenheimer Funds Distributor, Inc.
Attn: General Counsel
Two World Trade Center
New York, NY 10048-0203
14. We may terminate this Agreement by written notice to you, which
termination shall become effective ten days after the date of our mailing such
notice to you. We agree that you have and reserve the right, in your sole
discretion without notice to us, to suspend sales of Shares of any of the Funds,
or to withdraw entirely the offering of Shares of any of the Funds, at any time,
or, in your sole discretion, to modify, amend or cancel this Agreement upon
written notice to us of such modification, amendment or cancellation, which
shall be effective on the date stated in such notice. Without limiting the
foregoing, you may terminate this Agreement if we violate any of the provisions
of this Agreement, said termination to become effective on the date you mail
such notice to us. Without limiting the foregoing, and any provision hereof to
the contrary notwithstanding, our expulsion from the NASD will automatically
terminate this Agreement without notice; our suspension from the NASD, the
initiation of customer protection proceedings by the Securities Investor
Protection Corporation (or its successor), the appointment of a trustee for all
or substantially all of our business assets, or our violation of applicable
state, Federal or foreign laws or rules and regulations of authorized regulatory
agencies will terminate this Agreement effective upon the date you mail notice
to us of such termination. Your failure to terminate this Agreement for a
particular cause shall not constitute a waiver of your right to terminate this
Agreement at a later date for the same or any other cause. All notices
hereunder shall be to the respective parties at the addresses listed hereon,
unless such address is changed by written notice sent to the last address of the
other party provided under this Agreement.
15. This Agreement shall become effective as of the date when it is
executed and dated by you below and shall be in substitution of any prior
agreement between you and us covering any of the Funds. This Agreement and all
the rights and obligations of the parties hereunder shall be governed by and
construed under the laws of the State of New York applicable to agreements to be
performed in New York, without giving effect to choice of law rules. This
Agreement is not assignable or transferable, except that you may without notice
or consent from us, assign or transfer this Agreement to any successor firm or
corporation which becomes the Distributor or Sub-Distributor of the Funds or
assign any of your duties under this Agreement to any entity under common
control with you.
16. By signing this Agreement, we represent and warrant to you that this
Agreement has been duly authorized by us by all necessary action, corporate or
otherwise, and is signed on our behalf by our duly authorized officer or
principal.
<PAGE>
__________________________________________________
(Name of Dealer)
__________________________________________________
(Address of Dealer)
By: ______________________________________________
(Authorized Signature of Dealer)
__________________________________________________
(Name) (Title)
Accepted:
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:_______________________________
Date:_____________________________
6/95
<PAGE>
INDEPENDENT AUDITORS' CONSENT
To the Shareholders and Board of Directors
Quest of Value Fund, Inc.:
We consent to the use of our report dated December 9, 1994 included herein and
to the references to our Firm under the headings "Financial Highlights" in the
Prospectus and "Independent Auditors" in the Statement of Additional
Information.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
New York, New York
September 29, 1995
<PAGE>
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
FOR CLASS A SHARES OF
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the ___ day of _______, 1995, by and between OPPENHEIMER/QUEST FOR
VALUE FUND, INC. (the "Corporation") for the account of its OPPENHEIMER/QUEST
FOR VALUE FUND, INC. (the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. THE PLAN. This Plan is the Fund's written distribution plan for Class
A shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund will compensate the Distributor for its services incurred in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing,
a majority of the Corporation's Board of Directors (the "Board") who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any agreements
relating to this Plan (the "Independent Directors") may remove any broker,
dealer, bank or other person or entity as a Recipient, whereupon such person's
or entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or custodian
or co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be
-1-
<PAGE>
deemed owned by more than one Recipient for purposes of this Plan. In the event
that more than one person or entity would otherwise qualify as Recipients as to
the same Shares, the Recipient which is the dealer of record on the Fund's books
as determined by the Distributor shall be deemed the Recipient as to such Shares
for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(A) THE FUND WILL MAKE PAYMENTS TO THE DISTRIBUTOR (I) WITHIN FORTY-FIVE
(45) DAYS OF THE END OF EACH CALENDAR QUARTER, IN THE AGGREGATE AMOUNT OF
0.0625% (0.25% ON AN ANNUAL BASIS) OF THE AVERAGE DURING THE CALENDAR QUARTER OF
THE AGGREGATE NET ASSET VALUE OF THE SHARES COMPUTED AS OF THE CLOSE OF EACH
BUSINESS DAY (THE "SERVICE FEE"), PLUS (II) WITHIN TEN (10) DAYS OF THE END OF
EACH MONTH, IN THE AGGREGATE 0.020833% (0.25% ON AN ANNUAL BASIS) OF THE AVERAGE
DURING THE CALENDAR QUARTER OF THE AGGREGATE NET ASSET VALUE OF THE SHARES
COMPUTED AS OF THE CLOSE OF EACH BUSINESS DAY (THE "ASSET-BASED SALES CHARGE").
SUCH SERVICE FEE PAYMENTS RECEIVED FROM THE FUND WILL COMPENSATE THE DISTRIBUTOR
AND RECIPIENTS FOR PROVIDING ADMINISTRATIVE SUPPORT SERVICES WITH RESPECT TO
ACCOUNTS. SUCH ASSET-BASED SALES CHARGE PAYMENTS RECEIVED FROM THE FUND WILL
COMPENSATE THE DISTRIBUTOR AND RECIPIENTS FOR PROVIDING DISTRIBUTION ASSISTANCE
IN CONNECTION WITH THE SALE OF SHARES.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each
-2-
<PAGE>
business day, constituting Qualified Holdings owned beneficially or of record by
the Recipient or by its Customers for a period of more than the minimum period
(the "Minimum Holding Period"), if any, to be set from time to time by a
majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make service fee
payments ("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed (i) 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
THE ADVANCE SERVICE FEE PAYMENTS DESCRIBED IN PART (I) OF THE PRECEDING
SENTENCE MAY, AT THE DISTRIBUTOR'S SOLE OPTION, BE MADE MORE OFTEN THAN
QUARTERLY, AND SOONER THAN THE END OF THE CALENDAR QUARTER. IN ADDITION, THE
DISTRIBUTOR MAY MAKE ASSET-BASED SALES CHARGE PAYMENTS TO ANY RECIPIENT
QUARTERLY, WITHIN FORTY-FIVE (45) DAYS OF THE END OF EACH CALENDAR QUARTER, AT A
RATE NOT TO EXCEED 0.0625% (0.25% ON AN ANNUAL BASIS) OF THE AVERAGE DURING THE
CALENDAR QUARTER OF THE AGGREGATE NET ASSET VALUE OF SHARES COMPUTED AS OF THE
CLOSE OF EACH BUSINESS DAY, CONSTITUTING QUALIFIED HOLDINGS OWNED BENEFICIALLY
OR OF RECORD BY THE RECIPIENT OR ITS CUSTOMERS. HOWEVER, NO SUCH SERVICE FEE OR
ASSET-BASED SALES CHARGE PAYMENTS (COLLECTIVELY, THE "RECIPIENT PAYMENTS") SHALL
BE MADE TO ANY RECIPIENT FOR ANY SUCH QUARTER IN WHICH ITS QUALIFIED HOLDINGS
DO NOT EQUAL OR EXCEED, AT THE END OF SUCH QUARTER, THE MINIMUM AMOUNT ("MINIMUM
QUALIFIED HOLDINGS"), IF ANY, TO BE SET FROM TIME TO TIME BY A MAJORITY OF THE
INDEPENDENT DIRECTORS.
A majority of the Independent Directors may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount
-3-
<PAGE>
provided for in Section 3(b) of this Agreement; (ii) paying compensation to and
expenses of personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing from its own
resources, or from an affiliate, for interest and other borrowing costs of the
Distributor's unreimbursed expenses incurred in rendering distribution
assistance and administrative support services to the Fund; (iv) paying other
direct distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to current
Shareholders) and state "blue sky" registration expenses; and (v) providing any
service rendered by the Distributor that a Recipient may render pursuant to part
(a) of this Section 3. Such services include distribution assistance and
administrative support services rendered in connection with Shares acquired (i)
by purchase, (ii) in exchange for shares of another investment company for which
the Distributor serves as distributor or sub-distributor, or (iii) pursuant to a
plan of reorganization to which the Fund is a party. In the event that the
Board should have reason to believe that the Distributor may not be rendering
appropriate distribution assistance or administrative support services in
connection with the sale of Shares, then the Distributor, at the request of the
Board, shall provide the Board with a written report or other information to
verify that the Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect,
the selection and nomination of those persons to be Directors of the Corporation
who are not "interested persons" of the Fund or the Corporation ("Disinterested
Directors") shall be committed to the discretion of such Disinterested
Directors. Nothing herein shall prevent the Disinterested Directors from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the
Corporation shall provide at least quarterly a written reports to the
Corporation's Board for its review, detailing services rendered in connection
with the distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be provided
quarterly and shall state whether all provisions of Section 3 of this Plan have
been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Directors cast in person at a meeting called
for the purpose of voting on such agreement; and (iv) it shall, unless
terminated as
-4-
<PAGE>
herein provided, continue in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. THIS AMENDED
AND RESTATED PLAN HAS BEEN APPROVED BY A VOTE OF THE BOARD AND ITS INDEPENDENT
DIRECTORS CAST IN PERSON AT A MEETING CALLED ON JUNE 22, 1995 FOR THE PURPOSE OF
VOTING ON THIS PLAN, AND SHALL TAKE EFFECT AFTER APPROVAL BY CLASS A
SHAREHOLDERS OF THE FUND, AT WHICH TIME IT SHALL REPLACE THE FUND'S PLAN AND
AGREEMENT OF DISTRIBUTION FOR THE SHARES MADE AS OF NOVEMBER 1, 1988 AS AMENDED
AS OF JULY 27, 1992 AND SEPTEMBER 1, 1993. UNLESS TERMINATED AS HEREINAFTER
PROVIDED, IT SHALL CONTINUE IN EFFECT FROM YEAR TO YEAR FROM THE DATE FIRST SET
FORTH ABOVE OR AS THE BOARD MAY OTHERWISE DETERMINE ONLY SO LONG AS SUCH
CONTINUANCE IS SPECIFICALLY APPROVED AT LEAST ANNUALLY BY A VOTE OF THE BOARD
AND ITS INDEPENDENT DIRECTORS CAST IN PERSON AT A MEETING CALLED FOR THE PURPOSE
OF VOTING ON SUCH CONTINUANCE. THIS PLAN MAY NOT BE AMENDED TO INCREASE
MATERIALLY THE AMOUNT OF PAYMENTS TO BE MADE WITHOUT APPROVAL OF THE CLASS C
SHAREHOLDERS, IN THE MANNER DESCRIBED ABOVE, AND ALL MATERIAL AMENDMENTS MUST BE
APPROVED BY A VOTE OF THE BOARD AND OF THE INDEPENDENT DIRECTORS. THIS PLAN MAY
BE TERMINATED AT ANY TIME BY VOTE OF A MAJORITY OF THE INDEPENDENT DIRECTORS OR
BY THE VOTE OF THE HOLDERS OF A "MAJORITY" (AS DEFINED IN THE 1940 ACT) OF THE
FUND'S OUTSTANDING VOTING SECURITIES OF THE CLASS. IN THE EVENT OF SUCH
TERMINATION, THE BOARD AND ITS INDEPENDENT DIRECTORS SHALL DETERMINE WHETHER THE
DISTRIBUTOR IS ENTITLED TO PAYMENT FROM THE FUND OF ALL OR A PORTION OF THE
SERVICE FEE AND/OR THE ASSET-BASED SALES CHARGE IN RESPECT OF SHARES SOLD PRIOR
TO THE EFFECTIVE DATE OF SUCH TERMINATION.
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
By: ____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
OFMI/value
-5-
<PAGE>
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
FOR CLASS B SHARES OF
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the ____ day of ________, 1995, by and between OPPENHEIMER/QUEST
FOR VALUE FUND, INC. (the "Corporation") for the account of its
OPPENHEIMER/QUEST FOR VALUE FUND, INC. (the "Fund") and OPPENHEIMER FUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. THE PLAN. This Plan is the Fund's written distribution and service
plan for Class B shares of the Fund (the "Shares"), contemplated by Rule 12b-1
(the "Rule") under the Investment Company Act of 1940 (the "1940 Act"), pursuant
to which the Fund will compensate the Distributor for its services in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing,
a majority of the Corporation's Board of Directors (the "Board") who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any agreements
relating to this Plan (the "Independent
1
<PAGE>
Directors") may remove any broker, dealer, bank or other person or entity as
a Recipient, whereupon such person's or entity's rights as a third-party
beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or custodian
or co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or entity would otherwise
qualify as Recipients as to the same Shares, the Recipient which is the dealer
of record on the Fund's books as determined by the Distributor shall be deemed
the Recipient as to such Shares for purposes of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(a) The Fund will make payments to the Distributor, (i) within forty-five
(45) days of the end of each calendar quarter, in the aggregate amount of
0.0625% (0.25% on an annual basis) of the average during the calendar quarter of
the aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) within ten (10) days of the end of
each month, in the aggregate amount of 0.0625% (0.75% on an annual basis) of the
average during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge") outstanding
for six years or less (the "Maximum Holding Period"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such Asset-
Based Sales Charge payments received from the Fund will compensate the
Distributor and Recipients for providing distribution assistance in connection
with the sales of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in the establishment
and maintenance of accounts or sub-accounts in the Fund and processing Share
redemption transactions, making the Fund's investment plans and dividend payment
options available, and providing such other information and services in
connection with the rendering of personal services and/or the maintenance of
Accounts, as the Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and Recipients may include, but shall not be limited
to, the following: distributing sales literature and prospectuses other than
those furnished to current holders of the Fund's Shares ("Shareholders"), and
providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to
2
<PAGE>
provide a written report or other information to verify that said Recipient
is providing appropriate distribution assistance and/or services in this
regard. If the Distributor or the Board of Directors still is not satisfied,
either may take appropriate steps to terminate the Recipient's status as such
under the Plan, whereupon such Recipient's rights as a third-party
beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers for a period of more than the
minimum period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make service fee
payments ("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed (i) 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this paragraph
(b) may, at the Distributor's sole option, be made more often than quarterly,
and sooner than the end of the calendar quarter. However, no such payments
shall be made to any Recipient for any such quarter in which its Qualified
Holdings do not equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time by a
majority of the Independent Directors.
A majority of the Independent Directors may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rate set forth above,
and/or direct the Distributor to increase or decrease the Maximum Holding
Period, the Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified Holdings,
Maximum Holding Period and Minimum Holding Period, if any, and the rate of
payments hereunder applicable to Recipients, and shall provide each Recipient
with written notice within thirty (30) days after any change in these
provisions. Inclusion of such provisions or a change in such provisions in a
revised current prospectus shall constitute sufficient notice. The Distributor
may make Plan payments to any "affiliated person" (as defined in the 1940 Act)
of the Distributor if such affiliated person qualifies as a Recipient.
3
<PAGE>
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount provided for in Section 3(b) of this Agreement;
(ii) paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing or
providing such financing from its own resources, or from an affiliate, for
interest and other borrowing costs on the Distributor's unreimbursed expenses
incurred in rendering distribution assistance and administrative support
services to the Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and prospectuses
(other than those furnished to current Shareholders) and state "blue sky"
registration expenses; and (v) providing any service rendered by the Distributor
that a Recipient may render pursuant to part (a) of this Section 3. Such
services include distribution assistance and administrative support services
rendered in connection with Shares acquired (i) by purchase, (ii) in exchange
for shares of another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of reorganization to
which the Fund is a party. In the event that the Board should have reason to
believe that the Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with the sale of
Shares, then the Distributor, at the request of the Board, shall provide the
Board with a written report or other information to verify that the Distributor
is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect, the
selection and nomination of those persons to be Directors of the Corporation who
are not "interested persons" of the Fund or the Corporation ("Disinterested
Directors") shall be committed to the discretion of such Disinterested
Directors. Nothing herein shall prevent the Disinterested Directors from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the Corporation
shall provide written reports to the Corporation's Board for its review,
detailing services rendered in connection with the distribution of the Shares,
the amount of all payments made and the purpose for which the payments were
made. The reports shall be provided quarterly, and shall state whether all
provisions of Section 3 of this Plan have been complied with.
4
<PAGE>
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in writing
and shall provide that: (i) such agreement may be terminated at any time,
without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Directors cast in person at a meeting called
for the purpose of voting on such agreement; and (iv) it shall, unless
terminated as herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at least annually by a vote of the
Board and its Independent Directors cast in person at a meeting called for the
purpose of voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Amended and
Restated Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on June 22, 1995, for the purpose
of voting on this Plan, and shall take effect after approval by Class B
shareholders of the Fund, at which time it shall replace the Fund's Amended and
Restated Distribution Plan adopted as of December 23, 1994 and Amended and
Restated Distribution Agreement for the Shares dated December 23, 1994. Unless
terminated as hereinafter provided, it shall continue in effect from year to
year thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by a vote of the Board
and its Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made without approval of the Class B
Shareholders, in the manner described above, and all material amendments must be
approved by a vote of the Board and of the Independent Directors. This Plan may
be terminated at any time by vote of a majority of the Independent Directors or
by the vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of such
termination, the Board and its Independent Directors shall determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the Service Fee and/or the Asset-Based Sales Charge in respect of Shares sold
prior to the effective date of such termination.
OPPENHEIMER QUEST FOR VALUE FUND, INC
By:____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:___________________________________
Andrew J. Donohue
Executive Vice President
5
<PAGE>
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND OPPENHEIMER/QUEST FOR VALUE FUND, INC.
FOR CLASS C SHARES OF
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the ___ day of _______, 1995, by and between OPPENHEIMER/QUEST FOR
VALUE FUND, INC. (the "Corporation") for the account of its OPPENHEIMER/QUEST
FOR VALUE FUND, INC. (the "Fund") and OPPENHEIMER FUNDS DISTRIBUTOR, INC. (the
"Distributor").
1. THE PLAN. This Plan is the Fund's written distribution plan for Class
C shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund will compensate the Distributor for its services incurred in connection
with the distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act as
distributor of securities of which it is the issuer, pursuant to the Rule,
according to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1) distribution
assistance in connection with the sale of Shares and/or (2) administrative
support services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms and
provisions of this Plan shall be interpreted and defined in a manner consistent
with the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., or its successor (the "NASD
Rules of Fair Practice") and (iv) any conditions pertaining either to
distribution-related expenses or to a plan of distribution, to which the Fund is
subject under any order on which the Fund relies, issued at any time by the
Securities and Exchange Commission.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person or
entity which: (i) has rendered assistance (whether direct, administrative or
both) in the distribution of Shares or has provided administrative support
services with respect to Shares held by Customers (defined below) of the
Recipient; (ii) shall furnish the Distributor (on behalf of the Fund) with such
information as the Distributor shall reasonably request to answer such questions
as may arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the foregoing,
a majority of the Corporation's Board of Directors (the "Board") who are not
"interested persons" (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of this Plan or in any agreements
relating to this Plan (the "Independent Directors") may remove any broker,
dealer, bank or other person or entity as a Recipient, whereupon such person's
or entity's rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares owned
beneficially or of record by: (i) such Recipient, or (ii) such customers,
clients and/or accounts as to which such Recipient is a fiduciary or custodian
or co-fiduciary or co-custodian (collectively, the "Customers"), but in no event
shall any such Shares be deemed owned by more than one Recipient for purposes of
this Plan. In the event that more than one person or
-1-
<PAGE>
entity would otherwise qualify as Recipients as to the same Shares, the
Recipient which is the dealer of record on the Fund's books as determined by
the Distributor shall be deemed the Recipient as to such Shares for purposes
of this Plan.
3. PAYMENTS FOR DISTRIBUTION ASSISTANCE AND ADMINISTRATIVE SUPPORT
SERVICES.
(a) The Fund will make payments to the Distributor, within forty-five (45)
days of the end of each calendar quarter, in the aggregate amount (i) of 0.0625%
(0.25% on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close of each
business day (the "Service Fee"), plus (ii) 0.1875% (0.75% on an annual basis)
of the average during the calendar quarter of the aggregate net asset value of
the Shares computed as of the close of each business day (the "Asset-Based Sales
Charge"). Such Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support services with
respect to Accounts. Such Asset-Based Sales Charge payments received from the
Fund will compensate the Distributor and Recipients for providing distribution
assistance in connection with the sale of Shares.
The administrative support services in connection with the Accounts to be
rendered by Recipients may include, but shall not be limited to, the following:
answering routine inquiries concerning the Fund, assisting in establishing and
maintaining accounts or sub-accounts in the Fund and processing Share redemption
transactions, making the Fund's investment plans and dividend payment options
available, and providing such other information and services in connection with
the rendering of personal services and/or the maintenance of Accounts, as the
Distributor or the Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to be
rendered by the Distributor and by Recipients may include, but shall not be
limited to, the following: distributing sales literature and prospectuses other
than those furnished to current holders of the Fund's Shares ("Shareholders"),
and providing such other information and services in connection with the
distribution of Shares as the Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution assistance or
administrative support services qualifying for payment under the Plan if it has
Qualified Holdings of Shares to entitle it to payments under the Plan. In the
event that either the Distributor or the Board should have reason to believe
that, notwithstanding the level of Qualified Holdings, a Recipient may not be
rendering appropriate distribution assistance in connection with the sale of
Shares or administrative support services for the Accounts, then the
Distributor, at the request of the Board, shall require the Recipient to provide
a written report or other information to verify that said Recipient is providing
appropriate distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied, either may take
appropriate steps to terminate the Recipient's status as such under the Plan,
whereupon such Recipient's rights as a third-party beneficiary hereunder shall
terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares, computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or by its Customers
-2-
<PAGE>
for a period of more than the minimum period (the "Minimum Holding Period"),
if any, to be set from time to time by a majority of the Independent
Directors.
Alternatively, the Distributor may, at its sole option, make service fee
payments ("Advance Service Fee Payments") to any Recipient quarterly, within
forty-five (45) days of the end of each calendar quarter, at a rate not to
exceed (i) 0.25% of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of business on the day such
Shares are sold, constituting Qualified Holdings sold by the Recipient during
that quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of Shares computed as of
the close of each business day, constituting Qualified Holdings owned
beneficially or of record by the Recipient or by its Customers for a period of
more than one (1) year, subject to reduction or chargeback so that the Advance
Service Fee Payments do not exceed the limits on payments to Recipients that
are, or may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the date
such Shares were sold, the Recipient is obligated and will repay to the
Distributor on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the preceding
sentence may, at the Distributor's sole option, be made more often than
quarterly, and sooner than the end of the calendar quarter. In addition, the
Distributor shall make asset-based sales charge payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar quarter, at a
rate not to exceed 0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of Shares computed as of the
close of each business day, constituting Qualified Holdings owned beneficially
or of record by the Recipient or its Customers for a period of more than one (1)
year. However, no such service fee or asset-based sales charge payments
(collectively, the "Recipient Payments") shall be made to any Recipient for any
such quarter in which its Qualified Holdings do not equal or exceed, at the end
of such quarter, the minimum amount ("Minimum Qualified Holdings"), if any, to
be set from time to time by a majority of the Independent Directors.
A majority of the Independent Directors may at any time or from time to
time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth above,
and/or direct the Distributor to increase or decrease the Minimum Holding Period
or the Minimum Qualified Holdings. The Distributor shall notify all Recipients
of the Minimum Qualified Holdings or Minimum Holding Period, if any, and the
rates of Recipient Payments hereunder applicable to Recipients, and shall
provide each Recipient with written notice within thirty (30) days after any
change in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient notice.
The Distributor may make Plan payments to any "affiliated person" (as defined in
the 1940 Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are subject
to reduction or elimination of such amounts under the limits to which the
Distributor is, or may become, subject under Article III, Section 26, of the
NASD Rules of Fair Practice. The distribution assistance and administrative
support services to be rendered by the Distributor in connection with the Shares
may include, but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that sells
Shares, and\or paying such persons Advance Service Fee Payments in advance of,
and\or greater than, the amount provided for in Section 3(b) of this Agreement;
(ii) paying compensation to and expenses of personnel of the
-3-
<PAGE>
Distributor who support distribution of Shares by Recipients; (iii) obtaining
financing or providing such financing from its own resources, or from an
affiliate, for interest and other borrowing costs of the Distributor's
unreimbursed expenses incurred in rendering distribution assistance and
administrative support services to the Fund; (iv) paying other direct
distribution costs, including without limitation the costs of sales
literature, advertising and prospectuses (other than those furnished to
current Shareholders) and state "blue sky" registration expenses; and (v)
providing any service rendered by the Distributor that a Recipient may render
pursuant to part (a) of this Section 3. Such services include distribution
assistance and administrative support services rendered in connection with
Shares acquired (i) by purchase, (ii) in exchange for shares of another
investment company for which the Distributor serves as distributor or
sub-distributor, or (iii) pursuant to a plan of reorganization to which the
Fund is a party. In the event that the Board should have reason to believe
that the Distributor may not be rendering appropriate distribution assistance
or administrative support services in connection with the sale of Shares,
then the Distributor, at the request of the Board, shall provide the Board
with a written report or other information to verify that the Distributor is
providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by Oppenheimer
Management Corporation ("OMC") from its own resources (which may include profits
derived from the advisory fee it receives from the Fund), or (ii) by the
Distributor (a subsidiary of OMC), from its own resources, from Asset-Based
Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does not
obligate or in any way make the Fund liable to make any payment whatsoever to
any person or entity other than directly to the Distributor. In no event shall
the amounts to be paid to the Distributor exceed the rate of fees to be paid by
the Fund to the Distributor set forth in paragraph (a) of this Section 3.
4. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in effect,
the selection and nomination of those persons to be Directors of the Corporation
who are not "interested persons" of the Fund or the Corporation ("Disinterested
Directors") shall be committed to the discretion of such Disinterested
Directors. Nothing herein shall prevent the Disinterested Directors from
soliciting the views or the involvement of others in such selection or
nomination if the final decision on any such selection and nomination is
approved by a majority of the incumbent Disinterested Directors.
5. REPORTS. While this Plan is in effect, the Treasurer of the
Corporation shall provide at least quarterly a written reports to the
Corporation's Board for its review, detailing services rendered in connection
with the distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be provided
quarterly and shall state whether all provisions of Section 3 of this Plan have
been complied with.
6. RELATED AGREEMENTS. Any agreement related to this Plan shall be in
writing and shall provide that: (i) such agreement may be terminated at any
time, without payment of any penalty, by a vote of a majority of the Independent
Directors or by a vote of the holders of a "majority" (as defined in the 1940
Act) of the Fund's outstanding voting securities of the Class, on not more than
sixty days written notice to any other party to the agreement; (ii) such
agreement shall automatically terminate in the event of its assignment (as
defined in the 1940 Act); (iii) it shall go into effect when approved by a vote
of the Board and its Independent Directors cast in person at a meeting called
for the purpose of voting on such agreement; and (iv) it shall, unless
terminated as herein provided, continue in effect from year to year only so long
as such continuance is specifically approved at
-4-
<PAGE>
least annually by a vote of the Board and its Independent Directors cast in
person at a meeting called for the purpose of voting on such continuance.
7. EFFECTIVENESS, CONTINUATION, TERMINATION AND AMENDMENT. This Amended
and Restated Plan has been approved by a vote of the Board and its Independent
Directors cast in person at a meeting called on June 22, 1995 for the purpose of
voting on this Plan, and shall take effect after approval by Class C
shareholders of the Fund, at which time it shall replace the Fund's Plan and
Agreement of Distribution for the Shares made as of September 1, 1993 as amended
February 1, 1995. Unless terminated as hereinafter provided, it shall continue
in effect from year to year from the date first set forth above or as the Board
may otherwise determine only so long as such continuance is specifically
approved at least annually by a vote of the Board and its Independent Directors
cast in person at a meeting called for the purpose of voting on such
continuance. This Plan may not be amended to increase materially the amount of
payments to be made without approval of the Class C Shareholders, in the manner
described above, and all material amendments must be approved by a vote of the
Board and of the Independent Directors. This Plan may be terminated at any time
by vote of a majority of the Independent Directors or by the vote of the holders
of a "majority" (as defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class. In the event of such termination, the Board and its
Independent Directors shall determine whether the Distributor is entitled to
payment from the Fund of all or a portion of the Service Fee and/or the Asset-
Based Sales Charge in respect of Shares sold prior to the effective date of such
termination.
OPPENHEIMER/QUEST FOR VALUE FUND, INC.
By: ____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
-5-
