Filed Per Rule 497(c)
File No. 33-62261
QUEST FOR VALUE FAMILY OF FUNDS
INVESTMENT QUALITY INCOME FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held November 16, 1995
To the Shareholders of Investment Quality Income Fund:
Notice is hereby given that a Special Meeting of the Shareholders of
Investment Quality Income Fund (the "Fund"), a series of Quest for
Value Family of Funds (the "Trust"), an open-end, management investment
company, will be held at One World Financial Center, New York, New York
10281 on the 40th Floor, at 9:00 A.M., New York time, on November 16,
1995, and any adjournments thereof (the "Meeting"), for the following
purposes:
1. To consider and vote upon approval of the Agreement and Plan of
Reorganization dated as of September 26, 1995 (the "Reorganization
Agreement") by and among Oppenheimer Integrity Funds, on behalf of
Oppenheimer Bond Fund ("Bond Fund"), the Trust, on behalf of the
Fund, and Quest for Value Advisors, investment adviser to the
Fund, and the transactions contemplated thereby (the
"Reorganization"), including (i) the transfer of substantially all
the assets of the Fund to Bond Fund in exchange for Class A, Class
B and Class C shares of Bond Fund and the assumption by Bond Fund
of certain liabilities of the Fund, (ii) the distribution of such
shares of Bond Fund to shareholders of the Fund in complete
liquidation of the Fund (excluding a cash reserve), and (iii) the
cancellation of the outstanding shares of the Fund (the
"Proposal"); and
2. To act upon such other matters as may properly come before the
Meeting.
The Reorganization is more fully described in the accompanying Proxy
Statement and Prospectus and a copy of the Reorganization Agreement is
attached as Exhibit A thereto. Class A, Class B and Class C
shareholders of record at the close of business on September 25, 1995
are entitled to notice of, and to vote at, the Meeting. Please read
the Proxy Statement and Prospectus carefully before telling us, through
your proxy or in person, how you wish your shares to be voted. The
Board of Trustees of the Trust recommends a vote in favor of the
Reorganization. WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY
PROMPTLY.
By Order of the Board of Trustees,
Deborah Kaback, Secretary
October 2, 1995
Shareholders who do not expect to attend the Meeting are requested to
indicate voting instructions on the enclosed proxy and to date, sign
and return it in the accompanying postage-paid envelope. To avoid
unnecessary duplicate mailings, we ask your cooperation in promptly
mailing your proxy no matter how large or small your holdings may be.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED REORGANIZATION
1.What is the Reorganization?
The proposed Reorganization provides for the transfer of substantially
all the assets of the Quest for Value Investment Quality Income (the
"Fund") to the Oppenheimer Bond Fund ("Bond Fund"), in exchange for
Class A, Class B and Class C shares of Bond Fund and the assumption by
Bond Fund of certain liabilities of the Fund, the distribution of such
shares of Bond Fund to shareholders of the Fund in liquidation of the
Fund and the cancellation of the outstanding shares of the Fund.
The number of shares of Bond Fund that will be issued to shareholders
of the Fund will be determined on the basis of the relative net asset
values of Bond Fund and the Fund. Although the number of shares of
Bond Fund issued to a shareholder of the Fund may be more or less than
the shareholder's holdings of Fund shares, the value of the shares of
Bond Fund issued in the Reorganization will be equal to the value of
the shares previously held in the Fund. Holders of Class A, Class B
and Class C shares of the Fund will receive Class A, Class B and Class
C shares of Bond Fund, respectively, in the Reorganization.
The Reorganization has been proposed in connection with a proposed
acquisition by Oppenheimer Management Corporation ("OMC") of the assets
of Quest for Value Advisors, Quest for Value Distributors and
Oppenheimer Capital relating to twelve Quest for Value mutual funds
(including the Fund) and the assumption by OMC of certain liabilities.
OMC is discussed in greater detail below.
Shareholders are directed to read the accompanying Proxy Statement and
Prospectus for further information about the Reorganization and related
matters. Additional information about Bond Fund is set forth in its
accompanying Prospectus.
2.What are the reasons for the Reorganization?
After an intensive examination of the mutual fund industry, Quest for
Value Advisors and Distributors concluded that smaller fund
distributors would find it increasingly difficult to compete with
larger distributors with greater resources. Based on that conclusion,
Quest for Value has chosen to sell certain of its mutual fund related
assets to OMC. OMC, the purchaser, is seeking to merge certain of the
Quest for Value funds into certain of its funds.
3.What benefits to shareholders may result from this transaction?
The Board of Trustees of the Fund determined that, among other things,
the Reorganization would afford the shareholders of the Fund: 1) the
capabilities and resources of OMC and its affiliates in the area of
fixed income investment management, distribution, shareholder services
and marketing; and 2) the ability to exchange their shares for a wider
variety of portfolios within the OppenheimerFunds family than are
currently available to the shareholders of the Fund.
4.Who is paying the expenses of the Reorganization?
All expenses of the Reorganization will be paid by Quest for Value
Advisors and OMC and not the Fund or Bond Fund shareholders.
5.Who is Oppenheimer Management Corporation?
OMC and its subsidiaries are engaged principally in the business of
managing, distributing and servicing registered investment companies.
OMC has operated as an investment adviser since 1959. OMC is
indirectly controlled by Massachusetts Mutual Life Insurance Company.
As of August 31, 1995, Oppenheimer Management Corporation and its
affiliates had assets of more than $38 billion under management in more
than 45 mutual funds.
6.Do the Oppenheimer funds have a sales charge?
Yes, other than their money market funds. However, there will be no
commission or initial sales charge of any kind charged on Bond Fund
shares received in the Reorganization. The full value of your shares
in the Fund will be exchanged for shares of Bond Fund. However, any
contingent deferred sales charge which is applicable to a Fund
shareholder's investment will continue to apply. Also, purchases of
Class A shares of Bond Fund in addition to those received in the
Reorganization will be assessed any applicable sales charge. See the
accompany documents for further details.
Bond Fund has undertaken that any Fund shareholders entitled to a
waiver of or exemption from sales charges pursuant to the policy stated
in the Fund's current prospectus will continue to be entitled to such
waiver or exemption as a shareholder of Bond Fund after the
Reorganization so long as they continue to meet the applicable
eligibility criteria. Other Oppenheimer funds will also provide such
waivers and exemptions upon implementation of appropriate prospectus
disclosure. For example, those shareholders who, because they were
shareholders of the AMA Family of Funds or the Unified Funds were
eligible to purchase shares of any Quest for Value fund without a sales
charge, after the Reorganization will be eligible to purchase shares of
such Oppenheimer funds without a sales charge.
7.May I exchange between other Oppenheimer funds without charge?
Yes. As a shareholder of an Oppenheimer fund, you will be able to make
exchanges into any of the other Oppenheimer funds without charge. The
Fund currently imposes a fee of $5 for every exchange into another
Quest for Value fund.
8.Where can I get prospectuses and other information on the Oppenheimer
funds?
Call OppenheimerFunds at 1-(800) 255-2755. They will be pleased to
supply you with additional information, including other prospectuses.
9.After the Reorganization, who do I contact about my new Bond Fund
account or to initiate a transaction in that account?
Once the Reorganization is approved and effected, you will become a
shareholder of Bond Fund. For information about your new Bond Fund
account or to initiate a transaction in that account, you may continue
to contact your registered representative at your broker/dealer or, in
the alternative, Shareholder Services, Inc. at 1-(800) 525-7048 .
10.Will this Reorganization result in any tax liability to the Fund,
Bond Fund or to me as a shareholder?
The Reorganization is intended to qualify for Federal income tax
purposes as a tax-free reorganization. Accordingly, no gain or loss
will be recognized by Fund shareholders upon the exchange of Fund
shares for shares of Bond Fund. The aggregate tax basis of Bond Fund
shares received by you will be the same as the aggregate tax basis of
your Fund shares immediately prior to the Reorganization. The holding
period of the shares of the Bond Fund to be received by you will
include the period during which the Fund shares surrendered in exchange
therefore were held.
Shareholders of the Fund should consult their tax advisors regarding
the effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing only relates to the Federal income
tax consequences of the Reorganization, shareholders of the Fund should
also consult their tax advisors as to state and local tax consequences,
if any, of the Reorganization.
<PAGE>
QUEST FOR VALUE FAMILY OF FUNDS
INVESTMENT QUALITY INCOME FUND
One World Financial Center, New York, New York 10281
1-800-232-FUND
PROXY STATEMENT
- --------------------------
OPPENHEIMER BOND FUND
3410 South Galena Street, Denver, Colorado 80231
1-800-525-7048
PROSPECTUS
This Proxy Statement and Prospectus is being furnished to shareholders
of Investment Quality Income Fund (the "Fund"), a series of Quest for
Value Family of Funds (the "Trust"), an open-end, management investment
company, in connection with the solicitation by the Board of Trustees
of the Trust (the "Board") of proxies to be used at the Special Meeting
of Shareholders of the Fund, to be held at One World Financial Center,
New York, New York 10281 on the 40th Floor at 9:00 A.M., New York time,
on November 16, 1995, and any adjournments thereof (the "Meeting"). It
is expected that this Proxy Statement and Prospectus will be mailed to
shareholders on or about October 5, 1995.
At the Meeting, shareholders of the Fund will be asked to consider and
vote upon approval of the Agreement and Plan of Reorganization, dated
as of September 26, 1995 (the "Reorganization Agreement"), by and among
Oppenheimer Integrity Funds (the "Integrity Trust"), an open-end
management investment company, on behalf of Oppenheimer Bond Fund
("Bond Fund"), the Trust, on behalf of the Fund, and Quest for Value
Advisors ("QVA"), investment adviser to the Fund, and the transactions
contemplated by the Reorganization Agreement (the "Reorganization").
The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund to Bond Fund in exchange for Class A, Class
B and Class C shares of Bond Fund and the assumption by Bond Fund of
certain liabilities of the Fund, the distribution of such shares of
Bond Fund to shareholders of the Fund in complete liquidation of the
Fund (excluding the Cash Reserve (as hereinafter defined)) and the
cancellation of the outstanding shares of the Fund. A copy of the
Reorganization Agreement is attached hereto as Exhibit A and is
incorporated by reference herein. As a result of the proposed
Reorganization, each Class A, Class B and Class C shareholder of the
Fund will receive that number of Class A, Class B and Class C shares,
respectively, of Bond Fund having an aggregate net asset value equal to
the net asset value of such shareholder's shares of the Fund of that
class. This transaction is being structured as a tax-free
reorganization. See "Approval of the Reorganization."
Bond Fund currently offers Class A, Class B and Class C shares. Class
A shares are sold with a sales charge imposed at the time of purchase
(certain purchases aggregating $1.0 million or more ($500,000 as to
purchases by OppenheimerFunds prototype 401(k) plans) are not subject
to a sales charge, but may be subject to a contingent deferred sales
charge ("CDSC") if redeemed within 18 months of the date of purchase);
Class B shares are sold without a front-end sales charge but may be
subject to a CDSC if redeemed within six years of the date of purchase;
and Class C shares are sold without a front-end sales charge but may be
subject to a CDSC if not held for one year. Holders of Class A shares
in the Fund will receive Class A shares of Bond Fund and no initial
sales charge will be imposed on the Class A shares received by the Fund
Class A shareholders. Holders of Class B and Class C shares in the
Fund will receive Class B and Class C shares, respectively, of Bond
Fund. Any Class B or Class C CDSC which is applicable to a
shareholder's investment will continue to apply; the duration of any
CDSC applicable to Class A shares may be reduced as described below in
"Comparative Fee Tables - Transaction Charges." In calculating the
applicable CDSC payable upon the subsequent redemption of shares of
Bond Fund the period during which a Fund shareholder held shares of the
Fund will be counted.
Bond Fund is a mutual fund that seeks a high level of current income by
investing mainly in debt instruments. The Fund seeks to provide
shareholders with as high a level of current income as is consistent
with conservation of principal through a portfolio consisting primarily
of fixed income obligations. Shareholders of the Fund should consider
the differences in investment objectives and policies of Bond Fund and
the Fund, including Bond Fund's investment policy to invest in
securities rated lower than investment grade. See "Comparison Between
Bond Fund and the Fund - Comparison of Investment Objectives, Policies
and Restrictions."
Bond Fund has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form N-14 (the "Registration
Statement") relating to the registration of shares of Bond Fund to be
offered to the shareholders of the Fund pursuant to the Reorganization
Agreement. This Proxy Statement and Prospectus relating to the
Reorganization also constitutes a Prospectus of Bond Fund filed as part
of such Registration Statement. Information contained or incorporated
by reference herein relating to Bond Fund has been prepared by and is
the responsibility of Bond Fund. Information contained or incorporated
by reference herein relating to the Fund has been prepared by and is
the responsibility of the Fund.
This Proxy Statement and Prospectus sets forth concisely information
about Bond Fund that a prospective investor should know before voting
on the Reorganization. The following documents have been filed with
the SEC and are available without charge upon written request to Quest
for Value Distributors ("QVD"), the general distributor for the Fund,
at P.O. Box 3567, Church Street Station, New York, New York 10277-1296,
or by calling the toll-free number for the Fund shown above: (i) a
Prospectus for the Fund, dated March 1, 1995, as revised June 30, 1995
(information about the Fund is incorporated herein by reference from
the Fund's Prospectus); and (ii) a Statement of Additional Information
about the Fund, dated March 1, 1995 (the "Fund Additional Statement").
The following documents have each been filed with the SEC, are
incorporated herein by reference and are available without charge upon
written request to the transfer and shareholder servicing agent for
Bond Fund, Oppenheimer Shareholder Services ("OSS"), at P.O. Box 5270,
Denver Colorado 80217, or by calling the toll-free number for Bond Fund
shown above: (i) a Prospectus for Bond Fund, dated July 10, 1995, as
supplemented July 14, 1995; and (ii) a Statement of Additional
Information relating to the Reorganization described in this Proxy
Statement and Prospectus (the "Additional Statement"), dated October 2,
1995 and filed as part of the Registration Statement, which Additional
Statement includes, among other things, the Prospectus for the Fund,
the Fund Additional Statement and a Statement of Additional Information
about Bond Fund, dated July 10, 1995, as supplemented July 14, 1995
(the "Bond Fund Additional Statement"), which contains more detailed
information about Bond Fund and its management.
Investors are advised to read and retain this Proxy Statement and
Prospectus for future reference.
Shares of Bond Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, and are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible loss
of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement and Prospectus is dated October 2, 1995.
<PAGE>
TABLE OF CONTENTS
PROXY STATEMENT AND PROSPECTUS
COMPARATIVE FEE TABLES
SYNOPSIS
Parties to the Reorganization
The Reorganization
Tax Consequences of the Reorganization
Investment Objectives and Policies
Investment Advisory and Distribution Plan Fees
Purchases, Exchanges and Redemptions
PRINCIPAL RISK FACTORS
APPROVAL OF THE REORGANIZATION (The Proposal)
Background
Acquisition Agreement
Board Approval of the Reorganization
The Reorganization
Tax Aspects of the Reorganization
Capitalization Table (Unaudited)
COMPARISON BETWEEN BOND FUND AND THE FUND
Comparison of Investment Objectives, Policies and Restrictions
Special Investment Methods
Investment Restrictions
Bond Fund Performance
Additional Comparative Information
INFORMATION CONCERNING THE MEETING
The Meeting
Record Date; Vote Required; Share Information
Proxies
Costs of the Solicitation and the Reorganization
MISCELLANEOUS
Financial Information
Public Information
OTHER BUSINESS
EXHIBIT A - Agreement and Plan of Reorganization, dated as of September
26, 1995, by and among Oppenheimer Integrity Funds, on
behalf of Oppenheimer Bond Fund, Quest for Value Family of
Funds, on behalf of Investment Quality Income Fund, and
Quest for Value Advisors A-1
EXHIBIT B - Purchase Price Formula Pursuant to the Acquisition
Agreement B-1
<PAGE>
COMPARATIVE FEE TABLES
Transaction Charges
Shareholders pay certain expenses directly, such as sales charges and
account transaction charges. The schedule of such charges for both
Bond Fund and the Fund (collectively, the "funds") is substantially the
same, except as noted below.
Oppenheimer Bond Fund
Class A Class B Class C
Maximum Sales Charge on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge None(1) 5.0%(2) 1.0%(3)
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee None None None
Investment Quality Income
Fund
Class A Class B Class C
Maximum Sales Charge on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Reinvested Dividends None None None
Deferred Sales Charge None(1) 5.0%(2) 1.0%(3)
(as a % of the lower of the original
purchase price or redemption proceeds)
Exchange Fee $5.00 $5.00 $5.00
(1)If you invest $1 million or more (as to Bond Fund, $500,000 for
purchases by OppenheimerFunds prototype 401(k) plans) in Class A
shares, although you will generally not pay an initial sales charge,
you may have to pay a sales charge of up to 1.0% if you sell your
shares within 18 calendar months (as to Bond Fund) or 12 calendar
months (as to the Fund, with a charge of 0.50 of 1.0% assessed for
redemptions in the subsequent 12-month period), in each case from the
end of the calendar month during which you purchased those shares.
After the Reorganization, the maximum duration of sales charges as to
Bond Fund Class A shares issued in the Reorganization to former
shareholders of the Fund will be 18 months, and the charge assessed
will be 1.0% for the first twelve months and 0.50 of 1.0% in the
subsequent six months.
(2)If you redeem Class B shares within six years of their purchase, you
may have to pay a contingent deferred sales charge starting at 5.0% in
the first year and declining thereafter.
(3)If you redeem Class C shares within 12 months of their purchase, you
may have to pay a 1.0% contingent deferred sales charge.
Expenses of Bond Fund and the Fund; Pro Forma Expenses
The funds each pay a variety of expenses directly for management of
their assets, administration, distribution of their shares and other
services, and those expenses are reflected in the net asset value per
share of each of Bond Fund and the Fund. The following calculations
are based on the expenses of Bond Fund and the Fund for the 12 months
ended December 31, 1994 and the six months ended June 30, 1995. These
amounts are shown as a percentage of the average net assets of each
class of shares of the Fund and of Bond Fund for those periods. The
pro forma fees reflect what the fee schedules would have been at
December 31, 1994 and June 30, 1995 as if the Reorganization had
occurred 12 months and six months, respectively, prior to those dates.
<TABLE>
<CAPTION>
Oppenheimer Bond Fund
12 months ended 12/31/94 6 months ended 6/30/95(1)
Class A Class B Class C(2) Class A Class B Class C(2)
<S> <C> <C> <C> <C> <C> <C>
Management Fees(3) 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
12b-1 Fees 0.24% 0.96% 0.96% 0.25% 1.00% 1.00%
Other Expenses 0.31% 0.33% 0.33% 0.32% 0.35% 0.35%
Total Fund Operating
Expenses(3) 1.30% 2.04% 2.04% 1.32% 2.10% 2.10%
Investment Quality Income Fund
12 months ended 12/31/94 6 months ended 6/30/95(1)
Class A Class B Class C Class A Class B Class C
Management Fees(4) 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
12b-1 Fees 0.40% 1.00% 1.00% 0.40% 1.00% 1.00%
Other Expenses 0.61% 0.63% 0.63% 0.52% 0.52% 0.54%
Total Fund Operating
Expenses(4) 1.61% 2.23% 2.23% 1.52% 2.12% 2.14%
Pro Forma Combined Fund
12 months ended 12/31/94 6 months ended 6/30/95(1)
Class A Class B Class C(2) Class A Class B Class C(2)
Management Fees(3) 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
12b-1 Fees 0.24% 1.00% 1.00% 0.25% 1.00% 1.00%
Other Expenses 0.31% 0.32% 0.32% 0.31% 0.34% 0.34%
Total Fund Operating
Expenses(3) 1.30% 2.07% 2.07% 1.31% 2.09% 2.09%
</TABLE>
(1)Annualized.
(2)Class C shares of Bond Fund were first publicly offered on July 11,
1995. "Other Expenses" shown for Class C shares of Bond Fund and the
combined fund on a pro forma basis are estimates based on amounts that
would have been payable if Bond Fund Class C shares had been
outstanding for the 12 months ended December 31, 1994 and the six
months ended June 30, 1995, respectively.
(3)Management fees for Bond Fund and the pro forma combined fund have
been restated in the fee table above to reflect the increased
management fee rates paid by Bond Fund to its investment adviser,
pursuant to a new investment advisory agreement approved by
shareholders of Bond Fund at a meeting held July 10, 1995. Had this
management fee rate not changed, "Management Fees" (i) for the twelve
months ended December 31, 1994 would have been 0.50%, 0.50% and 0.50%
of Class A, Class B and Class C average annual net assets, and "Total
Fund Operating Expenses" would have been 1.06%, 1.78% and 1.78% of
Class A, Class B and Class C average annual net assets, and (ii) for
the six months ended June 30, 1995 would have been 0.49%, 0.49% and
0.49% of Class A, Class B and Class C average annual net assets, and
"Total Fund Operating Expenses" would have been 1.06%, 1.84% and 1.84%
of Class A, Class B and Class C average annual net assets. See
"Investment Advisory and Distribution Plan Fees" below.
(4)"Management Fees" and "Total Fund Operating Expenses" have been
restated to reflect the termination, effective April 24, 1995, of a
voluntary waiver by QVA of a portion of its management fee. For the 12
months ended December 31, 1994, as to Class A, Class B and Class C
shares of the Fund, actual "Management Fees" were 0.30%, 0.30% and
0.30%, and actual "Total Fund Operating Expenses" were 1.31%, 1.93% and
1.93%, in each case of their respective average annual net assets. For
the six months ended June 30, 1995, as to Class A, Class B and Class C
shares of the Fund, actual "Management Fees" were 0.52%, 0.52% and
0.52%, and actual "Total Fund Operating Expenses" were 1.44%, 2.04% and
2.06%, in each case of their respective average annual net assets.
Example
To attempt to show the effect of these expenses on an investment over
time, the example shown below has been created. Assume that you make a
$1,000 investment in either the Fund or Bond Fund or the new combined
fund and that the annual return is 5% and that the operating expenses
for each fund are the ones shown in the chart above for the 12 months
ended December 31, 1994 and the six months ended June 30, 1995. If you
were to redeem your shares at the end of each period shown below, your
investment would incur the following expenses by the end of each period
shown:
12 Months ended 12/31/94
1 year 3 years 5 years 10 years
Oppenheimer Bond Fund
Class A Shares $60 $87 $115 $197
Class B Shares $71 $94 $130 $200(1)
Class C Shares $31 $64 $110 $237(2)
Investment Quality
Income Fund
Class A Shares $63 $96 $131 $230
Class B Shares $73 $100 $139 $241(1)
Class C Shares $33 $70 $119 $256(2)
Pro Forma Combined
Fund
Class A Shares $60 $87 $115 $197
Class B Shares $71 $95 $131 $202(1)
Class C Shares $31 $65 $111 $240(2)
If you did not redeem your investment, it would incur the following
expenses:
12 months ended 12/31/94
1 year 3 years 5 years 10 years
Oppenheimer Bond Fund
Class A Shares $60 $87 $115 $197
Class B Shares $21 $64 $110 $200(1)
Class C Shares $21 $64 $110 $237(2)
Investment Quality
Income Fund
Class A Shares $63 $96 $131 $230
Class B Shares $23 $70 $119 $241(1)
Class C Shares $23 $70 $119 $256(2)
Pro Forma Combined
Fund
Class A Shares $60 $87 $115 $197
Class B Shares $21 $65 $111 $202(1)
Class C Shares $21 $65 $111 $240(2)
If you were to redeem your shares at the end of each period shown
below, your investment would incur the following expenses by the end of
each period shown:
6 Months ended 6/30/95
1 year 3 years 5 years 10 years
Oppenheimer Bond Fund
Class A Shares $60 $87 $116 $199
Class B Shares $71 $96 $133 $205(1)
Class C Shares $31 $66 $113 $243(2)
Investment Quality
Income Fund
Class A Shares $62 $93 $126 $220
Class B Shares $72 $96 $134 $230(1)
Class C Shares $32 $67 $115 $247(2)
Pro Forma Combined
Fund
Class A Shares $60 $87 $116 $198
Class B Shares $71 $95 $132 $204(1)
Class C Shares $31 $65 $112 $242(2)
If you did not redeem your investment, it would incur the following
expenses:
6 months ended 6/30/95
1 year 3 years 5 years 10 years
Oppenheimer Bond Fund
Class A Shares $60 $87 $116 $199
Class B Shares $21 $66 $113 $205(1)
Class C Shares $21 $66 $113 $243(2)
Investment Quality
Income Fund
Class A Shares $62 $93 $126 $220
Class B Shares $22 $66 $114 $230(1)
Class C Shares $22 $67 $115 $247(2)
Pro Forma Combined
Fund
Class A Shares $60 $87 $116 $198
Class B Shares $21 $65 $112 $204(1)
Class C Shares $21 $65 $112 $242(2)
(1)The Class B expenses in years seven through ten for Bond Fund and
year nine and ten for the Fund are based on the Class A expenses shown
above, because Bond Fund and the Fund automatically convert Class B
shares into Class A shares after six years and eight years,
respectively. Long-term Class B shareholders could pay the economic
equivalent of more than the maximum front-end sales charge allowed
under applicable regulatory requirements, because of the effect of the
asset-based sales charge and contingent deferred sales charge. The
automatic conversion of Class B shares to Class A shares is designed to
minimize the likelihood that this will occur.
(2)Because of the asset-based sales charge imposed on Class C shares of
Bond Fund and the Fund, long-term shareholders of Class C shares could
bear expenses that would be the economic equivalent of an amount
greater than the maximum front-end sales charges permitted under
applicable regulatory requirements.
SYNOPSIS
The following is a synopsis of certain information contained in or
incorporated by reference in this Proxy Statement and Prospectus and
presents key considerations for shareholders of the Fund to assist them
in determining whether to approve the Reorganization. This synopsis is
only a summary and is qualified in its entirety by the more detailed
information contained in or incorporated by reference in this Proxy
Statement and Prospectus and the Exhibits hereto. Shareholders should
carefully review this Proxy Statement and Prospectus and the Exhibits
hereto in their entirety and, in particular, the current Prospectus of
Bond Fund which accompanies this Proxy Statement and Prospectus and is
incorporated by reference herein.
Parties to the Reorganization
Bond Fund is a series of Oppenheimer Integrity Funds, a diversified,
open-end, management investment company organized in 1982 as a multi-
series Massachusetts business trust. Prior to July 10, 1995, Bond Fund
was named "Oppenheimer Investment Grade Bond Fund." Bond Fund is
located at 3410 South Galena Street, Denver, Colorado 80231.
Oppenheimer Management Corporation ("OMC") acts as investment adviser
to Bond Fund. Oppenheimer Funds Distributor, Inc. ("OFDI"), a
subsidiary of OMC, acts as the distributor of Bond Fund's shares.
Additional information about Bond Fund is set forth below.
The Fund, a diversified fund, is a series of Quest for Value Family of
Funds (the "Trust"), an open-end, management investment company
organized as a Massachusetts business trust in 1987. The Fund is
located at One World Financial Center, New York, New York 10281. QVA
acts as investment adviser to the Fund. QVD acts as the distributor of
the Fund's shares. QVA and QVD are majority-owned subsidiaries of
Oppenheimer Capital, an institutional investment manager. OMC is not
related to Oppenheimer Capital nor its affiliate, the brokerage firm
Oppenheimer & Co., Inc. Additional information about the Fund is set
forth below.
The Reorganization
The Reorganization Agreement provides for the transfer of substantially
all the assets of the Fund to Bond Fund in exchange for Class A, Class
B and Class C shares of Bond Fund and the assumption by Bond Fund of
certain liabilities of the Fund. The Reorganization Agreement also
provides for the distribution of shares of Bond Fund to the Fund
shareholders in complete liquidation of the Fund (excluding the Cash
Reserve). As a result of the Reorganization, each Fund shareholder
will receive that number of full and fractional Bond Fund shares equal
in value to such shareholder's pro rata interest in the net assets
transferred to Bond Fund as of the Valuation Date (as hereinafter
defined). Holders of Class A, Class B and Class C shares of the Fund
will receive Class A, Class B and Class C shares, respectively, of Bond
Fund. For further information about the Reorganization see "Approval
of the Reorganization" below.
For the reasons set forth below under "Approval of the Reorganization -
Reasons for the Reorganization," the Board, including the trustees who
are not "interested persons" of the Trust (the "Independent Trustees"),
as that term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act"), has concluded that the Reorganization is in
the best interests of the Fund and its shareholders and that the
interests of existing Fund shareholders will not be diluted as a result
of the Reorganization, and recommends approval of the Reorganization by
Fund shareholders. The Board of Trustees of Bond Fund has also
approved the Reorganization and determined that the interests of
existing Bond Fund shareholders will not be diluted as a result of the
Reorganization. If the Reorganization is not approved, the Fund will
continue in existence and the Board will determine whether to pursue
alternative actions. "Approval of the Reorganization" sets forth
certain information with respect to the background of the
Reorganization, including other transactions and agreements entered
into, or contemplated to be entered into, by OMC, QVA and their
respective affiliates.
Approval of the Reorganization will require the affirmative vote of a
majority of each of the Class A, Class B and Class C shares of the
Fund, voting separately as a class, represented in person or by proxy
at the Meeting and entitled to vote at the Meeting. See "Information
Concerning the Meeting - Record Date; Vote Required; Share
Information."
Tax Consequences of the Reorganization
As a condition to the closing of the Reorganization, the Fund and Bond
Fund will have received an opinion to the effect that the
Reorganization will qualify as a tax-free reorganization for Federal
income tax purposes. As a result of such tax-free reorganization, no
gain or loss would be recognized by the Fund, Bond Fund, or the
shareholders of either fund for Federal income tax purposes. For
further information about the tax consequences of the Reorganization,
see "Approval of the Reorganization -Tax Aspects of the Reorganization"
below.
Investment Objectives and Policies
As its investment objective, Bond Fund seeks a high level of current
income by investing mainly in debt instruments. Under normal market
conditions, Bond Fund invests at least 65% of its total assets in
investment grade debt securities, U.S. Government securities, and money
market instruments and may invest up to 35% of its total assets in debt
securities rated less than investment grade. Investment grade debt
securities are those rated in one of the four highest categories by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), or another nationally-recognized rating organization.
Such categories are, from highest to lowest ratings, AAA, AA, A and BBB
as to S&P and Aaa, Aa, A and Baa as to Moody's. See "Comparison
Between Bond Fund and the Fund" for a discussion of certain of these
ratings. Securities rated less than investment grade (often called
"junk bonds") are considered speculative. Although non-investment
grade securities generally offer the potential for higher income than
investment grade debt securities, they may be subject to greater market
fluctuations, greater difficulty in selling them and a greater risk of
default because of the issuer's low creditworthiness. See "Principal
Risk Factors" for a more complete discussion of the risks of investing
in non-investment grade debt securities. Prior to July 10, 1995, Bond
Fund was named "Oppenheimer Investment Grade Bond Fund" and its
investments were limited to investment grade bonds, U.S. Government
securities and money market instruments. Bond Fund's shareholders
approved the changes in Bond Fund's investment policies at a meeting
held July 10, 1995 and these new investment policies are described
herein and in more detail in Bond Fund's current Prospectus and the
Bond Fund Additional Statement.
OMC anticipates that Bond Fund would generally invest at least 75% of
its total assets in : (i) U.S. corporate bonds rated "A" or better and
(ii) U.S. government and agency bonds. OMC further anticipates that
Bond Fund would invest an additional 15% of its total assets in non-
investment grade domestic corporate bonds and 10% of its total assets
in non-investment grade foreign bonds. These anticipated investment
targets, including the allocation between domestic and foreign lower-
grade debt securities, are not fundamental policies, and they are
subject to fluctuation and may be changed by OMC without further notice
to shareholders or amended prospectus disclosure.
Bond Fund's investments may also include securities of foreign
governments and companies, mortgage-backed securities, collateralized
mortgage-backed obligations (CMOs), asset-backed securities, zero
coupon securities, preferred stock and municipal securities. Bond Fund
may also write covered calls and use certain derivative investments,
including options and futures, to enhance income and may use hedging
instruments to try to manage investment risks.
As its investment objective, the Fund seeks as high a level of current
income as is consistent with conservation of principal through a
portfolio consisting primarily of fixed-income obligations. Under
normal market conditions, at least 80% of the Fund's assets will be
invested in corporate bonds, U.S. government securities and/or
mortgage-backed debt securities rated "A" or better by Moody's or S&P
or, if unrated, considered to be of comparable quality by QVA. The
Fund may invest up to 20% of its assets in the lowest category of
investment grade corporate bonds. Such bonds are deemed to have
speculative elements. As with Bond Fund, the Fund may use hedging
instruments to try to manage investment risks.
Shareholders of the Fund should consider the differences in investment
objectives and policies of the funds, including the investment policy
of Bond Fund to invest in securities rated lower than investment grade.
See "Comparison Between Bond Fund and the Fund -Comparison of
Investment Objectives, Policies and Restrictions."
Investment Advisory and Distribution Plan Fees
The funds obtain investment management services from their investment
advisers pursuant to the terms of their respective investment advisory
agreements. The management fee is payable to the investment advisers
monthly and is computed on the net asset value of each fund as of the
close of business each day. Bond Fund pays a management fee which
declines on additional assets as Bond Fund increases its asset base, at
the annual rate of 0.75% of the first $200 million of net assets, 0.72%
of the next $200 million, 0.69% of the next $200 million, 0.66% of the
next $200 million, 0.60% of the next $200 million and 0.50% of net
assets over $1 billion. The management fee payable by the Fund to QVA
is at an annual rate of 0.60% of net assets.
Both Bond Fund and the Fund have adopted separate service and/or
distribution plans pursuant to Rule 12b-1 under the 1940 Act for their
respective Class A, Class B and Class C shares. Pursuant to the plans,
Class A, Class B and Class C shares of Bond Fund and the Fund are
authorized to pay OFDI and QVD, respectively, in connection with the
distribution of shares and the servicing of shareholder accounts that
hold the fund's shares. The plans for Bond Fund and the Fund provide
for payments at a fixed rate to compensate OFDI and QVD, respectively,
except for Bond Fund's Class A service plan, which provides for
reimbursement of OFDI's expenses at a rate not to exceed a fixed rate.
The current maximum annual fee payable by shares of Bond Fund and the
Fund pursuant to their service and/or distribution plans is (i) as to
Class A shares, 0.25% (as a service fee), (ii) as to Class B shares,
1.00% (consisting of a 0.25% service fee and a 0.75% "asset-based sales
charge") and (iii) as to Class C shares, 1.00% (consisting of a 0.25%
service fee and a 0.75% "asset-based sales charge") respectively, of
average annual net assets. Class A shares of the Fund also pay QVD an
asset-based sales charge at an annual rate of 0.15%. Class B shares of
Bond Fund automatically convert to Class A shares of Bond Fund six
years after purchase. Class B shares of the Fund automatically convert
to Class A shares of the Fund eight years after purchase. Accordingly,
Class B shareholders of the Fund pay the asset-based sales charge on
their shares for a longer period than Bond Fund Class B shareholders.
Purchases, Exchanges and Redemptions
Purchases. Purchases of shares of Bond Fund and the Fund may be made
directly through the distributor for Bond Fund or the transfer agent
for the Fund, respectively, or through any dealer, broker or financial
institution that has a sales agreement with the distributor for such
fund (initial purchases of Fund shares must be made through such
dealer, broker or institution). In addition, a shareholder of Bond
Fund may purchase shares automatically from an account at a domestic
bank or other financial institution under the "OppenheimerFunds
AccountLink" service. Class A shares of both Bond Fund and the Fund
generally are sold subject to an initial sales charge and Class B and
Class C shares generally are sold without a front-end sales charge but
may be subject to a CDSC upon redemption. See "Comparative Fee Tables
- -- Transaction Charges" above for a complete description of such sales
charges.
The Class A Bond Fund shares to be issued under the Reorganization
Agreement will be issued by Bond Fund at net asset value without a
sales charge. The sales charge on Class A shares of Bond Fund will
only affect shareholders of the Fund to the extent that they desire to
make additional purchases of Class A shares of Bond Fund in addition to
the shares which they will receive as a result of the Reorganization.
Future dividends and capital gain distributions of Bond Fund, if any,
may be reinvested without sales charge. The Class B and Class C shares
of Bond Fund to be issued under the Reorganization Agreement will be
issued at net asset value and, along with Class A shares of Bond Fund
to be issued under the Reorganization Agreement, will be deemed aged to
the same level as the shareholder's existing Fund Class A, Class B and
Class C shares. Bond Fund has undertaken that any Fund shareholders
entitled to a waiver of or exemption from sales charges pursuant to the
policy stated in the Fund's Prospectus dated March 1, 1995, as revised
June 30, 1995, shall continue to be entitled to such waiver or
exemption as a shareholder of Bond Fund after the Reorganization so
long as they continue to meet the applicable eligibility criteria.
Other Oppenheimer funds shall also provide such waivers and exemptions
upon implementation of appropriate prospectus disclosure.
Exchanges. Shareholders of Bond Fund and the Fund may exchange their
shares at net asset value for shares of the same class of mutual funds
distributed by OFDI and QVD, respectively, subject to certain
conditions. Bond Fund offers an automatic exchange plan providing for
systematic exchanges from Bond Fund of a specified amount for shares of
the same class of other funds within the OppenheimerFunds family.
Redemptions. Class A shares of the funds may be redeemed without
charge at their respective net asset values per share calculated after
the redemption order is received and accepted; however, certain large
investments in Class A shares that were exempt from the front-end sales
charge upon purchase may be subject to a CDSC upon redemption. See
"Comparative Fee Tables -- Transaction Charges" above. Class B shares
of the funds may be redeemed at their net asset value per share,
subject to a maximum CDSC of 5.0% for redemptions occurring within six
years of purchase. Class C shares of both funds may be redeemed at
their net asset value per share, subject to a CDSC of 1.00% if such
shares are redeemed during the first 12 months following their
purchase.
Shareholders of Bond Fund may reinvest redemption proceeds of Class A
shares on which an initial sales charge was paid, or Class A or Class B
shares on which a CDSC was paid, within six months of a redemption at
net asset value in Class A shares of Bond Fund or any of numerous
mutual funds within the OppenheimerFunds family. This privilege is not
applicable to Class C Bond Fund shares. Shareholders of the Fund that
reinvest redemption proceeds of Class A, Class B or Class C shares in
another fund in the Quest Funds family within 60 days will be
reinstated as a shareholder with the same privileges regarding the non-
payment of sales charges that apply to exchanges. Shareholders of the
funds may redeem their shares by written request or by telephone
request in certain stated amounts, or they may arrange to have share
redemption proceeds wired, for a fee, to a pre-designated account at a
U.S. bank or other financial institution that is an automated clearing
house ("ACH") member. Checkwriting privileges on Class A shares of
Bond Fund are also available. Bond Fund may redeem accounts valued at
less than $1,000 if the account has fallen below such stated amount for
reasons other than market value fluctuations. The funds offer
automatic withdrawal plans providing for systematic withdrawals of a
specified amount from the fund account.
PRINCIPAL RISK FACTORS
In evaluating whether to approve the Reorganization and invest in Bond
Fund, shareholders should carefully consider the following summary of
risk factors, relating to both Bond Fund and the Fund, in addition to
the other information set forth in this Proxy Statement and Prospectus.
A complete description of risk factors for each fund is set forth in
the Prospectuses of the funds and their respective Statements of
Additional Information.
As a general matter, Bond Fund and the Fund are intended for investors
seeking high current income and not for investors seeking capital
appreciation. There is no assurance that either Bond Fund or the Fund
will achieve its investment objective and investment in the funds is
subject to investment risks, including the possible loss of the
principal invested. As described below, Bond Fund generally invests a
certain percentage of its assets in high-yield, lower-rated securities.
The Fund may not invest in securities that are rated below investment
grade. Accordingly, investors should consider the additional risk
potential of this investment policy of Bond Fund.
Investment in Debt Securities
The funds both seek their investment objective through investments
primarily in debt securities. Debt securities are subject to interest
rate risk and credit risk. Interest rate risk relates to fluctuations
in market value due to changes in prevailing interest rates. When
prevailing interest rates fall, the values of already-issued debt
securities generally rise. When interest rates rise, the values of
already-issued debt securities generally decline. The magnitude of
these fluctuations will often be greater for longer-term debt
securities than shorter-term debt securities. Changes in the value of
securities held by a fund mean that the fund's share prices can go up
or down when interest rates change, because of the effect of the change
on the value of the fund's portfolio of debt securities.
Credit risk relates to the ability of the issuer of a debt security to
make interest or principal payments on the security as they become due.
Generally, higher-yielding, lower-rated bonds are subject to greater
credit risk than higher-rated bonds. Securities issued or guaranteed
by the U.S. government are subject to little, if any, credit risk.
Bond Fund is permitted to invest up to 35% of its total assets in debt
securities rated less than investment grade or, if unrated, judged by
OMC to be of comparable quality to such lower-rated debt securities
(often called "junk bonds"). However, OMC anticipates that Bond Fund
would generally invest no more than 25% of its total assets in non-
investment grade debt securities. Such securities are speculative and
involve greater risk than investment grade debt securities. They may
be less liquid than higher-rated securities. If Bond Fund were forced
to sell a lower-grade debt security during a period of rapidly
declining prices, it might experience significant losses especially if
a substantial number of other holders decide to sell at the same time.
Other risks may involve the default of the issuer or price changes in
the issuer's securities due to change in the issuer's financial
strength or economic conditions. The Fund may not invest in non-
investment grade debt although up to 20% of the Fund's assets may be
invested in the lowest category of investment grade bonds, which bonds
are deemed to have speculative elements.
The funds may invest in mortgage-backed securities which securities are
subject to prepayment risks. The effective maturity of a mortgage-
backed security may be shortened by unscheduled or early payment of
principal and interest on the underlying mortgages. This may result in
greater price and yield volatility than traditional fixed-income
securities that have a fixed maturity and interest rate. The principal
that is returned may be invested in instruments having a higher or
lower yield than the prepaid instruments depending on then-current
market conditions. Such securities therefore may be less effective as
a means of "locking in" attractive long-term interest rates and may
have less potential for appreciation during periods of declining
interest rates than conventional bonds with comparable stated
maturities. If the funds buy mortgage-backed securities at a premium,
prepayments of principal and foreclosures of mortgages may result in
some loss of the fund's principal investment to the extent of the
premium paid. The value of mortgage-backed securities may also be
affected by changes in the market's perception of the creditworthiness
of the entity issuing or guaranteeing them or by changes in government
regulations and tax policies.
The funds may invest in collateralized mortgage obligations ("CMOs").
Investments by the Fund in CMOs must be of high quality as determined
by the Board. CMOs may be issued in a variety of classes or series
("tranches"). The principal value of certain CMO tranches may be more
volatile and less liquid than other types of mortgage-related
securities, because of the possibility that the principal value of the
CMOs may be prepaid earlier than the maturity of the CMOs as a result
of prepayments of the underlying mortgage loans by the borrowers.
Bond Fund may also invest in "stripped" mortgage-backed securities of
CMOs. Stripped mortgage-backed securities usually have at least two
classes. The classes receive different proportions of the interest and
principal distributions on the pool of mortgage assets that act as
collateral for the security. In certain cases, one class will receive
all of the interest payments (and is known as an "I/O"), while the
other class will receive all of the principal payments (and is known as
a "P/O"). The yield to maturity on the class that receives only
interest is extremely sensitive to the rate of payment of the principal
on the underlying mortgages. Principal prepayments increase that
sensitivity. Stripped securities that pay "interest only" are
therefore subject to greater price volatility when interest rates
change, and they have the additional risk that if the underlying
mortgages are prepaid, the fund will lose the anticipated cash flow
from the interest on the prepaid mortgages. That risk is increased
when general interest rates fall, and in times of rapidly falling
interest rates, the fund might receive back less than its investment in
such I/Os. The value of "principal only" securities generally
increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of
coupon-bearing bonds of the same maturity. Bond Fund may also invest
in private-issuer stripped securities. At present, established trading
markets have not yet developed for these securities. Accordingly, most
private-issuer stripped securities may be deemed "illiquid".
Bond Fund may enter into "forward roll" transactions with respect to
mortgage-backed securities. In a forward roll transaction, Bond Fund
will sell a security to selected banks or other entities and
simultaneously agree to repurchase a similar security (same type,
coupon and maturity) from the institution at a specified later date at
an agreed upon price. Bond Fund is required to secure its obligation
in the transaction by segregating assets with a custodian bank equal in
amount to its obligation under the roll. The principal risk of forward
rolls is the risk of default by the counterparty.
Foreign Securities
The funds may generally invest without limit in debt securities of
foreign governments and foreign companies. Some of the foreign debt
securities Bond Fund may invest in, such as emerging market debt, have
speculative characteristics. There are certain risks of foreign
investing. For example, foreign issuers are not required to use
generally-accepted accounting principles. If foreign securities are
not registered for sale in the U.S. under U.S. securities laws, the
issuer does not have to comply with the disclosure requirements of our
laws, which are generally more stringent than foreign laws. The values
of foreign securities investments will be affected by other factors,
including exchange control regulations or currency blockage and
possible expropriation or nationalization of assets. There are risks
of changes in foreign currency values. The funds may purchase
securities denominated in foreign currencies; accordingly, a change in
value of a foreign currency against the U.S. dollar will result in a
change in the U.S. dollar value of a fund's securities denominated in
that currency. The currency rate change will also affect its income
available for distribution. Although the funds' investment income from
foreign securities may be received in foreign currencies, the funds
will be required to absorb the cost of currency fluctuations. If a
fund suffers a loss on foreign currencies after it has distributed its
income during the year, the fund may find that it has distributed more
income than was available from actual investment income. There may
also be changes in governmental administration or economic or monetary
policy in the U.S. or abroad that can affect foreign investing. In
addition, it is generally more difficult to obtain court judgments
outside the United States if the fund has to sue a foreign broker or
issuer. Additional costs may be incurred because foreign broker
commissions are generally higher than U.S. rates, and there are
additional custodial costs associated with holding securities abroad.
Repurchase Agreements
The funds may enter into repurchase agreements of seven days or less
without limit and may cause up to 10% of their respective net assets
to be subject to repurchase agreements having a maturity beyond seven
days. Repurchase agreements must be fully collateralized. However, if
the vendor fails to pay the resale price on the delivery date, the
funds may experience costs or delays in disposing of the collateral and
may experience losses to the extent that the proceeds from the sale of
the collateral is less than the repurchase price.
Options, Futures and Interest Rate Swaps; Derivatives
The funds may purchase and sell certain kinds of futures contracts and
options on such contracts for hedging purposes. Bond Fund may also
purchase and sell put and call options, options on broadly-based stock
or bond indices and foreign currency and forward contracts and enter
into interest rate swap agreements. The foregoing instruments,
referred to as "hedging instruments," may be considered derivative
investments. Bond Fund may also invest in certain derivative
investments to enhance income. Hedging instruments and derivative
investments and their special risks are described below in "Comparison
Between Bond Fund and the Fund."
APPROVAL OF THE REORGANIZATION
(The Proposal)
Background
Oppenheimer Capital, in the course of a review of its business,
recently concluded that it should concentrate on its core investment
management business and not continue in the retail distribution of
mutual funds. Oppenheimer Capital is the parent of QVA. The retail
mutual fund market requires significant assets per fund and in the
aggregate for a mutual fund family to cover normal costs, significant
capital investment in new products and services, financing for Class B
and Class C shares and sales support. Consequently, it has become
increasingly difficult for a relatively small mutual fund operation,
with assets under $10 billion, to compete. Sometime after this
determination was made, representatives of OMC approached Oppenheimer
Capital about acquiring certain of its mutual fund assets.
Representatives of OMC, Oppenheimer Capital, QVD and QVA held meetings
beginning in April 1995. Following the negotiation of the terms of an
acquisition agreement and related agreements, an acquisition agreement
(the "Acquisition Agreement") was executed by OMC, Oppenheimer Capital,
QVD and QVA on August 17, 1995.
The Reorganization described in this Proxy Statement and Prospectus is
one aspect of the overall Acquisition (as hereinafter defined)
contemplated by the Acquisition Agreement described below. The
consummation of the Acquisition is one condition, among others, to the
closing of the Reorganization. Accordingly, unless the parties
otherwise agree, the Reorganization may not be effected, despite
shareholder approval, if the Acquisition does not close. In such case,
the Fund will continue in existence and the Board will take such
further action as it, in its discretion, deems necessary or advisable.
The description of the Acquisition Agreement set forth below is a
summary only.
Acquisition Agreement
The Acquisition Agreement contemplates the sale to OMC of substantially
all the assets (the "Purchased Assets") of QVA, QVD and Oppenheimer
Capital (collectively, the "Companies") relating to twelve Quest For
Value mutual funds (the "Acquired Funds") and the assumption by OMC of
certain liabilities of the Companies with respect to the Acquired Funds
(the foregoing, the "Acquisition"). The Acquisition Agreement
contemplates that six of the Acquired Funds (including the Fund) will
be reorganized with certain mutual funds currently advised by OMC (the
"Reorganized Funds") and the remaining six Acquired Funds will enter
into investment advisory agreements with OMC (or its designee) and OMC
(or its designee) will thereupon enter into subadvisory agreements with
QVA for the benefit of each such fund (the "Continuing Funds").
The purchase price for the Purchased Assets will be calculated pursuant
to the formula set forth on Exhibit B hereto. If the Acquisition had
been consummated on July 31, 1995, QVA estimates that the purchase
price (which includes the initial purchase payment payable at closing,
certain commissions and a deferred cash payment) would have been
approximately $50 million. The actual purchase price may be lower
depending upon changes in the net asset value of the Acquired Funds.
A condition to the obligation of OMC to close under the Acquisition
Agreement (the "Acquisition Closing") is the approval of the
reorganizations of the Reorganized Funds (including the Reorganization
described in this Proxy Statement and Prospectus) and the approval of
the investment advisory agreements and subadvisory agreements with the
Continuing Funds by shareholders that have in the aggregate at least
75% of the closing net assets of all Acquired Funds. A condition to
the obligation of the Companies to close under the Acquisition
Agreement (which condition has been satisfied) is that the directors or
trustees of the Continuing Funds and the Reorganized Funds have adopted
a resolution that for a period of three years after the Acquisition
Closing, at least 75% of the members of the board of each such fund
will not be "interested persons" (as defined in the 1940 Act) of the
investment adviser or subadviser for such fund or "interested persons"
(as defined in the 1940 Act) of QVA, the predecessor investment adviser
as to the Continuing Funds. The Acquisition Agreement sets forth
certain other conditions to each party's obligation to close.
The Companies have agreed pursuant to an Agreement Not to Compete not
to sponsor, manage or distribute any open- end or closed-end management
investment company registered under the 1940 Act or any similar law in
Canada (except for certain identified investment companies or types of
investment companies) and not to sell, underwrite or assist in the
distribution of shares of any such funds for a period to end on the
earlier of (i) the third anniversary of the date on which there is no
effective sub-advisory agreement between OMC and QVA or (ii) the eighth
anniversary of the Acquisition Closing. OMC and the Companies have
agreed to indemnify the other for certain liabilities.
Board Approval of the Reorganization
At its meeting on June 22, 1995 the Board, including the Independent
Trustees, unanimously approved the Reorganization and the
Reorganization Agreement, determined that the Reorganization is in the
best interests of the Fund and its shareholders and resolved to
recommend that Fund shareholders vote for approval of the
Reorganization. The Board further determined that the Reorganization
would not result in dilution of the Fund's shareholders' interests.
In evaluating the Reorganization, the Board requested and reviewed,
with the assistance of independent legal counsel, materials furnished
by OMC and QVA. These materials included financial statements as well
as other written information regarding OMC and its personnel,
operations and financial condition. The Board also reviewed the same
type of information about QVA. Consideration was given to comparative
information concerning other mutual funds with similar investment
objectives to the Fund and Bond Fund, including information prepared by
Lipper Analytical Services, Inc. and Management Practice Inc. The
Board also considered information with respect to the relative
historical performance of the funds. The Board also reviewed and
discussed the terms and provisions of the investment advisory agreement
pursuant to which OMC provides investment management services to Bond
Fund and compared them to the existing management arrangements for the
Fund as well as the management arrangements of other mutual funds,
particularly with respect to the allocation of various types of
expenses, levels of fees and resulting expense ratios.
In reaching its determination, the Board gave careful consideration to
the following factors, among others: the Reorganization would afford
the shareholders of the Fund the capabilities and resources of OMC and
its affiliates in the area of investment management, distribution,
shareholder servicing and marketing; the ability of the shareholders of
the Fund to exchange their shares for a wider variety of portfolios
within the OppenheimerFunds family with differing investment objectives
than are currently available to shareholders of the Fund; the terms and
conditions of the Reorganization (including that there would be no
sales charge imposed in effecting the Reorganization, the
Reorganization was intended to qualify as a tax-free exchange and all
expenses of the Reorganization would be paid by QVA and OMC in the
amounts incurred by them and the respective fund); and the similarity
and differences of the investment objectives, policies and methods of
the Fund and Bond Fund.
The Board also considered that the annual operating expenses for Bond
Fund are lower, as a percentage of assets, and would be lower on a pro
forma basis after giving effect to the Reorganization, than the
operating expenses of the Fund, resulting in a savings to Fund
shareholders. For operating expenses and other expense information
relating to Bond Fund and the Fund, see "Comparative Fee Tables -
Expenses of Bond Fund and the Fund; Pro Forma Expenses." Further,
since Class B shares of Bond Fund automatically convert to Class A
shares after six years, as compared to a conversion of Class B shares
of the Fund after eight years, Class B Fund shareholders would benefit
from the earlier conversion to a Class that does not bear an annual
asset-based sales charge. In addition, the Board determined that the
purchase, exchange and redemption procedures and privileges provided by
Bond Fund are comparable to those of the Fund and that Fund
shareholders currently exempt from payment of certain transaction-based
sales charges will continue to be so exempt as shareholders of Bond
Fund.
The Bond Fund Board of Trustees, including the trustees who are not
"interested persons" of Bond Fund, unanimously approved the
Reorganization and the Reorganization Agreement and determined that the
Reorganization is in the best interests of Bond Fund and its
shareholders. The Bond Fund Board further determined that the
Reorganization would not result in dilution of the Bond Fund
shareholders' interests. The Bond Fund Board considered, among other
things, that an increase in Bond Fund's asset base as a result of the
Reorganization could benefit Bond Fund shareholders due to the
economies of scale available to a larger fund. These economies of
scale should result in slightly lower costs per account for each Bond
Fund shareholder through lower operating expenses and transfer agency
expenses.
The Reorganization
The following summary of the Reorganization Agreement is qualified in
its entirety by reference to the Reorganization Agreement (a copy of
which is set forth in full as Exhibit A to this Proxy Statement and
Prospectus). The Reorganization Agreement contemplates a
reorganization under which (i) substantially all of the assets of the
Fund would be transferred to Bond Fund in exchange for Class A, Class B
and Class C shares of Bond Fund and the assumption by Bond Fund of
certain liabilities of the Fund, (ii) the Class A, Class B and Class C
shares would be distributed among the respective Class A, Class B and
Class C shareholders of the Fund in liquidation of the Fund and (iii)
the outstanding shares of the Fund would be cancelled. Prior to the
Closing Date (as hereinafter defined), the Fund will endeavor to
discharge all of its liabilities and obligations when and as due prior
to such date. Bond Fund will not assume any liabilities or obligations
of the Fund other than those reflected on an unaudited statement of
assets and liabilities of the Fund prepared as of the Valuation Date
and that are agreed to by Bond Fund. In this regard, the Fund will
retain a cash reserve (the "Cash Reserve") in an amount which is deemed
sufficient in the discretion of the Board for the payment of (a) the
Fund's expenses of liquidation and (b) the Fund's liabilities, other
than those assumed by Bond Fund. The number of full and fractional
Class A, Class B and Class C shares of Bond Fund to be issued to the
Fund will be determined on the basis of Bond Fund's and the Fund's
relative net asset values per Class A, Class B and Class C shares,
respectively, computed as of the close of business of the New York
Stock Exchange, Inc. on the business day preceding the Closing Date
(the "Valuation Date"). The Closing Date for the Reorganization will
be the date of the closing of the Acquisition under the Acquisition
Agreement (or such other day and time as may be mutually agreed upon in
writing).
OMC will utilize the valuation procedures set forth in the Bond Fund
Prospectus and Bond Fund Additional Information to determine the value
of the Fund's assets to be transferred to Bond Fund pursuant to the
Reorganization, the value of Bond Fund's assets and the net asset value
of each class of shares of Bond Fund. Such values will be computed by
OMC as of the Valuation Date in a manner consistent with its regular
practice in pricing Bond Fund.
The Reorganization Agreement provides for coordination between the
funds as to their respective portfolios so that, on and after the
Closing Date, Bond Fund will be in compliance with all of its
investment policies and restrictions. The Fund will recognize capital
gain or loss on any sales made pursuant to this condition. As noted in
"Tax Aspects of the Reorganization" below, if the Fund realizes net
gain from the sale of securities, such gain, to the extent not offset
by capital loss carry-forwards, will be distributed to shareholders
prior to the Closing Date and will be taxable to shareholders as
capital gain.
Contemporaneously with the closing, the Fund will be liquidated (except
for the Cash Reserve) and the Fund will distribute or cause to be
distributed pro rata to Fund shareholders of record as of the close of
business on the Valuation Date the full and fractional Bond Fund shares
of each class received by the Fund. Upon such liquidation all issued
and outstanding shares of the Fund will be cancelled on the Fund's
books and Fund shareholders will have no further rights as shareholders
of the Fund. To assist the Fund in the distribution of Bond Fund
shares, Bond Fund will, in accordance with a shareholder list supplied
by the Fund, cause Bond Fund's transfer agent to credit and confirm an
appropriate number of shares of Bond Fund to each shareholder of the
Fund. Certificates for shares of Bond Fund will be issued upon written
request of a former shareholder of the Fund but only for whole shares
with fractional shares credited to the name of the shareholder on the
books of Bond Fund. Former Class A shareholders of the Fund who wish
certificates representing their Class A shares of Bond Fund must, after
receipt of their confirmations, make a written request to Oppenheimer
Shareholder Services, P.O. Box 5270, Denver, Colorado 80217. Share
certificates are not available for Class B or Class C Bond Fund shares.
Shareholders of the Fund holding certificates representing their shares
will not be required to surrender their certificates to anyone in
connection with the Reorganization. After the Reorganization, however,
it will be necessary for such shareholders to surrender such
certificates in order to redeem, transfer, pledge or exchange any
shares of Bond Fund. After the closing of the Reorganization, the Fund
will not conduct any business except in connection with the winding up
of its affairs. Under the Reorganization Agreement, within one year
after the Closing Date, the Fund shall: either (i) transfer any
remaining amount of the Cash Reserve to Bond Fund, if such remaining
amount is not material (as defined below) or (ii) distribute such
remaining amount to the shareholders of the Fund who were such on the
Valuation Date. Such remaining amount shall be deemed to be material
if the amount to be distributed, after deducting the estimated expenses
of the distribution, equals or exceeds one cent per share of the number
of Fund shares outstanding on the Valuation Date.
The consummation of the Reorganization is subject to the conditions set
forth in the Reorganization Agreement, including, without limitation,
approval of the Reorganization by the Fund's shareholders.
Notwithstanding approval of the Fund's shareholders, the Reorganization
may be terminated at any time at or prior to the Closing Date (i) by
mutual written consent of the Trust, on behalf of the Fund, and
Integrity Trust, on behalf of Bond Fund, (ii) by the Trust, on behalf
of the Fund, or Integrity Trust, on behalf of Bond Fund if the closing
shall not have occurred on or before February 29, 1996, or (iii) by
the Trust, on behalf of the Fund, or Integrity Trust, on behalf of Bond
Fund upon a material breach by the other (and, with respect to Bond
Fund, a material breach by QVA) of any representation, warranty,
covenant or agreement contained therein to be performed on or prior to
the Closing Date, if a condition therein expressed to be precedent to
the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met prior to the
Closing Date or the Acquisition is not consummated. Termination of the
Reorganization Agreement will terminate all obligations of the parties
thereto (other than a confidentiality obligation of Bond Fund with
respect to information relating to the Fund and the obligation of Bond
Fund to return certain books and records to the Fund) without liability
except, in the event of a termination pursuant to (iii) above, any
party in breach (other than a breach due to the Fund's shareholders not
approving the Reorganization) of the Reorganization Agreement (or the
Acquisition Agreement, if applicable) will, upon demand, reimburse the
non-breaching party for all reasonable out-of-pocket fees and expenses
incurred in connection with the transactions contemplated by the
Reorganization Agreement.
Approval of the Reorganization will require the vote specified below in
"Information Concerning the Meeting - Record Date; Vote Required; Share
Information." If the Reorganization is not approved by the
shareholders of the Fund, the trustees of the Trust will consider other
possible courses of action.
Tax Aspects of the Reorganization
At or prior to the Closing Date, the Fund will declare a dividend in an
amount large enough so that it will have declared a dividend of all of
its investment company taxable income and net capital gain, if any, for
the taxable period ending with its dissolution (determined without
regard to any deduction for dividends paid). Such dividends will be
included in the taxable income of the Fund's shareholders as ordinary
income and capital gain, respectively.
The exchange of the assets of the Fund for Class A, Class B and Class C
shares of Bond Fund and the assumption by Bond Fund of certain
liabilities of the Fund is intended to qualify for Federal income tax
purposes as a tax-free reorganization under Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Fund has
represented to Price Waterhouse LLP, tax adviser to the Fund, that, to
the Fund's best knowledge, there is no plan or intention by any Fund
shareholder who owns 5% or more of the Fund's outstanding shares, and,
to the Fund's best knowledge, there is no plan or intention on the part
of the remaining Fund shareholders, to redeem, sell, exchange or
otherwise dispose of a number of Bond Fund shares received in the
transaction that would reduce the Fund shareholders' ownership of Bond
Fund Class A, Class B and Class C shares to a number of shares having a
value, as of the Closing Date, of less than 50% of the value of all the
formerly outstanding Fund shares as of the same date. The Fund and
Bond Fund have each further represented to Price Waterhouse LLP the
fact that, as of the Closing Date, the Fund and Bond Fund will qualify
as regulated investment companies or will meet the diversification test
of Section 368(a)(2)(F)(ii) of the Code.
As a condition to the closing of the Reorganization, Bond Fund and the
Fund will receive the opinion of Price Waterhouse LLP to the effect
that, based on the Reorganization Agreement, the above representations
and other representations as such firm shall reasonably request,
existing provisions of the Code, Treasury Regulations issued
thereunder, current Revenue Rulings, Revenue Procedures and court
decisions, for Federal income tax purposes:
1. The transfer of substantially all of the Fund's assets in
exchange for Class A, Class B and Class C shares of Bond Fund and
the assumption by Bond Fund of certain identified liabilities of
the Fund followed by the distribution by the Fund of Class A,
Class B and Class C shares of Bond Fund to the Fund shareholders
in exchange for their Fund shares will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the
Code and the Fund and Bond Fund will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code.
2. Pursuant to Section 1032 of the Code, no gain or loss will be
recognized by Bond Fund upon the receipt of the assets of the Fund
solely in exchange for Class A, Class B and Class C shares of Bond
Fund and the assumption by Bond Fund of the identified liabilities
of the Fund.
3. Pursuant to Section 361(a) of the Code, no gain or loss will
be recognized by the Fund upon the transfer of the assets of the
Fund to Bond Fund in exchange for Class A, Class B and Class C
shares of Bond Fund and the assumption by Bond Fund of the
identified liabilities of the Fund or upon the distribution of
Class A, Class B and Class C shares of Bond Fund to the Fund
shareholders in exchange for the Fund shares.
4. Pursuant to Section 354(a) of the Code, no gain or loss will
be recognized by the Fund shareholders upon the exchange of the
Fund shares for the Class A, Class B and Class C shares of Bond
Fund.
5. Pursuant to Section 358 of the Code, the aggregate tax basis
for Class A, Class B and Class C shares of Bond Fund received by
each Fund shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Fund shares held by each
such Fund shareholder immediately prior to the Reorganization.
6. Pursuant to Section 1223 of the Code, the holding period of
Class A, Class B and Class C shares of Bond Fund to be received by
each Fund shareholder will include the period during which the
Fund shares surrendered in exchange therefor were held (provided
such Fund shares were held as capital assets on the date of the
Reorganization).
7. Pursuant to Section 362(b) of the Code, the tax basis of the
assets of the Fund acquired by Bond Fund will be the same as the
tax basis of such assets of the Fund immediately prior to the
Reorganization.
8. Pursuant to Section 1223 of the Code, the holding period of
the assets of the Fund in the hands of Bond Fund will include the
period during which those assets were held by the Fund.
9. Bond Fund will succeed to and take into account the items of
the Fund described in Section 381(c) of the Code, including the
earnings and profits, or deficit in earnings and profits, of the
Fund as of the date of the transactions. Bond Fund will take
these items into account subject to the conditions and limitations
specified in Sections 381, 382, 383 and 384 of the Code and
applicable regulations thereunder.
Shareholders of the Fund should consult their tax advisors regarding
the effect, if any, of the Reorganization in light of their individual
circumstances. Since the foregoing discussion only relates to the
Federal income tax consequences of the Reorganization, shareholders of
the Fund should also consult their tax advisors as to state and local
tax consequences, if any, of the Reorganization.
Capitalization Table (Unaudited)
The table below sets forth the capitalization of Bond Fund and the Fund
and indicates the pro forma combined capitalization as of June 30, 1995
as if the Reorganization had occurred on that date.
Net Asset
Shares Value
Net Assets Outstanding Per Share
Oppenheimer Bond Fund*
Class A Shares $118,864,206 10,995,949 $10.81
Class B Shares 7,700,818 712,334 10.81
Investment Quality
Income Fund
Class A Shares 47,384,068 4,417,757 10.73
Class B Shares 10,751,740 1,002,425 10.73
Class C Shares 3,543,606 330,312 10.73
Pro Forma Combined
Fund**
Class A Shares 166,248,274 15,379,305 10.81
Class B Shares 18,452,558 1,706,945 10.81
Class C Shares 3,543,606 327,809 10.81
- ------------------
* Class C shares of Bond Fund were first publicly offered on July 11,
1995. Accordingly, information with respect to Class C shares of Bond
Fund is not reflected in this part of the table above.
**Reflects issuance of 4,383,356 Class A shares, 994,611 Class B shares
and 327,809 Class C shares of Bond Fund in a tax-free exchange for the
net assets of the Fund, aggregating $47,384,068, $10,751,740 and
$3,543,606 for Class A, Class B and Class C shares, respectively, of
the Fund.
The pro forma ratio of expenses to average annual net assets of the
combined funds at June 30, 1995 would have been 1.31% with respect to
Class A shares, 2.09% with respect to Class B shares and 2.09% with
respect to Class C shares.
COMPARISON BETWEEN BOND FUND AND THE FUND
Comparative information about Bond Fund and the Fund is presented
below. More complete information about Bond Fund and the Fund is set
forth in their respective Prospectuses (which, as to Bond Fund,
accompanies this Proxy Statement and Prospectus and is incorporated
herein by reference) and Statements of Additional Information. To
obtain copies, see "Miscellaneous - Public Information."
Comparison of Investment Objectives, Policies and Restrictions
As its investment objective, Bond Fund seeks a high level of current
income by investing mainly in debt instruments. As its investment
objective, the Fund seeks to provide shareholders with as high a level
of current income as is consistent with conservation of principal
through a portfolio consisting primarily of fixed income obligations.
In seeking their investment objectives, which are fundamental policies,
Bond Fund and the Fund employ the investment policies as described in
detail below.
Bond Fund. Under normal market conditions, Bond Fund invests at least
65% of its total assets in a diversified portfolio of investment grade
fixed-income securities. These include (i) investment-grade debt
securities rated BBB or above by S&P, Baa or above by Moody's or an
equivalent rating category of another nationally-recognized rating
organization or, if unrated, are of comparable quality as determined by
OMC; (ii) securities issued or guaranteed as to principal and interest
by the U.S. Government, its agencies or instrumentalities or
obligations secured by such securities ("U.S. Government Securities");
and (iii) high-quality, short-term money market instruments.
Bond Fund may invest up to 35% of its total assets in debt securities
rated less than investment grade or, if unrated, judged by OMC to be of
comparable quality to such lower-rated securities (collectively,
"lower-grade securities"). Lower-grade securities (often called "junk
bonds") are considered speculative and involve greater risk than
investment grade debt securities. Lower-grade securities include
securities rated BB, B, CCC, CC and D by S&P or Ba, B, Caa, Ca and C by
Moody's. Bonds rated BB, B, CCC and CC by S&P are regarded, on
balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the
terms of the obligation. Bonds on which no interest is paid are rated
C by S&P. Bonds rated D by S&P are in default and payment of interest
and/or repayment of principal is in arrears. Bonds rated Ba or B by
Moody's are judged to have speculative elements; their future is not
well-assured. Bonds rated Caa by Moody's are of poor standing and may
be in default; bonds rated Ca are speculative in a high degree and are
often in default; bonds rated C are regarded as having extremely poor
prospects of attaining any real investment standing. Prior to July 10,
1995, Bond Fund's investments were limited to investment grade bonds,
U.S. Government Securities and money market instruments. Such
investment policies were changed pursuant to shareholder approval on
July 10, 1995.
OMC anticipates that Bond Fund would generally invest at least 75% of
its total assets in: (i) U.S. corporate bonds rated "A" or better and
(ii) U.S. government and agency bonds. OMC further anticipates that
Bond Fund would invest an additional 15% of its total assets in non-
investment grade domestic corporate bonds and 10% of total assets in
non-investment grade foreign bonds. These anticipated investment
targets, including the allocation between domestic and foreign lower-
grade debt securities, are not fundamental investment policies, and
they are subject to fluctuation and may be changed by OMC without
further notice to shareholders or amended prospectus disclosure. When
investing Bond Fund's assets, OMC considers many factors, including
current developments and trends in both the economy and the financial
markets. Under normal market conditions, Bond Fund's target duration
will be approximately five. Duration is a measure of the anticipated
rise or decline in value for a 1% change in interest rates. For
example, a duration of 2 in a portfolio indicates that for every 1%
rise in general interest rates, the portfolio's value would be expected
to fall 2%, and vice versa.
Bond Fund may invest in debt securities issued or guaranteed by foreign
companies and debt securities of foreign governments or their agencies.
Bond Fund is not restricted in the amount of assets that it may invest
in foreign countries or in which countries. However, if Bond Fund's
assets are held abroad, the countries in which they are held and the
sub-custodians holding then must in most cases be approved by the
Integrity Trust Board of Trustees.
Bond Fund may also invest in U.S. Government Securities (including
mortgage-related U.S. Government Securities that are issued or
guaranteed by federal agencies or government-sponsored entities but are
not supported by the full faith and credit of the U.S. Government),
mortgage-backed securities, whether issued by the U.S. government or
private issuers, CMOs, stripped CMOs and asset-backed securities. In
addition to the foregoing, Bond Fund may invest in zero coupon
securities, preferred stocks and municipal securities.
The Fund. Under normal conditions, at least 80% of the Fund's assets
will be invested in corporate bonds, U.S. Government Securities and/or
mortgage-backed securities (including CMOs) rated A or better by
Moody's, or, if unrated, considered to be of comparable quality by QVA.
The Fund may invest up to 20% of its assets in the lowest category of
investment-grade corporate bonds, those which are rated Baa3 by Moody's
or BBB by S&P or, if unrated, considered to be of comparable quality by
QVA. The average maturity of the Fund's investments will vary based on
market conditions. It is anticipated, however, that the average dollar
weighted maturity of the Fund will be greater than 20 years. For
temporary defensive purposes the Fund may invest up to 100% of its
assets in various types of U.S. Government securities and high quality
money market instruments.
Special Investment Methods
Bond Fund and the Fund may use the special investment methods
summarized below.
Loans of Portfolio Securities. Both Bond Fund and the Fund may lend
their portfolio securities to brokers, dealers and other financial
institutions, subject to certain conditions. The funds must receive
collateral for the loans. As to Bond Fund, these loans are limited to
not more than 25% of the value of its total assets. However, Bond Fund
presently does not intend to lend its portfolio securities but, if it
does, the value of securities loaned is not expected to exceed 5% of
the value of the total assets of Bond Fund in the coming year. The
Fund may commit up to 10% of the value of its total assets to such
loans, but has not entered into any to date.
Repurchase Agreements. Both Bond Fund and the Fund may enter into
repurchase agreements. There is no limit on the amount of either fund's
net assets that may be subject to repurchase agreements of seven days
or less. Neither fund will enter into a repurchase agreement that will
cause more than 10% of its net assets to be subject to repurchase
agreements having a maturity beyond seven days; as to Bond Fund this
percentage limit may increase to 15% if certain state laws are changed
or Bond Fund's shares are no longer sold in those states. This policy
is fundamental as to the Fund; it is non-fundamental as to Bond Fund.
Hedging. Bond Fund may purchase and sell: futures contracts that
relate to foreign currencies ("forward contracts"), financial indices
and interest rates; certain put and call options; and options on
futures, broadly-based stock indices, bond indices and foreign
currency. Bond Fund may also enter into interest rate swap agreements.
The Fund may purchase or sell financial futures contracts and options
on such contracts. These are all referred to as "hedging instruments."
The funds do not use hedging instruments for speculative purposes. Up
to 50% of Bond Fund's total assets may be subject to calls. Bond Fund
will not write puts if more than 50% of its net assets would have to be
segregated to cover put obligations. Bond Fund may only purchase a
call or put if, after such purchase, the value of all call and put
options held by Bond Fund would not exceed 5% of Bond Fund's total
assets. Other limits on the use of hedging instruments are described
in the funds' respective Prospectuses and Statements of Additional
Information.
Hedging instruments may be used to manage a fund's exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary
substitute for purchasing individual securities; to try to manage its
exposure to changing interest rates; to hedge the fund's portfolio
against price fluctuations; and to increase the fund's exposure to the
securities market. Forward contracts are used to try to manage foreign
currency risks on Bond Fund's foreign investments. Bond Fund's foreign
currency options are used to try to protect against declines in the
dollar value of foreign securities Bond Fund owns, or to protect
against an increase in the dollar cost of buying foreign securities.
Bond Fund may write covered call options to provide income for
liquidity purposes, defensive reasons, or to raise cash to distribute
to shareholders.
The use of hedging instruments requires special skills and knowledge of
investment techniques that are different than those required for normal
portfolio management. If the investment adviser to a fund uses a
hedging instrument at the wrong time or judges market conditions
incorrectly, hedging strategies may reduce the fund's return. The fund
could also experience losses if the prices of its futures and options
positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future
or option. Options trading involves the payment of premiums and has
special tax effects on the fund. There are also special risks in
particular hedging strategies. If a covered call written by Bond Fund
is exercised on an investment that has increased in value, Bond Fund
will be required to sell the investment at the call price and will not
be able to realize any profit if the investment has increased in value
above the call price. Interest rate swaps are subject to credit risks
(if the other party fails to meet its obligations) and also to interest
rate risks. Bond Fund could be obligated to pay more under its swap
agreements than it receives under them, as a result of interest rate
changes.
Derivative Investments. Bond Fund can invest in a number of different
kinds of "derivative investments." Some types of derivatives may be
used for hedging purposes, as described above. Bond Fund may invest in
others because they offer the potential for increased income and
principal value. In general, a "derivative investment" is a specially-
designed investment the performance of which is linked to the
performance of another investment or security, such as an option,
future, index, currency or commodity. In the broadest sense,
derivative investments include the hedging instruments in which the
funds may invest. Other types of derivatives in which Bond Fund may
invest include index-linked or commodity-linked notes, debt
exchangeable for common stock, equity-linked debt securities and
currency indexed securities.
One risk of investing in derivative investments is that the company
issuing the instrument might not pay the amount due on the maturity of
the instrument. There is also the risk that the underlying investment
or security might not perform the way the investment adviser expected
it to perform. Markets, underlying securities and indices may move in
a direction not anticipated by OMC. The performance of derivative
investments may also be influenced by interest rate changes in the U.S.
and abroad. All of these risks can mean that Bond Fund will realize
less income than expected from its investments, or that it can lose
part or all of the value of its investments, which will affect its
share price. In some cases, the payment of principal or periodic
interest may be calculated as a multiple of the movement of currency
exchange rates or as an index, entailing the potential for increased
risk to principal and increase price volatility. In addition, from
time to time certain derivative investments held by the Fund may be
illiquid.
When-Issued and Delayed Delivery Transactions. The funds may purchase
securities on a "when-issued" basis and may purchase or sell such
securities on a "delayed delivery" basis. These terms refer to
securities that have been created and for which a market exists, but
which are not available for immediate delivery or are to be delivered
at a later date. There may be a risk of loss to the funds if the value
of the security changes prior to the settlement date.
Investment Restrictions
Both Bond Fund and Fund have certain investment restrictions that,
together with their respective investment objectives, are fundamental
policies changeable only by shareholder approval. The investment
restrictions of Bond Fund and the Fund are substantially the same
except as set forth below.
Bond Fund cannot (1) buy securities issued or guaranteed by any one
issuer (except the U.S. Government or any of its agencies or
instrumentalities) if with respect to 75% of its total assets Bond Fund
would own more than 10% of that issuer's voting securities; and (2)
make loans to an officer, trustee or employee of the Integrity Trust or
to any officer, director or employee of Massachusetts Mutual Life
Insurance Company ("MassMutual") or to MassMutual. In accordance with
certain nonfundamental policies and guidelines changeable without
shareholder approval, Bond Fund may not: (A)invest for the purpose of
exercising control over, or management of, any company; (B) purchase
any security of a company which (including any predecessor, controlling
person, general partner and guarantor) has a record of less than three
years of continuous operations or relevant business experience, if such
purchase would cause more than 5% of the current value of Bond Fund's
assets to be invested in such companies; and (C) invest in securities
of other investment companies except by purchase in the open market
where no commission or profit to a sponsor or dealer results from such
purchase other than the customary broker's commission, except when such
purchase is a part of a plan of merger, consolidation, reorganization
or acquisition.
The Fund cannot: (1) invest in securities of other investment companies
except in connection with a merger, consolidation, reorganization or
acquisition of assets, (2) invest more than 10% of its total assets in
illiquid securities 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, the
Fund has agreed to limit investment in restricted securities to 5% of
its total assets, although the restriction is not a fundamental
policy); this restriction does not apply to securities sold to
"qualified institutional buyers" in accordance with Rule 144 under the
Securities Act of 1933; (3) purchase more than 10% of the voting
securities of any one issuer; (4) 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 considered as one class; (5)
invest more than 5% of the Fund's total assets in securities of issuers
having a record, together with predecessors, of less than three years
of continuous operation; (6) invest in physical commodities or
physical commodity contracts or speculate in financial commodity
contracts, but the Fund is authorized to purchase and sell financial
futures contracts and options on such futures contracts exclusively for
hedging and other non-speculative purposes to the extent specified in
its Prospectus; (7) purchase warrants if as a result the Fund would
then have either more than 5% of its total assets (determined at the
time of investment) invested in warrants or more than 2% of its total
assets invested in warrants not listed on the New York or American
Stock Exchange; (8) purchase securities on margin (except for such
short-term loans as are necessary for the clearance of purchases of
portfolio securities); (9) invest for the purpose of exercising control
or management of another company; and (10) issue senior securities as
defined in the 1940 Act except insofar as the Fund may be deemed to
have issued a senior security by reason of: (a) entering into any
repurchase agreement; (b) borrowing money in accordance with
restrictions set forth in the Fund's current Prospectus; or (c) lending
portfolio securities.
Bond Fund Performance
Bond Fund does not maintain a fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any
capital gains.
In 1994, the Federal Reserve aggressively moved to raise short term
interest rates in an effort to control inflation. As interest rates
rose, the bond market declined. In response to the rising interest
rates in the U.S., OMC reduced Bond Fund's exposure to long-term U.S.
Government Treasury securities whose performance tends to lag
investment-grade corporate bonds in the mid-to-late stages of economic
expansion. OMC moved to position Bond Fund's assets somewhat more
conservatively by increasing Bond Fund's holdings in asset-backed
issues and mortgage-backed bonds which generally are more stable and
predictable in periods of rising interest rates and which OMC viewed as
offering high credit quality and attractive yields. While waiting for
the bond market to stabilize, OMC increased Bond Fund's holdings in
short-term money market securities. Bond Fund's investment
performance will vary over time, depending on market conditions, the
composition of the portfolio, expenses and which class of shares an
investor owns. Past performance should not be considered a prediction
of future performance.
Included in the prospectus for Bond Fund, a copy of which accompanies
this Proxy Statement and Prospectus and is incorporated herein by
reference, in the section entitled "Performance of the Fund" is a
performance graph which depicts the performance of a hypothetical
investment of $10,000 in Class A and Class B shares of Bond Fund held
until December 31, 1994; in the case of Class A shares, since April 15,
1988 and in the case of Class B shares, from the inception of the Class
on May 1, 1993, with all dividends and capital gains distributions
reinvested on the reinvestment date. Class C shares were not offered
during the fiscal year ended December 31, 1994, and thus no performance
information about Class C shares is given. The average annual total
return of shares of Bond Fund are compared with the performance of
Lehman Brothers Corporate Bond Index, a broad-based, unmanaged index of
publicly-issued nonconvertible investment grade corporate debt of U.S.
issuers, widely recognized as a measure of the U.S. fixed-rate
corporate bond market. The Lehman Brothers Corporate Bond Index
includes a factor for the reinvestment of interest, but does not
reflect expenses or taxes. Index performance reflects the reinvestment
of dividends but does not consider the effect of capital gains or
transaction costs, and none of the data shows the effect of taxes.
Information on Fund performance is set forth in the Fund's Annual
Report as of October 31, 1994, which may be obtained without charge as
set forth in "Miscellaneous - Public Information." Such information is
incorporated herein by reference.
Additional Comparative Information
General
For a discussion of the organization and operation of Bond Fund,
including brokerage practices, see "Investment Objective and Policies"
and "How the Fund is Managed" in the Bond Fund current Prospectus and
"Brokerage Policies of the Fund" in the Bond Fund Additional Statement.
For a discussion of the organization and operation of the Fund,
including brokerage practices, see "Investment Objectives of the Fund,"
"Investment Restrictions and Techniques," "Investment Management
Agreement" and "Additional Information" in the Fund current Prospectus.
Financial Information
For certain financial information about Bond Fund and the Fund, see (as
to Bond Fund) "Financial Highlights" and "Performance of the Fund" in
the Bond Fund current Prospectus and (as to the Fund) "Financial
Highlights" in the Fund current Prospectus.
Management of Bond Fund and the Fund
For information about the management of Bond Fund and the Fund,
including their respective Boards of Trustees, investment advisers,
portfolio managers and distributors, see (as to Bond Fund) "Expenses"
and "How the Fund is Managed" in the Bond Fund current Prospectus and
"How the Fund is Managed," "Trustees and Officers of the Fund" and "The
Manager and its Affiliates" in the Bond Fund Additional Statement and
(as to the Fund) "Investment Management Agreement," Distribution Plan,"
"Portfolio Transactions and Turnover" and "Additional Information" in
the Fund current Prospectus and "Trustees and Officers" in the Fund
Additional Statement.
Description of Shares of Bond Fund and the Fund
Bond Fund is a series of Integrity Trust, a Massachusetts business
trust. Each share of Bond Fund represents an interest in Bond Fund
proportionately equal to the interest of each other share of the same
class and entitles the holder to one vote per share (and a fractional
vote for a fractional share) on matters submitted to a vote at
shareholder meetings. Shares of Bond Fund and of Integrity Trust's
other series vote together in the aggregate on certain matters at
shareholder meetings, such as the election of Trustees and ratification
of appointment of auditors. Shareholders of a particular series or
class vote separately on proposals which affect that series or class,
and shareholders of a series or class which are not affected by that
matter are not entitled to vote on the proposal. Bond Fund is not
required to hold, and does not plan to hold, regular annual meetings of
shareholders. Shareholders of Bond Fund have the right, under certain
circumstances, to remove a Trustee and will be assisted in
communicating with other shareholders for such purpose.
Bond Fund is authorized to issue an unlimited number of shares of
beneficial interest. Shares are freely transferrable and shares do not
have cumulative voting rights or preemptive or subscription rights.
Bond Fund is governed by a Board of Trustees that has the power,
without shareholder approval, to establish and designate one or more
series and to divide unissued shares into two or more classes. The
Board of Trustees has established three classes of shares for Bond
Fund, Class A, Class B and Class C. Each class invests in the same
investment portfolio. Each class has its own dividends and
distributions, and pays certain expenses which may be different for the
different classes. Under certain circumstances, a shareholder of Bond
Fund may be held personally liable as a partner for the obligations of
Bond Fund, and under the Declaration of Trust for Integrity Trust, such
a shareholder is entitled to indemnification rights by Bond Fund; the
risk of a shareholder incurring any such loss is limited to the remote
circumstances in which Bond Fund is unable to meet its obligations.
For further information about the shares of Bond Fund, and for a
description of the classes of shares of the Fund, including voting
rights, restrictions on disposition and potential liability associated
with their ownership, see (as to Bond Fund) "How the Fund is Managed"
in the Bond Fund current Prospectus and Bond Fund Additional Statement
and (as to the Fund) "Additional Information" in the Fund current
Prospectus.
Dividends, Distributions and Taxes
Both funds declare dividends from net investment income on each regular
business day, distribute dividends monthly and distribute net long-term
capital gains annually. Bond Fund distributes net short-term capital
gains annually and the Fund distributes such gains quarterly. For a
discussion of the policies of Bond Fund and the Fund with respect to
dividends and distributions, and a discussion of the tax consequences
of an investment in Bond Fund and the Fund, see (as to Bond Fund)
"Dividends, Capital Gains and Taxes" in the Bond Fund current
Prospectus and (as to the Fund) "Dividends and Distributions" and "Tax
Status" in the Fund current Prospectus.
Purchases, Redemptions and Exchanges of Shares
For a discussion of how shares of Bond Fund and the Fund may be
purchased, redeemed and exchanged, see (as to Bond Fund) "How to Buy
Shares," "How to Sell Shares," "Exchanges of Shares," "Special Investor
Services," "Service Plan for Class A Shares," "Distribution and Service
Plan for Class B Shares" and "Distribution and Service Plan for Class C
Shares" in the Bond Fund current Prospectus; and see "How to Buy
Shares," "How to Redeem Shares," "Exchanging Shares" and "Additional
Information" in the Fund current Prospectus.
Shareholder Inquiries
For a description of how shareholder inquiries should be made, see (as
to Bond Fund) "How the Fund is Managed" in the Bond Fund current
Prospectus and (as to the Fund) "Additional Information" in the Fund
current Prospectus.
INFORMATION CONCERNING THE MEETING
The Meeting
The Meeting will be held at One World Financial Center, New York, New
York 10281 on the 40th Floor at 9:00 A.M., New York time, on November
16, 1995 and any adjournments thereof. At the Meeting, shareholders of
the Fund will be asked to consider and vote upon approval of the
Reorganization Agreement, and the transactions contemplated thereby,
including the transfer of substantially all the assets of the Fund in
exchange for Class A, Class B and Class C shares of Bond Fund and the
assumption by Bond Fund of certain liabilities of the Fund, the
distribution of such shares to the shareholders of the Fund in
liquidation of the Fund and the cancellation of the outstanding shares
of the Fund.
Record Date; Vote Required; Share Information
The Board has fixed the close of business on September 25, 1995 as the
record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting. The affirmative
vote of majority of each of the Class A, Class B and Class C shares of
the Fund, voting separately as a class, represented in person or by
proxy at the Meeting and entitled to vote at the Meeting is required
for approval of the Proposal. Each shareholder will be entitled to one
vote for each share and a fractional vote for each fractional share
held of record at the close of business on the Record Date. Only
shareholders of the Fund will vote on the Reorganization. The vote of
shareholders of Bond Fund is not being solicited to approve the
Reorganization Agreement.
At the close of business on the Record Date, there were approximately
4,318,710.404 Class A, 1,166,907.458 Class B and 339,198.928 Class C
shares of the Fund issued and outstanding. The presence in person or
by proxy of the holders of a majority of each of Class A, Class B and
Class C shares constitutes a quorum for the transaction of business at
the Meeting. As of the close of business on the Record Date, there
were approximately 11,684,995.814 Class A, 2,257,691.486 Class B and
91.827 Class C shares of Bond Fund issued and outstanding. To the
knowledge of the Fund, as of the Record Date, no person owned of record
or beneficially more than 5% of the outstanding Class A, Class B or
Class C Fund shares or more than 5% of the outstanding shares of the
Fund except for: (i) Unified Management Corp. Omnibus Account, 429 N.
Pennsylvania Street, Indianapolis, Indiana 46204, which held of record
but not beneficially for the benefit of clients 222,145.277 Class A
shares of the Fund (approximately 5.14% of such outstanding shares);
and (ii) Oppenheimer & Co., Inc., P.O. Box 3484, Church Street Station,
New York, New York 10008, which held of record but not beneficially for
the benefit of two separate clients 150,982.668 Class C shares and
21,353.695 Class C shares of the Fund (approximately 44.51% and 6.30%,
respectively, of such outstanding shares). As to shares of the Fund
held by the foregoing entities, to the knowledge of the Fund no
beneficial owner on whose behalf such shares are held owned more than
5% of the outstanding shares of the specified class as of the Record
Date. To the knowledge of Bond Fund, as of the Record Date, no person
owned of record or beneficially more than 5% of the outstanding Class
A, Class B or Class C Bond Fund shares or more than 5% of the
outstanding shares of Bond Fund except for (i) MML Reinsurance
(Bermuda) Ltd., 1295 State Street, Springfield, Massachusetts 01111,
which held of record and beneficially 797,309.538 Class A shares of
Bond Fund (approximately 6.82% of such outstanding shares) and (ii)
Oppenheimer Management Corporation, Two World Trade Center, New York,
New York 10048, which held of record and beneficially all the Class C
shares of Bond Fund as of the Record Date. The foregoing percentages
are based on shares of the indicated class outstanding as of the Record
Date. As of the Record Date, the officers and Trustees of Integrity
Trust, and the officers and Trustees of the Trust, beneficially owned
as a group less than 1% of the outstanding shares of each class of Bond
Fund and the Fund, respectively, and of Bond Fund and the Fund,
respectively.
In the event a quorum does not exist as to one or more classes of
shares of the Fund on the date originally scheduled for the Meeting,
or, subject to approval of the Board, for other reasons, one or more
adjournments of the Meeting may be sought by the Board. Any adjournment
would require a vote in favor of the adjournment by the holders of a
majority of the shares present at the Meeting (or any adjournment
thereof) in person or by proxy. The persons named as proxies will vote
all shares represented by proxies which they are required to vote in
favor of the Proposal, in favor of an adjournment, and will vote all
shares which they are required to vote against the Proposal, against an
adjournment. In the event that a quorum of each class is present at
the Meeting but one or more classes does not approve the
Reorganization, the Reorganization will be deemed to have not been
approved and the Board will consider what further action, if any, to
take.
Proxies
The enclosed form of proxy, if properly executed and returned, will be
voted (or counted as an abstention or withheld from voting) in
accordance with the choices specified thereon, and will be included in
determining whether there is quorum to conduct the Meeting. If a
shareholder executes and returns a proxy but fails to indicate how the
votes should be cast, the proxy will be voted in favor of the Proposal.
Shares owned of record by broker-dealers for the benefit of their
customers ("street account shares") will be voted by the broker-dealer
based on instructions received from its customers. If no instructions
are received, the broker-dealer may (if permitted under applicable
stock exchange rules), as record holder, vote such shares on the
Proposal in the same proportion as that broker-dealer votes street
account shares for which voting instructions were received in time to
be voted ("broker non-votes"). Abstentions and broker non-votes will
be counted as present for purposes of determining a quorum and will
have the same effect as a vote against the Proposal. The proxy may be
revoked at any time prior to the voting thereof by: (i) writing to the
Secretary of the Trust at One World Financial Center, New York, New
York 10281; (ii) attending the Meeting and voting in person; or (iii)
signing and returning a new proxy (if returned and received in time to
be voted).
Costs of the Solicitation and the Reorganization
All expenses of this solicitation, including the cost of printing and
mailing this Proxy Statement and Prospectus, will be evenly apportioned
between QVA and OMC. Any documents such as existing prospectuses or
annual reports that are included in that mailing will be a cost of the
fund issuing the document. In addition to the solicitation of proxies
by mail, proxies may be solicited by officers and employees of QVA, the
Trust's investment adviser, or QVA's affiliates, personally or by
telephone or telegraph. In addition, QVA has retained D.F. King & Co.,
Inc., 77 Water Street, New York, New York 10005 to assist in the
solicitation of proxies for the Meeting and the other shareholder
meetings contemplated by the Acquisition primarily by contacting
shareholders by telephone and telegram for a fee not to exceed $25,000,
plus reasonable out-of-pocket expenses. With respect to a telephone
solicitation by such firm, additional expenses would include the
following: $5.00 per telephone vote transacted, $2.75 per outbound
telephone contact and costs related to obtaining shareholder telephone
numbers. The cost for such proxy solicitor will be shared by QVA and
OMC. D.F. King & Co., Inc. may call shareholders to ask if they would
be willing to have their votes recorded by telephone. The telephone
voting procedure is designed to authenticate shareholders' identities,
to allow shareholders to authorize the voting of their shares in
accordance with their instructions and to confirm that their
instructions have been recorded properly. The Trust has been advised
by counsel that these procedures are consistent with the requirements
of applicable law. Shareholders voting by telephone would be asked for
their social security number or other identifying information and would
be given an opportunity to authorize proxies to vote their shares in
accordance with their instructions. To ensure that the shareholders'
instructions have been recorded correctly they will receive a
confirmation of their instructions in the mail. A special toll-free
number will be available in case the information contained in the
confirmation is incorrect. Although a shareholder's vote may be taken
by telephone, each shareholder will receive a copy of this Proxy
Statement and Prospectus and may vote by mail using the enclosed proxy
cared. Brokerage houses, banks and other fiduciaries may be requested
to forward soliciting material to the beneficial owners of shares of
the Fund and to obtain authorization for the execution of proxies. For
those services, if any, they will be reimbursed by the Trust for their
reasonable out-of-pocket expenses.
Expenses of the Reorganization will be paid as set forth in the
Reorganization Agreement. With respect to the Reorganization, OMC and
QVA will share the cost of the tax opinion. Any other out-of-pocket
expenses of Bond Fund and the Fund associated with the Reorganization,
including fund, accounting and transfer agent expenses, will be borne
by OMC and QVA, respectively, in the amounts so incurred by the
respective fund.
MISCELLANEOUS
Financial Information
The Reorganization will be accounted for by Bond Fund in its financial
statements similar to a pooling without restatement. Further financial
information as to the Fund is contained in its current Prospectus,
which is available without charge upon written request to Quest for
Value Distributors, at P.O. Box 3567, Church Street Station, New York,
New York 10277-1296, and in its audited financial statements as of
October 31, 1994 and unaudited financial statements as of April 30,
1995, all of which are included in the Additional Statement. Financial
information for Bond Fund is contained in its current Prospectus
accompanying this Proxy Statement and Prospectus and incorporated
herein, and in its audited financial statements as of December 31, 1994
and unaudited financial statements as of June 30, 1995, which are
included in the Additional Statement.
Public Information
Additional information about Bond Fund and the Fund is available, as
applicable, in the following documents: (i) Bond Fund's Prospectus
dated July 10, 1995, supplemented July 14, 1995, accompanying this
Proxy Statement and Prospectus and incorporated by reference herein;
(ii) the Fund's Prospectus, which may be obtained without charge by
writing to QVD at the address indicated above; (iii) Bond Fund's Annual
Report as of December 31, 1994 and Semi-Annual Report as of June 30,
1995, which may be obtained without charge by writing to OSS at the
address on the cover of this Proxy Statement and Prospectus; and (iv)
the Fund's Annual Report as of October 31, 1994, and Semi-Annual Report
as of April 30, 1995 which may be obtained without charge by writing to
QVD. All of the foregoing documents and the Statements of Additional
Information referred to below may be obtained by calling the toll-free
number for Bond Fund or the Fund, as applicable, on the cover of this
Proxy Statement and Prospectus.
Additional information about the following matters is contained in the
Additional Statement, which is incorporated herein by reference and
includes the Bond Fund Additional Statement, the Fund's Prospectus
dated March 1, 1995, as revised June 30, 1995, the Fund Additional
Statement and the Annual and Semi-Annual Reports described in the
preceding paragraph: the organization and operation of Bond Fund and
the Fund; more information on investment policies, practices and risks;
information about Bond Fund's and the Fund's respective Boards of
Trustees and their responsibilities; a further description of the
services provided by Bond Fund's and the Fund's investment adviser,
distributor, and transfer and shareholder servicing agent; dividend
policies; tax matters; an explanation of the method of determining the
offering price of the shares of Bond Fund and the Fund; purchase,
redemption and exchange programs; and distribution arrangements.
Bond Fund and the Fund are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and in accordance
therewith, file reports and other information with the SEC. Proxy
material, reports and other information about Bond Fund and the Fund
which are of public record can be inspected and copied at public
reference facilities maintained by the SEC in Washington, D.C. and
certain of its regional offices, and copies of such materials can be
obtained at prescribed rates from the Public Reference Branch, Office
of Consumer Affairs and Information Services, SEC, Washington, D.C.
20549.
OTHER BUSINESS
Management of the Fund knows of no business other than the matters
specified above which will be presented at the Meeting. Since matters
not known at the time of the solicitation may come before the Meeting,
the proxy as solicited confers discretionary authority with respect to
such matters as properly come before the Meeting, including any
adjournment or adjournments thereof, and it is the intention of the
persons named as attorneys-in-fact in the proxy to vote this proxy in
accordance with their judgment on such matters.
By Order of the Board of Trustees
Deborah Kaback, Secretary
October 2, 1995285
MERGE/285PROXY.9Qf
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as
of this 26th day of September, 1995, by and among Oppenheimer Integrity
Funds, a Massachusetts business trust ("Oppenheimer Trust"), on behalf
of Oppenheimer Bond Fund ("Oppenheimer Fund"), a series of Oppenheimer
Trust, Quest for Value Family of Funds, a Massachusetts business trust
("Quest For Value"), on behalf of Investment Quality Income Fund
("Quest Portfolio"), a series of Quest For Value, and Quest for Value
Advisors ("Quest Advisors"), a Delaware general partnership which
serves as investment adviser to the Quest Portfolio.
This Agreement is intended to be and is adopted as a "plan of
reorganization", within the meaning of Treas. Reg. Section 1.368-2(g),
for a reorganization under Section 368(a)(1) of the Internal Revenue
Code of 1986, as amended ("Code"). The reorganization
("Reorganization") will consist of the transfer to the Oppenheimer Fund
of substantially all of the assets of the Quest Portfolio in exchange
for the assumption by the Oppenheimer Fund of such stated liabilities
of the Quest Portfolio as shall be agreed to by the Oppenheimer Fund
and the issuance by the Oppenheimer Fund of shares of beneficial
interest of the Oppenheimer Fund ("shares") of Class A, Class B and
Class C to be distributed contemporaneously with the Closing Date (as
defined in Section 3.1 below), to the shareholders of the Quest
Portfolio in liquidation of the Quest Portfolio as provided herein, all
upon the terms and conditions hereinafter set forth in this Agreement.
To the extent necessary to effectuate the transactions contemplated by
this Agreement, or as the context of representations, warranties,
covenants and other agreements set forth in this Agreement may require,
all references in this Agreement to the Quest Portfolio shall include
Quest For Value and all references to the Oppenheimer Fund shall
include the Oppenheimer Trust.
In consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree
as follows:
1. THE REORGANIZATION AND LIQUIDATION OF THE QUEST PORTFOLIO
1.1 Subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained herein, on
the Closing Date, the Quest Portfolio will assign, deliver and
otherwise transfer its assets as set forth in paragraph 1.2 ("Quest
Portfolio Assets") to the Oppenheimer Fund, and the Oppenheimer Fund
will in exchange therefor assume Quest Portfolio's stated liabilities
on the Closing Date as set forth in paragraph 1.3 and deliver to the
Quest Portfolio the number of each class of shares of the Oppenheimer
Fund, including fractional Oppenheimer Fund shares, determined by
dividing the value of the Quest Portfolio Assets, net of such stated
liabilities, represented by shares of each class of the Quest Portfolio
computed in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value of each class of shares of the
Oppenheimer Fund, computed in the manner and as of the time and date
set forth in paragraph 2.2. Such transactions shall take place at the
closing provided for in paragraph 3.1 ("Closing").
1.2 (a) The Quest Portfolio Assets shall consist of all property
and rights, including without limitation all cash, cash equivalents,
securities and dividend and interest receivables owned by the Quest
Portfolio, and any deferred or prepaid expenses shown as an asset on
the Quest Portfolio's books on the Closing Date. Notwithstanding the
foregoing, the Quest Portfolio Assets shall exclude a cash reserve (the
"Cash Reserve") to be retained by the Quest Portfolio sufficient in its
discretion for the payment of the expenses of the Quest Portfolio's
dissolution and its liabilities, but not in excess of the amount
contemplated by paragraph 7.11.
(b) Promptly following the signing of this Agreement, the
Quest Portfolio will provide the Oppenheimer Fund with a list of its
assets as of the most reasonably practical date. On the Closing Date,
the Quest Portfolio will provide the Oppenheimer Fund with a list of
the Quest Portfolio Assets to be assigned, delivered and otherwise
transferred to the Oppenheimer Fund and of the stated liabilities to be
assumed by the Oppenheimer Fund pursuant to this Agreement.
1.3 The Quest Portfolio will endeavor to discharge all of its
liabilities and obligations when and as due prior to the Closing Date.
An unaudited Statement of Assets and Liabilities of the Quest Portfolio
will be prepared by the Treasurer of the Quest Portfolio, as of the
Valuation Date (as defined in Section 2.1 below), which Statement shall
be prepared in conformity with generally accepted accounting principles
consistently applied from the prior audited period. On the Closing
Date, the Oppenheimer Fund shall assume such stated liabilities,
expenses, costs, charges and reserves set forth on such Statement as
shall be agreed to by the Oppenheimer Fund.
1.4 In order for the Quest Portfolio to comply with Section
852(a)(1) of the Code and to avoid having any investment company
taxable income or net capital gain (as defined in Section 852(b)(2) and
1222(11) of the Code, respectively) in the short taxable year ending
with its dissolution, the Quest Portfolio will on or before the
Valuation Date (a) declare a dividend in an amount large enough so that
it will have declared dividends of all of its investment company
taxable income and net capital gain, if any, for such taxable year
(determined without regard to any deduction for dividends paid) and (b)
distribute such dividend.
1.5 Contemporaneously with the Closing, the Quest Portfolio will
be liquidated (except for the Cash Reserve) and the Quest Portfolio
will distribute or cause to be distributed the Oppenheimer Fund shares
of each class received by the Quest Portfolio pursuant to paragraph 1.1
pro rata to the appropriate shareholders of record of each class
determined as of the close of business on the Valuation Date as defined
in paragraph 2.1. Upon such liquidation all issued and outstanding
shares of the Quest Portfolio will be cancelled on the Quest
Portfolio's books and the Quest Portfolio Shareholders will have no
further rights as such Shareholders. The Oppenheimer Fund will not
issue certificates representing the shares of the Oppenheimer Fund in
connection with such exchange.
1.6 After the Closing, the Quest Portfolio shall not conduct any
business except in connection with the winding up of its affairs and
shall file, or make provision for filing of, all reports it is required
by law to file. After the Closing, Quest For Value may be dissolved
and deregistered as an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act"). Within one year after the
Closing, the Quest Portfolio shall (a) either pay or make provision for
payment of all of its liabilities and taxes, and (b) either (i)
transfer any remaining amount of the Cash Reserve to the Oppenheimer
Fund, if such remaining amount (as reduced by the estimated cost of
distributing it to shareholders) is not material (as defined below) or
(ii) distribute such remaining amount to the shareholders of the Quest
Portfolio on the Valuation Date. Such remaining amount shall be deemed
to be material if the amount to be distributed, after deduction of the
estimated expenses of the distribution, equals or exceeds one cent per
share of the Quest Portfolio outstanding on the Valuation Date.
1.7 Copies of all books and records of or pertaining to the Quest
Portfolio, including those in connection with its obligations under the
1940 Act, the Code, State blue sky laws or otherwise in connection with
this Agreement, will promptly after the Closing be delivered to
officers of the Oppenheimer Fund or their designee. Quest For Value
and Quest Advisors shall have access to such books and records upon
reasonable request during normal business hours.
2. THE CALCULATION
2.1 The value of the Quest Portfolio Assets shall be the value of
such assets computed as of the close of business of the New York Stock
Exchange on the business day preceding the Closing Date (such time and
date being hereinafter called the "Valuation Date"), using the
valuation procedures set forth in the Oppenheimer Fund's then current
prospectus and statement of additional information.
2.2 The net asset value of each class of shares of the
Oppenheimer Fund shall be the net asset value per share computed on the
Valuation Date, using the valuation procedures set forth in the
Oppenheimer Fund's then current prospectus and statement of additional
information.
2.3 The number of each class of Oppenheimer Fund shares
(including fractional shares, if any) to be issued hereunder shall be
determined by dividing the value of the Quest Portfolio Assets, net of
the liabilities assumed by the Oppenheimer Fund pursuant to paragraph
1.1 attributable to that class, determined in accordance with paragraph
2.1, by the net asset value of an Oppenheimer Fund share of a similar
class determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made by Oppenheimer
Management Corporation in accordance with its regular practice in
pricing the Oppenheimer Fund. The Oppenheimer Fund shall cause
Oppenheimer Management Corporation to deliver to the Quest Portfolio a
copy of its valuation report at the Closing.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date hereunder (the "Closing Date") shall be the
date of the closing of the acquisition contemplated by that certain
Acquisition Agreement (the "Acquisition Agreement") dated August 17,
1995 between Oppenheimer Management Corporation, Quest Advisors, Quest
for Value Distributors and Oppenheimer Capital (or such other day and
time as may be mutually agreed upon in writing). The Closing shall be
held in a location mutually agreeable to all the parties hereto. All
acts taking place at the Closing shall be deemed to take place
simultaneously as of 9:00 a.m. Eastern time on the Closing Date unless
otherwise agreed by the parties.
3.2 Portfolio securities held by the Quest Portfolio and
represented by a certificate or written instrument shall be presented
by it or on its behalf to The Bank of New York (the "Custodian"),
custodian for the Oppenheimer Fund, for examination no later than five
business days preceding the Valuation Date. Such portfolio securities
(together with any cash or other assets) shall be delivered by the
Quest Portfolio to the Custodian for the account of the Oppenheimer
Fund on or before the Closing Date in conformity with applicable
custody provisions under the 1940 Act and duly endorsed in proper form
for transfer in such condition as to constitute good delivery thereof
in accordance with the custom of brokers. The portfolio securities
shall be accompanied by all necessary federal and state stock transfer
stamps or a check for the appropriate purchase price of such stamps.
Portfolio securities and instruments deposited with a securities
depository, as defined in Rule 17f-4 under the 1940 Act, or with a
qualified foreign custodian under Rule 17f-5 of the 1940 Act shall be
delivered on or before the Closing Date by book entry in accordance
with customary practices of such depositories and the Custodian. The
cash delivered shall be in the form of a Federal Funds wire, payable to
the order of "The Bank of New York, Custodian for Oppenheimer Bond
Fund."
3.3 In the event that on the Valuation Date (a) the New York
Stock Exchange shall be closed to trading or trading thereon shall be
restricted or (b) trading or the reporting of trading on such Exchange
or elsewhere shall be disrupted so that, in the judgment of both the
Oppenheimer Fund and the Quest Portfolio, accurate appraisal of the
value of the net assets of the Oppenheimer Fund or the Quest Portfolio
Assets is impracticable, the Valuation Date shall be postponed until
the first business day after the day when trading shall have been fully
resumed without restriction or disruption and reporting shall have been
restored.
3.4 The Quest Portfolio shall deliver to the Oppenheimer Fund or
its designee (a) at the Closing a list, certified by its Secretary, of
the names, addresses and taxpayer identification numbers of the Quest
Portfolio Shareholders (as hereinafter defined) and the number of each
class of outstanding Quest Portfolio shares owned by each such
shareholder, all as of the Valuation Date (the "Quest Portfolio
Shareholders"), and (b) as soon as practicable after the Closing all
original documentation (including Internal Revenue Service forms,
certificates, certifications and correspondence) relating to the Quest
Portfolio Shareholders' taxpayer identification numbers and their
liability for or exemption from back-up withholding. The Oppenheimer
Fund shall issue and deliver to Quest Portfolio a confirmation
evidencing delivery of each class of Oppenheimer Fund shares to be
credited on the Closing Date to the Quest Portfolio or provide evidence
reasonably satisfactory to the Quest Portfolio that such Oppenheimer
Fund shares have been credited to Quest Portfolio's account on the
books of the Oppenheimer Fund. At the Closing each party shall deliver
to the other such bills of sale, assignments, assumption agreements,
receipts or other documents as such other party or its counsel may
reasonably request to effect the consummation of the transactions
contemplated by the Agreement.
4. COVENANTS OF THE OPPENHEIMER FUND AND THE QUEST PORTFOLIO
4.1 The Oppenheimer Fund will operate its business in the
ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include customary
dividends and other distributions and such changes that have been
approved by shareholders of the Oppenheimer Fund at a shareholders
meeting prior to the Closing of which Quest Portfolio has been advised.
4.2 The Oppenheimer Fund has prepared and filed with the
Securities and Exchange Commission ("Commission") a registration
statement on Form N-14 under the Securities Act of 1933, as amended
("1933 Act"), and will prepare and file with the Commission any
amendments thereto, relating to the Oppenheimer Fund shares to be
issued to the Quest Portfolio Shareholders pursuant to the
Reorganization ("Registration Statement"). The Quest Portfolio will
provide the Oppenheimer Fund with the Proxy Materials as described in
paragraph 4.3 below, for inclusion in the Registration Statement. The
Quest Portfolio will further provide the Oppenheimer Fund with such
other information and documents relating to the Quest Portfolio as are
reasonably necessary for the preparation of the Registration Statement.
4.3 The Quest Portfolio will call a meeting of its shareholders
to consider and act upon the Reorganization, including this Agreement,
and take all other action necessary to obtain approval of the
transactions contemplated herein. The Quest Portfolio will prepare,
with such assistance from the Oppenheimer Fund as may be mutually
agreed to, the notice of meeting, form of proxy and proxy statement and
prospectus (collectively "Proxy Materials") to be used in connection
with such meeting provided that the Oppenheimer Fund will furnish the
Quest Portfolio with a current effective prospectus relating to the
Oppenheimer Fund shares for inclusion in the Proxy Materials and with
such other information relating to the Oppenheimer Fund as is
reasonably necessary for the preparation of the Proxy Materials.
4.4 Prior to the Closing Date, the Quest Portfolio will assist
the Oppenheimer Fund in obtaining such information as the Oppenheimer
Fund reasonably requests concerning the beneficial ownership of the
shares of the Quest Portfolio.
4.5 Subject to the provisions of this Agreement, the Oppenheimer
Fund and the Quest Portfolio will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
4.6 As promptly as practicable, but in any case within 60 days
after the Closing Date, the Quest Portfolio shall furnish or cause to
be furnished to the Oppenheimer Fund, such information as the
Oppenheimer Fund reasonably requests to enable the Oppenheimer Fund to
determine the Quest Portfolio's earnings and profits for federal income
tax purposes that will be carried over to the Oppenheimer Fund pursuant
to Section 381 of the Code.
4.7 As soon after the Closing Date as is reasonably practicable,
Quest for Value shall prepare and file all federal and other tax
returns and reports of the Quest Portfolio required by law to be filed
with respect to all periods ending through and after the Closing Date
but not theretofore filed.
4.8 The Oppenheimer Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the
1940 Act and such of the state Blue Sky and securities laws as it may
deem appropriate in order to continue its operations after the Closing
Date.
4.9 Until the third anniversary of the Closing Date, the
Oppenheimer Fund will use its best efforts to assure that at least 75%
of the Trustees of the Oppenheimer Fund will not be "interested
persons" of the investment adviser for the Oppenheimer Fund or Quest
Advisors, as the term "interested person" is defined by the 1940 Act.
5. REPRESENTATIONS AND WARRANTIES
5.1 Oppenheimer Trust, on behalf of the Oppenheimer Fund
represents and warrants to the Quest Portfolio as follows:
(a) The Oppenheimer Fund is a series of Oppenheimer Trust, an
unincorporated voluntary association validly existing and in good
standing under the laws of the Commonwealth of Massachusetts, and has
the power and authority to own its properties and to carry on its
business as it is now conducted;
(b) Oppenheimer Trust is a duly registered, open-end, management
investment company, and its registration with the Commission as an
investment company under the 1940 Act and the registration of its
shares under the 1933 Act are in full force and effect;
(c) All of the issued and outstanding shares of each class of the
Oppenheimer Fund have been offered and sold in compliance in all
material respects with applicable registration requirements of the 1933
Act and state securities laws. Shares of each class of the Oppenheimer
Fund are registered in all jurisdictions in which they are required to
be registered under state securities laws and other laws, and said
registrations, including any periodic reports or supplemental filings,
are complete and current, all fees required to be paid have been paid,
and the Oppenheimer Fund is not subject to any stop order and is fully
qualified to sell its shares in each state in which its shares have
been registered;
(d) The current prospectus and statement of additional
information of the Oppenheimer Fund conform in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act and the
regulations thereunder and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(e) At the Closing Date, the Oppenheimer Fund will have title to
the Oppenheimer Fund's assets, subject to no liens, security interests
or other encumbrances except those incurred in the ordinary course of
business.
(f) The Oppenheimer Fund is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation
of any provision of the Oppenheimer Trust's Declaration of Trust or By-
Laws or of any material agreement, indenture, instrument, contract,
lease or other undertakings to which the Oppenheimer Fund is a party or
by which it is bound;
(g) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Oppenheimer Fund
or any of its properties or assets, except as previously disclosed in
writing to the Quest Portfolio. The Oppenheimer Fund knows of no facts
that might form the basis for the institution of such proceedings and
is not a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects, or is reasonably likely to materially and adversely
affect, its business or its ability to consummate the transactions
contemplated herein;
(h) The Statement of Assets and Liabilities, Statement of
Operations and Statement of Changes in Net Assets as of December 31,
1994 (audited) of the Oppenheimer Fund examined by Deloitte & Touche
LLP (a copy of which has been furnished to the Quest Portfolio), fairly
present, in all material respects, the financial condition of the
Oppenheimer Fund as of such date in conformity with generally accepted
accounting principles consistently applied, and as of such date there
were no known liabilities of the Oppenheimer Fund (contingent or
otherwise) not disclosed therein that would be required in conformity
with generally accepted accounting principles to be disclosed therein;
(i) All issued and outstanding Oppenheimer Fund shares of each
class are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable with no personal liability
attaching to the ownership thereof except as otherwise set forth in the
current statement of additional information for the Oppenheimer Fund
under "How the Fund is Managed - Organization and History;"
(j) Oppenheimer Trust has the power to enter into this Agreement
and carry out its obligations hereunder. The execution, delivery and
performance of this Agreement have been duly authorized by all
necessary corporate action on the part of Oppenheimer Trust, and this
Agreement constitutes a valid and binding obligation of the Oppenheimer
Trust enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors rights and to general
equity principles;
(k) The Oppenheimer Fund shares of each class to be issued and
delivered to the Quest Portfolio, for the account of the Quest
Portfolio Shareholders, pursuant to the terms of this Agreement will at
the Closing Date have been duly authorized and, when so issued and
delivered, will be duly and validly issued Oppenheimer Fund shares, and
will be fully paid and non-assessable with no personal liability
attaching to the ownership thereof except as otherwise set forth in the
current statement of additional information for the Oppenheimer Fund
under "How the Fund is Managed - Organization and History," and no
shareholder of Oppenheimer Fund will have any preemptive right or right
of subscription or purchase in respect thereof;
(l) Since December 31, 1994, there has not been (i) any material
adverse change in the Oppenheimer Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or that have been approved by shareholders of the
Oppenheimer Fund or (ii) any incurrence by the Oppenheimer Fund of any
indebtedness except indebtedness incurred in the ordinary course of
business. For the purposes of this subparagraph, neither a decline in
net asset value per share of any class of the Oppenheimer Fund nor the
redemption of Oppenheimer Fund shares by Oppenheimer Fund shareholders,
shall constitute a material adverse change;
(m) All material Federal and other tax returns and reports of the
Oppenheimer Fund required by law to have been filed, have been filed,
and all Federal and other taxes shown as due or required to be shown as
due on said returns and reports have been paid or provision has been
made for the payment thereof, and to the best of the Oppenheimer Fund's
knowledge no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(n) For each taxable year of its operation, the Oppenheimer Fund
has met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company and neither the
execution or delivery of nor the performance of its obligations under
this Agreement will adversely affect, and no other events are
reasonably likely to occur which will adversely affect the ability of
the Oppenheimer Fund to continue to meet the requirements of Subchapter
M of the Code;
(o) Since December 31, 1994, there has been no change by the
Oppenheimer Fund in accounting methods, principles, or practices,
including those required by generally accepted accounting principles,
except as disclosed in writing to the Quest Portfolio or as set forth
in the financial statements of the Oppenheimer Fund covering such
period;
(p) The information furnished or to be furnished by the
Oppenheimer Fund for use in registration statements, proxy materials
and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with
Federal securities and other laws and regulations applicable thereto;
and
(q) The Proxy Statement and Prospectus to be included in the
Registration Statement (only insofar as it relates to the Oppenheimer
Fund) will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not materially misleading.
5.2 Quest for Value, on behalf of the Quest Portfolio, represents and
warrants to the Oppenheimer Fund as follows:
(a) The Quest Portfolio is a series of Quest For Value, an
unincorporated voluntary association validly existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) Quest For Value is a duly registered, open-end, management
investment company, its registration with the Commission as an
investment company under the 1940 Act is in full force and effect and
its current Prospectus and Statement of Additional Information conform
in all material respects to the requirements of the 1933 Act and the
1940 Act and the regulations thereunder and do not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(c) All of the issued and outstanding shares of each class of the
Quest Portfolio have been offered and sold in compliance in all
material respects with applicable registration requirements of the 1933
Act and state securities laws. Shares of each class of the Quest
Portfolio are registered in all jurisdictions in which they are
required to be registered under state securities laws and other laws,
and said registrations, including any periodic reports or supplemental
filings, are complete and current, all fees required to be paid have
been paid, and the Quest Portfolio is not subject to any stop order and
is fully qualified to sell its shares in each state in which its shares
have been registered;
(d) The Quest Portfolio is not, and the execution, delivery and
performance of this Agreement will not result, in a violation of (i)
any provision of Quest For Value's Declaration of Trust or By-Laws or
(ii) of any agreement, indenture, instrument, contract, lease or other
undertaking to which the Quest Portfolio is a party or by which it is
bound (other than any violations that individually or in the aggregate
would not have a material adverse effect on the Quest Portfolio);
(e) The Quest Portfolio has no material contracts or other
commitments (other than this Agreement) that will be terminated with
liability to it prior to or as of the Closing Date;
(f) Except as otherwise disclosed in writing to and acknowledged
by the Oppenheimer Fund prior to the date of this Agreement, no
litigation, administrative proceeding, investigation, examination or
inquiry of or before any court or governmental body is presently
pending, or to its knowledge, threatened relating to the Quest
Portfolio or any of its properties or assets which, if adversely
determined, would materially and adversely affect its financial
condition or the conduct of its business. The Quest Portfolio knows of
no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that
materially and adversely affects, or is likely to materially and
adversely affect, its business or its ability to consummate the
transactions herein contemplated;
(g) The Statements of Assets and Liabilities, Statements of
Operations and Statements of Changes in Net Assets of the Quest
Portfolio as of October 31, 1994 (audited), examined by Price
Waterhouse LLP, and April 30, 1995 (unaudited) (copies of each of which
have been furnished to the Oppenheimer Fund) fairly present, in all
material respects, the Quest Portfolio's financial condition as of such
dates, its results of operations for such periods and changes in its
net assets for such periods in conformity with generally accepted
accounting principles consistently applied, and as of such dates there
were no known liabilities of the Quest Portfolio (contingent or
otherwise) not disclosed therein that would be required in conformity
with generally accepted accounting principles to be disclosed therein.
All liabilities (contingent and otherwise) as of the Closing Date known
to the Quest Portfolio will be set forth on the unaudited Statement of
Assets and Liabilities referred to in paragraph 1.3.
(h) Since the date of the most recent audited financial
statements, there has not been any material adverse change in the Quest
Portfolio's financial condition, assets, liabilities or business, other
than changes occurring in the ordinary course of business, or any
incurrence by the Quest Portfolio of indebtedness maturing more than
one year from the date such indebtedness was incurred, except as
otherwise disclosed in writing to and acknowledged by the Oppenheimer
Fund prior to the date of this Agreement and prior to the Closing Date.
All liabilities of the Quest Portfolio (contingent and otherwise) are
reflected in the unaudited statement described in paragraph 1.3 above.
For the purpose of this subparagraph (h), neither a decline in the
Quest Portfolio's net asset value per share nor a decrease in the Quest
Portfolio's size due to redemptions by Quest Portfolio shareholders
shall constitute a material adverse change;
(i) All federal and other tax returns and reports of the Quest
Portfolio required by law to be filed shall have been filed, there are
no claims, levies, liabilities or amounts due for corporate, excise,
income or other federal, state or local taxes outstanding or threatened
against Quest Portfolio (other than those reflected on its most recent
financial statements) and to the best of Quest For Value's knowledge
there are no facts that might form the basis for such proceedings, no
such return is currently under audit and no assessment has been
asserted with respect to any such return and to the extent such tax
returns with respect to the taxable year of the Quest Portfolio ended
October 31, 1995 have not been filed, such returns will be filed when
required and the amount of tax shown as due thereon shall be paid when
due;
(j) For each taxable year since its inception, the Quest
Portfolio has met all the requirements of Subchapter M of the Code for
qualification and treatment as a "regulated investment company" as
defined therein and will be in compliance with said requirements at and
as of the Closing Date;
(k) All issued and outstanding shares of each class of the Quest
Portfolio are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable with no personal
liability attaching to the ownership thereof. All such shares of each
class will, at the time of Closing, be held by the persons and in the
amounts set forth in the list of shareholders submitted to the
Oppenheimer Fund pursuant to paragraph 3.4. The Quest Portfolio does
not have outstanding any options, warrants or other rights to subscribe
for or purchase any of its shares of any class, nor is there
outstanding any security convertible into any of its shares of any
class except for class B shares of the Quest Portfolio which convert
into class A shares of the Quest Portfolio as described in the current
prospectus of the Quest Portfolio.
(l) At the Closing Date, the Quest Portfolio will have good and
valid title to the Quest Portfolio Assets, subject to no liens,
security interests or other encumbrances, and full right, power and
authority to assign, deliver and otherwise transfer the Quest Portfolio
Assets hereunder, and upon delivery and payment for the Quest Portfolio
Assets, the Oppenheimer Fund will acquire title thereto, subject to no
restrictions on the full transfer thereof, including such restrictions
as might arise under the 1933 Act;
(m) Quest For Value has the power to enter into this Agreement
and carry out its obligations hereunder. The execution, delivery and
performance of this Agreement will have been duly authorized prior to
the Closing Date by all necessary action on the part of Quest For
Value, and subject to the approval of Quest Portfolio's shareholders,
this Agreement constitutes a valid and binding obligation of Quest For
Value, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors rights and to general
equity principles. No other consents, authorizations or approvals are
necessary in connection with the performance of this Agreement.
(n) On the effective date of the Registration Statement, at the
time of the meeting of Quest Portfolio's shareholders and on the
Closing Date, the Proxy Materials (exclusive of the currently effective
Oppenheimer Fund prospectus and statement of additional information
incorporated therein) will (i) comply in all material respects with the
provisions of the 1933 Act, the Securities Exchange Act of 1934 ("1934
Act") and the 1940 Act and the regulations thereunder and (ii) not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statement therein, in light of the circumstances under which such
statements were made, not misleading. Any other information furnished
or to be furnished by Quest Portfolio for use in the Registration
Statement or in any other manner that may be necessary in connection
with the transactions contemplated hereby shall be accurate and
complete and shall comply in all material respects with applicable
federal securities and other laws and all regulations thereunder;
(o) Quest Portfolio will, on or prior to the Closing Date,
declare one or more dividends or other distributions to shareholders
that, together with all previous dividends and other distributions to
shareholders, shall have the effect of distributing to the shareholders
all of its investment company taxable income and net capital gain, if
any, through the Closing Date (computed without regard to any deduction
for dividends paid);
(p) Quest Portfolio has maintained or has caused to be maintained
on its behalf all books and accounts as required of a registered
investment company in compliance with the requirements of Section 31 of
the 1940 Act and the Rules thereunder;
(q) Quest Portfolio is not acquiring Oppenheimer Fund shares to
be issued hereunder for the purpose of making any distribution thereof
other than in accordance with the terms of this Agreement;
(r) As of the Closing Date no violation of applicable federal,
state and local statute, law or regulation, exists that individually,
or in the aggregate, would have a material adverse effect on the
business or operations of Quest Portfolio;
(s) As of the Closing Date the Quest Portfolio is in compliance
with its investment objective(s), policies and restrictions as
described in its current prospectus and statement of additional
information;
(t) There are no unresolved or outstanding shareholder claims or
complaints related to Quest Portfolio and there will be no such claims
or complaints as of the Closing Date other than as disclosed by Quest
Advisors in writing to Oppenheimer Fund prior to the Closing Date;
(u) Except as previously disclosed to Oppenheimer Fund in
writing, and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such
calculations have been done in accordance with the provisions of Rule
2a-4 under the 1940 Act.
5.3 Quest Advisors represents and warrants to the Oppenheimer
Fund as follows:
(a) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date no violation of applicable federal, state and local
statute, law or regulation, exists that individually, or in the
aggregate, would have a material adverse effect on the business or
operations of Quest Portfolio.
(b) To the best knowledge of Quest Advisors after due inquiry,
assuming fulfillment of the conditions precedent to the consummation of
the Reorganization, Quest Portfolio has the right, power, legal
capacity and authority to enter into the Reorganization contemplated by
this Agreement.
(c) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date Quest Portfolio is in compliance with its
investment objective(s), policies and restrictions as described in its
current prospectus and statement of additional information.
(d) To the best knowledge of Quest Advisors after due inquiry, as
of the Closing Date there are no outstanding breaches by Quest
Portfolio of any agreement, indenture, instrument, contract, lease or
other undertaking to which it is a party, or by which it is bound
(other than any breaches that individually or in the aggregate would
not have a material adverse effect on the Quest Portfolio).
(e) To the best knowledge of Quest Advisors upon due inquiry,
there are no unresolved or outstanding shareholder claims or inquiries
related to Quest Portfolio and there will be no such claims or
inquiries as of the Closing Date other than as disclosed by Quest
Advisors in writing to Oppenheimer Fund prior to the Closing Date.
(f) Quest Advisors is not aware of any threatened or pending
litigation, administrative proceeding, investigation, examination or
inquiry of or before any court or governmental body relating to the
Quest Portfolio or any of its properties or assets which, if adversely
determined, would materially and adversely affect the Quest Portfolio's
business or its ability to consummate the transactions herein
contemplated.
(g) Quest Advisors is not aware of any outstanding or threatened
private claims or litigation relating to Quest Portfolio. Quest
Advisors knows of no facts that might form the basis for such
proceedings.
(h) Except as previously disclosed to Oppenheimer Fund in
writing, and except as have been fully corrected, there have been no
miscalculations of the net asset value of Quest Portfolio during the
twelve-month period preceding the Closing Date and all such
calculations have been done in accordance with the provisions of Rule
2a-4 under the 1940 Act.
(i) There are no claims, levies or liabilities for corporate,
excise, income or other federal, state or local taxes outstanding or
threatened against Quest Portfolio, other than those reflected in its
most recent audited financial statements. Quest Advisors knows of no
facts that might form the basis for such proceedings.
(j) To the best knowledge of Quest Advisors after due inquiry,
there have been no material adverse changes in Quest Portfolio's
financial condition, assets, liabilities or business, other than those
reflected in its most recent audited financial statements and all
liabilities of Quest Portfolio (contingent and otherwise) known to
Quest Advisors have been reported in writing to the Oppenheimer Fund
prior to the date of this Agreement and prior to the Closing Date. A
reduction in net assets due to shareowner redemptions will not be
deemed to be a material adverse change.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE QUEST PORTFOLIO
The obligations of Quest Portfolio to consummate the transactions
provided for herein shall be subject, at its election, to the
performance by Oppenheimer Fund of all the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto,
the following conditions:
6.1 All representations and warranties of Oppenheimer Trust, on
behalf of Oppenheimer Fund, contained in this Agreement shall be true
and correct in all material respects as of the date hereof and, except
as they may be affected by the transactions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
6.2 Oppenheimer Fund shall have delivered to Quest Portfolio a
certificate executed in Oppenheimer Fund's name by Oppenheimer Fund's
President, Vice President or Secretary and, Treasurer or Assistant
Treasurer, in a form reasonably satisfactory to Quest Portfolio and
dated as of the Closing Date, to the effect that the representations
and warranties of Oppenheimer Trust, on behalf of Oppenheimer Fund made
in this Agreement are true and correct at and as of the Closing Date,
except as they may be affected by the transactions contemplated by this
Agreement, and as to such other matters as Quest Portfolio shall
reasonably request;
6.3 Quest Portfolio shall have received a favorable opinion from
Myer, Swanson, Adams & Wolf, P.C., counsel to the Oppenheimer Fund,
dated as of the Closing Date, in a form reasonably satisfactory to
Gordon Altman Butowsky Weitzen Shalov & Wein, counsel to Quest
Portfolio, covering the following points:
That (a) Oppenheimer Fund is a series of Oppenheimer Trust, an
unincorporated voluntary association duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts, and has the power to own all of its properties
and assets and to carry on its business as presently conducted
(Massachusetts counsel may be relied upon in delivering such
opinion); (b) Oppenheimer Trust is a duly registered, open-end,
management investment company and, to the knowledge of such
counsel, its registration with the Commission as an investment
company under the 1940 Act is in full force and effect; (c) this
Agreement has been duly authorized, executed and delivered by the
Oppenheimer Trust, on behalf of Oppenheimer Fund, and assuming due
authorization, execution and delivery of this Agreement by Quest
Portfolio, is a valid and binding obligation of Oppenheimer Trust
enforceable against Oppenheimer Trust in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors rights and to general equity principles; (d) Oppenheimer
Fund shares to be issued to Quest Portfolio shareholders as
provided by this Agreement are duly authorized and upon delivery
of such shares to Quest Portfolio will be validly issued and
outstanding and fully paid and non-assessable (except as otherwise
set forth in the current statement of additional information for
the Oppenheimer Fund under "How the Fund is Managed - Organization
and History") and no shareholder of Oppenheimer Fund has any
preemptive rights to subscription or purchase in respect thereof
(Massachusetts counsel may be relied upon in delivering such
opinion); (e) the execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated hereby
will not, violate Oppenheimer Trust's Declaration of Trust and By-
Laws or any provision of any material agreement (known to such
counsel) to which Oppenheimer Fund is a party or by which it is
bound or, to the knowledge of such counsel, result in the
acceleration of any material obligation or the imposition of any
material penalty under any agreement, judgment or decree to which
Oppenheimer Fund is a party or by which it is bound; (f) to the
knowledge of such counsel, no consent, approval, authorization or
order of any court or governmental authority of the United States
or any state is required for the consummation by Oppenheimer Fund
of the transactions contemplated herein, except such as have been
obtained under the 1933 Act , the 1934 Act and the 1940 Act and
such as may be required under state securities laws; (g) only
insofar as they relate to Oppenheimer Fund, the descriptions in
the Proxy Materials of statutes, legal and governmental
proceedings and contracts and other documents, if any, are
accurate in all material respects and fairly present the
information required to be shown; (h) such counsel does not know
of any legal or governmental proceedings, only insofar as they
relate to Oppenheimer Fund, existing on or before the date of
mailing of the Proxy Materials or the Closing Date that are
required to be described in the Registration Statement or in any
documents that are required to be filed as exhibits to the
Registration Statement that are not described as required; and (i)
to the best knowledge of such counsel, no material litigation or
administrative proceedings or investigation of or before any court
or governmental body is presently pending or overtly threatened as
to Oppenheimer Fund or any of its properties or assets and
Oppenheimer Fund is not a party to or subject to the provisions of
any order, decree or judgment of any court or governmental body
that materially and adversely affects its business, other than as
previously disclosed in the Registration Statement.
6.4 All actions taken by Oppenheimer Trust and Oppenheimer Fund
in connection with the transactions contemplated by this Agreement and
all documents incidental thereto shall be satisfactory in form and
substance to Quest Portfolio and its counsel, Gordon Altman Butowsky
Weitzen Shalov & Wein.
6.5 As of the Closing Date, there shall be no material change in
the investment objective, policies and restrictions nor any increase in
the investment management fees, fees payable pursuant to Oppenheimer
Fund's 12b-1 plans of distribution or sales loads of Oppenheimer Fund
from those described in the Prospectus and Statement of Additional
Information of Oppenheimer Fund dated July 10, 1995 as supplemented
July 14, 1995, except as may have been approved by shareholders of the
Oppenheimer Fund.
6.6 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND
The obligations of Oppenheimer Fund to complete the transactions
provided for herein shall be subject, at its election, to the
performance by Quest Portfolio of all the obligations to be performed
by it hereunder on or before the Closing Date and, in addition thereto,
the following conditions:
7.1 All representations and warranties of Quest For Value, on
behalf of Quest Portfolio, and Quest Advisors contained in this
Agreement shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same
force and effect as if made on and as of the Closing Date;
7.2 Quest Portfolio shall have delivered to Oppenheimer Fund a
statement of Quest Portfolio Assets and its liabilities, together with
a list of Quest Portfolio's securities and other assets showing the
respective adjusted bases and holding periods thereof for income tax
purposes, as of the Closing Date, certified by the Treasurer of Quest
Portfolio;
7.3 Quest Portfolio shall have delivered to Oppenheimer Fund at
the Closing a certificate executed in Quest For Value's name by the
President, Vice President or Secretary and the Treasurer or Assistant
Treasurer of Quest For Value, in form and substance satisfactory to
Oppenheimer Fund and dated as of the Closing Date, to the effect that
the representations and warranties of Quest for Value, on behalf of
Quest Portfolio, made in this Agreement are true and correct at and as
of the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as
Oppenheimer Fund shall reasonably request. Such a certificate shall
also be delivered to Oppenheimer Fund as executed by Quest Advisors
with respect to its representations and warranties made in paragraph
5.3.
7.4 Oppenheimer Fund shall have received at the Closing a
favorable opinion dated as of the Closing Date of Gordon Altman
Butowsky Weitzen Shalov & Wein, counsel to Quest For Value, in a form
satisfactory to Myer, Swanson, Adams & Wolf, P.C., counsel to
Oppenheimer Fund covering the following points:
That (a) Quest Portfolio is a series of Quest For Value, an
unincorporated voluntary association duly organized, validly
existing and in good standing under the laws of the Commonwealth
of Massachusetts and has the power to own all of its properties
and assets and to carry on its business as presently conducted
(Massachusetts counsel may be relied upon in delivering such
opinion); (b) Quest For Value is registered as an investment
company under the 1940 Act, and, to the knowledge of such counsel,
its registration with the Commission as an investment company
under the 1940 Act is in full force and effect; (c) this Agreement
has been duly authorized, executed and delivered by Quest For
Value on behalf of Quest Portfolio and, assuming due
authorization, execution and delivery of this Agreement by
Oppenheimer Fund, is a valid and binding obligation of Quest For
Value enforceable against Quest For Value in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors rights and to general equity principles; (d) the
execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not,
violate Quest For Value's Declaration of Trust or By-Laws or any
provision of any material agreement (known to such counsel) to
which Quest For Value is a party or by which it is bound or, to
the knowledge of such counsel, result in the acceleration of any
material obligation or the imposition of any material penalty
under any agreement, judgment or decree to which Quest For Value
is a party or by which it is bound; (e) to the knowledge of such
counsel, no consent, approval, authorization or order of any court
or governmental authority of the United States or any state is
required for the consummation by Quest For Value of the
transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities laws; (f) only
insofar as they relate to Quest For Value, the descriptions in the
Proxy Materials of statutes, legal and governmental proceedings
and contracts and other documents, if any, are accurate in all
material respects and fairly present the information required to
be shown; (g) such counsel does not know of any legal or
governmental proceedings, only insofar as they relate to Quest For
Value, existing on or before the date of mailing the Proxy
Materials or the Closing Date that are required to be described in
the Registration Statement or in any documents that are required
to be filed as exhibits to the Registration Statement that are not
described as required; and (h) to the best knowledge of such
counsel, no material litigation or administrative proceedings or
investigation of or before any court or governmental body is
presently pending or overtly threatened as to Quest For Value or
any of its properties or assets and Quest Portfolio is not a party
to or subject to the provisions of any order, decree or judgment
of any court or governmental body that materially and adversely
affects its business, other than as previously disclosed in the
Registration Statement.
7.5 Between the date hereof and the Closing Date, Quest For Value
shall provide Oppenheimer Fund and its representatives reasonable
access during regular business hours and upon reasonable notice to the
books and records of or relating to Quest Portfolio, including without
limitation the books and records of Quest For Value, as Oppenheimer
Fund may reasonably request. All such information obtained by
Oppenheimer Fund and its representatives shall be held in confidence
and may not be used for any purpose other than in connection with the
transaction contemplated hereby. In the event that the transaction
contemplated by this Agreement is not consummated, Oppenheimer Fund
and its representatives will promptly return to Quest For Value all
documents and copies thereof with respect to Quest Portfolio obtained
from Quest For Value during the course of such investigation.
7.6 Quest For Value, on behalf of Quest Portfolio shall have
delivered to Oppenheimer Fund, pursuant to paragraph 5.2(g), copies of
the most recent financial statements of Quest Portfolio certified by
Price Waterhouse LLP.
7.7 On the Closing Date, the Quest Portfolio Assets shall include
no assets that Oppenheimer Fund, by reason of charter limitations or
otherwise, may not properly acquire.
7.8 All actions taken by Quest For Value and Quest Portfolio in
connection with the transactions contemplated by the Agreement and all
documents incidental thereto shall be reasonably satisfactory in form
and substance to Oppenheimer Fund and its counsel, Myer, Swanson, Adams
& Wolf, P.C.
7.9 The stated liabilities, expenses, costs, charges and reserves
reflected on the unaudited Statement of Assets and Liabilities of the
Quest Portfolio referred to in paragraph 1.3 shall have been agreed to
by the Oppenheimer Fund.
7.10 The filing of the Registration Statement shall have been
approved by the Board of Trustees of the Oppenheimer Fund.
7.11 The Cash Reserve shall not exceed 10% of the value of the net
assets, nor 30% in value of the gross assets, of the Quest Portfolio at
the close of business on the Valuation Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF OPPENHEIMER FUND
AND QUEST PORTFOLIO
The obligations of Quest Portfolio and Oppenheimer Fund hereunder
are each subject to the further conditions that on or before the
Closing Date:
8.1 This Agreement and the transactions contemplated herein shall
have been approved by the requisite vote of the holders of the
outstanding shares of Quest Portfolio and certified copies of the
resolutions evidencing such approval shall have been delivered to
Oppenheimer Fund;
8.2 On the Closing Date, no action, suit or other proceeding
shall be pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in
connection with, this Agreement or the transactions contemplated
herein;
8.3 All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities
(including those of the Commission and of state Blue Sky and securities
authorities, including "no-action" positions or any exemptive orders
from such federal and state authorities) deemed necessary by
Oppenheimer Fund or Quest For Value on behalf of Quest Portfolio to
permit consummation, in all material respects, of the transactions
contemplated herein shall have been obtained, except where failure to
obtain any such consent, order or permit would not involve risk of a
material adverse effect on the assets or properties of Oppenheimer Fund
or Quest Portfolio.
8.4 The Registration Statement on Form N-14 shall have become
effective under the 1933 Act, no stop orders suspending the
effectiveness thereof shall have been issued and, to the best knowledge
of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated
under the 1933 Act;
8.5 Quest Portfolio shall have declared and paid a dividend or
dividends and/or other distributions that, together with all previous
such dividends or distributions, shall have the effect of distributing
to the Quest Portfolio Shareholders all of Quest Portfolio's investment
company taxable income (computed without regard to any deduction for
dividends paid) and all of its net capital gain (after reduction for
any capital loss carry-forward and computed without regard to any
deduction for dividends paid) for all taxable years ending on or before
the Closing Date; and
8.6 The parties shall have received a favorable opinion from
Price Waterhouse LLP (based on such representations as such firm shall
reasonably request), addressed to Oppenheimer Fund and Quest Portfolio,
which opinion may be relied upon by the shareholders of Oppenheimer
Fund and Quest Portfolio, substantially to the effect that, for federal
income tax purposes:
(a) The transfer of substantially all of Quest Portfolio's assets
in exchange for Oppenheimer Fund shares and the assumption by
Oppenheimer Fund of certain identified liabilities of Quest
Portfolio followed by the distribution by Quest Portfolio of
Oppenheimer Fund shares to the Quest Portfolio Shareholders in
exchange for their Quest Portfolio shares will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the
Code and Quest Portfolio and Oppenheimer Fund will each be a
"party to the reorganization" within the meaning of Section 368(b)
of the Code;
(b) Pursuant to Section 1032 of the Code, no gain or loss will be
recognized by Oppenheimer Fund upon the receipt of the assets of
Quest Portfolio solely in exchange for Oppenheimer Fund shares and
the assumption by Oppenheimer Fund of the identified liabilities
of Quest Portfolio;
(c) Pursuant to Section 361(a) of the Code, no gain or loss will
be recognized by Quest Portfolio upon the transfer of the assets
of Quest Portfolio to Oppenheimer Fund in exchange for Oppenheimer
Fund shares and the assumption by Oppenheimer Fund of the
identified liabilities of Quest Portfolio, or upon the
distribution of Oppenheimer Fund shares to the Quest Portfolio
Shareholders in exchange for the Quest Portfolio shares;
(d) Pursuant to Section 354(a) of the Code, no gain or loss will
be recognized by the Quest Portfolio Shareholders upon the
exchange of the Quest Portfolio shares for the Oppenheimer Fund
shares;
(e) Pursuant to Section 358 of the Code, the aggregate tax basis
for Oppenheimer Fund shares received by each Quest Portfolio
Shareholder pursuant to the Reorganization will be the same as the
aggregate tax basis of the Quest Portfolio shares held by each
such Quest Portfolio Shareholder immediately prior to the
Reorganization;
(f) Pursuant to Section 1223 of the Code, the holding period of
Oppenheimer Fund shares to be received by each Quest Portfolio
Shareholder will include the period during which the Quest
Portfolio shares surrendered in exchange therefor were held
(provided such Quest Portfolio shares were held as capital assets
on the date of the Reorganization);
(g) Pursuant to Section 362(b) of the Code, the tax basis of the
assets of Quest Portfolio acquired by Oppenheimer Fund will be the
same as the tax basis of such assets to Quest Portfolio
immediately prior to the Reorganization;
(h) Pursuant to Section 1223 of the Code, the holding period of
the assets of Quest Portfolio in the hands of Oppenheimer Fund
will include the period during which those assets were held by
Quest Portfolio; and
(i) Oppenheimer Fund will succeed to and take into account the
items of Quest Portfolio described in Section 381(c) of the Code,
including the earnings and profits, or deficit in earnings and
profits, of Quest Portfolio as of the date of the transaction.
Oppenheimer Fund will take those items into account subject to the
conditions and limitations specified in Sections 381, 382, 383 and
384 of the Code and applicable regulations thereunder.
Notwithstanding anything herein to the contrary, neither Oppenheimer
Fund nor Quest Portfolio may waive the material conditions set forth in
this paragraph 8.6 although the actual wording of such opinion may
differ to the extent agreed to by Oppenheimer Fund and Quest Portfolio.
9. BROKERAGE FEES AND EXPENSES
9.1 Oppenheimer Fund and Quest For Value on behalf of Quest
Portfolio each represents and warrants to the other that there are no
brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
9.2 (a) Oppenheimer Management Corporation shall bear the
expenses of Oppenheimer Fund incurred in connection with entering into
and carrying out the provisions of this Agreement, including legal,
accounting and Commission registration fees and Blue Sky expenses.
Quest Advisors (or a party other than Oppenheimer Fund) shall bear
Quest Portfolio's expenses incurred in connection with entering into
and carrying out the provisions of this Agreement, including legal and
accounting fees, and portfolio transfer taxes (if any) incurred in
connection with the consummation of the transactions contemplated
herein. Notwithstanding the foregoing, expenses incurred with respect
to the tax opinion referenced in paragraph 8.6 and expenses of the
proxy solicitation, including the cost of printing and mailing the
Proxy Materials, will be evenly apportioned between Quest Advisors and
Oppenheimer Management Corporation.
(b) In the event the transactions contemplated herein are not
consummated by reason of Quest Portfolio's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Quest Portfolio's obligations specified in
this Agreement), Quest Advisors' (or a party other than Oppenheimer
Fund) only obligation hereunder shall be to reimburse Oppenheimer Fund
(or Oppenheimer Management Corporation) for all reasonable out-of-
pocket fees and expenses incurred by Oppenheimer Fund (or Oppenheimer
Management Corporation) in connection with those transactions,
including legal, accounting and filing fees.
(c) In the event the transactions contemplated herein are not
consummated by reason of Oppenheimer Fund's being either unwilling or
unable to go forward (other than by reason of the nonfulfillment or
failure of any condition to Oppenheimer Fund's obligations specified in
the Agreement), Oppenheimer Fund's only obligations hereunder shall be
to reimburse Quest Portfolio (or Quest Advisors) for all reasonable
out-of-pocket fees and expenses incurred by Quest Portfolio (or Quest
Advisors) in connection with those transactions, including legal,
accounting and filing fees, and to comply with the provisions of
paragraph 7.5 hereof.
10. ENTIRE AGREEMENT: SURVIVAL OF WARRANTIES
10.1 Oppenheimer Trust, on behalf of Oppenheimer Fund, Quest For
Value, on behalf of Quest Portfolio and Quest Advisors agree that no
party has made any representation, warranty or covenant not set forth
herein and that this Agreement constitutes the entire agreement between
the parties.
10.2 The representations, warranties and covenants contained in
this Agreement or in any document delivered pursuant hereto or in
connection herewith shall survive the consummation of the transactions
contemplated herein.
11. TERMINATION
11.1 This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:
(a) by the mutual written consent of Quest For Value, on behalf
of Quest Portfolio, and Oppenheimer Trust, on behalf of Oppenheimer
Fund;
(b) by either Oppenheimer Trust, on behalf of Oppenheimer Fund or
Quest For Value, on behalf of Quest Portfolio, by notice to the other,
without liability to the terminating party on account of such
termination (providing the termination party is not otherwise in
default or in breach of this Agreement) if the Closing shall not have
occurred on or before February 29, 1996; or
(c) by either Oppenheimer Trust, on behalf of Oppenheimer Fund or
Quest For Value, on behalf of Quest Portfolio, in writing without
liability of the terminating party on account of such termination
(provided the terminating party is not otherwise in material default or
breach of the Agreement), if (i) the other party shall fail to perform
in any material respect its agreements contained herein required to be
performed on or prior to the Closing Date, (ii) Quest Advisors, Quest
For Value or the Quest Portfolio, or Oppenheimer Trust or the
Oppenheimer Fund, respectively, materially breaches or shall have
breached any of its representations, warranties or covenants contained
herein, (iii) the Quest Portfolio Shareholders fail to approve the
Agreement, (iv) any other condition herein expressed to be precedent to
the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met or (v) the
acquisition contemplated by the Acquisition Agreement is not
consummated.
11.2 (a) Termination of this Agreement pursuant to paragraphs
11.1(a) or (b) shall terminate all obligations of the parties hereunder
(other than Oppenheimer Fund's obligations under paragraph 7.5) and
there shall be no liability for damages on the part of Oppenheimer
Trust, the Oppenheimer Fund, Quest Portfolio or Quest Advisors or the
trustees, directors or officers of Oppenheimer Trust, Quest Portfolio
or Quest Advisors, to any other party or its trustees, directors or
officers.
(b) Termination of this Agreement pursuant to paragraph
11.1(c) shall terminate all obligations of the parties hereunder (other
than Oppenheimer Fund's obligations under paragraph 7.5) and there
shall be no liability for damages on the part of Oppenheimer Fund,
Quest Portfolio or Quest Advisors or the trustees, directors or
officers of Oppenheimer Trust, Quest Portfolio or Quest Advisors, to
any other party or its trustees, directors or officers, except that any
party in breach of this Agreement (or, as to a termination pursuant to
paragraph 11.1(c)(v), in breach of the Acquisition Agreement) shall,
upon demand, reimburse the non-breaching party or parties for all
reasonable out-of-pocket fees and expenses incurred in connection with
the transactions contemplated by this Agreement, including legal,
accounting and filing fees. For the purposes of this paragraph
11.2(b), the non-fulfillment of the condition set forth in paragraph
8.1 shall not be deemed a breach entitling a party to reimbursement of
expenses and fees.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such
manner as may be mutually agreed upon in writing by the authorized
officers of Quest For Value, Oppenheimer Trust and Quest Advisors;
provided, however, that following the meeting of Quest Portfolio's
shareholders called by Quest Portfolio pursuant to paragraph 4.2, no
such amendment may have the effect of changing the provisions for
determining the number of Oppenheimer Fund Shares to be issued to the
Quest Portfolio Shareholders under this Agreement to the detriment of
such Shareholders without their further approval.
13. INDEMNIFICATION
13.1 Oppenheimer Management Corporation will indemnify and hold
harmless, Quest For Value, Quest Portfolio and Quest Advisors, and
their respective trustees, directors, officers and shareholders against
any and all claims to the extent such claims are based upon, arise out
of or relate to any untruthful or inaccurate representations made by
Oppenheimer Trust on behalf of Oppenheimer Fund in this Agreement or
any breach by Oppenheimer Fund of any warranty or any failure to
perform or comply with any of its obligations, covenants, conditions or
agreements set forth in this Agreement, including those set forth in
paragraph 1.3.
13.2 Quest Advisors will indemnify and hold harmless Quest For
Value, Oppenheimer Trust and Oppenheimer Fund, and their respective
trustees, officers and shareholders against any and all claims to the
extent such claims are based upon, arise out of or relate to any
untruthful or inaccurate representation made by Quest For Value on
behalf of Quest Portfolio or Quest Advisors in this Agreement or any
breach by Quest Portfolio or Quest Advisors of any warranty or any
failure by Quest Portfolio to perform or comply with any of its
obligations, covenants, conditions or agreements set forth in this
Agreement.
13.3 As used in this section 13, the word "claim" means any and
all liabilities, obligations, losses, damages, deficiencies, demands,
claims, penalties, assessments, judgments, actions, proceedings and
suits of whatever kind and nature and all costs and expenses
(including, without limitation, reasonable attorneys' fees).
13.4 Promptly after the receipt by any party (the "Indemnified
Party"), of notice of any claim by a third party which may give rise to
indemnification hereunder, the Indemnified Party shall notify the party
against whom a claim for indemnification may be made hereunder (the
"Indemnifying Party"), in reasonable detail of the nature and amount of
the claim. The Indemnifying Party shall be entitled to assume, at its
sole cost and expense (unless it is subsequently determined that the
Indemnifying Party did not have the obligation to indemnify the
Indemnified Party under such circumstances), and shall have sole
control of the defense and settlement of such action or claim;
provided, however, that:
(a) the Indemnified Party shall be entitled to participate in the
defense of such claim and, in connection therewith, to employ counsel
at its own expense; and
(b) without the prior written consent of the Indemnified Party
which shall not be unreasonably withheld, the Indemnifying Party shall
not consent to the entry of any judgment or enter into any settlement
that requires any action other than the payment of money.
In the event the Indemnifying Party elects to assume control of the
defense of any such action in accordance with the foregoing provisions,
(i) the Indemnifying Party shall not be liable to Indemnified Party
for any legal fees, costs and expenses incurred by the Indemnified
Party in connection with the defense thereof arising after the date the
Indemnifying Party elects to assume control of such defense and (ii)
Indemnified Party shall fully cooperate with the Indemnifying Party in
such defense. If the Indemnifying Party does not assume control of
the defense of such claim in accordance with the foregoing provisions,
the Indemnified Party shall have the right to defend such claim, in
which case the Indemnifying Party shall pay all reasonable costs and
expenses of such defense plus interest on the cost of defense from the
date paid at a rate equal to the prime commercial rate of interest as
in effect from time to time at Citibank, N.A. The Indemnified Party
shall conduct such defense in good faith and shall have the right to
settle the matter with the prior written consent of the Indemnifying
Party which shall not be reasonably withheld.
14. NOTICES
Any notice, report, statement or demand required or permitted by
any provisions of this Agreement shall be in writing and shall be given
by prepaid telegraph, telecopy, certified mail or overnight express
courier addressed to Oppenheimer Fund at Two World Trade Center, 34th
Floor, New York, New York 10048-0203 Attention: Andrew J. Donohue with
a copy to Allan Adams, Esq. at Myer, Swanson, Adams & Wolf, P.C., 1600
Broadway, Denver, Colorado 80202; to Quest For Value at One World
Financial Center, New York, New York 10281 Attention: Thomas Duggan,
with a copy to Stuart Strauss, Esq. at Gordon Altman Butowsky Weitzen
Shalov & Wein, 114 West 47th Street, New York, New York 10036.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF
LIABILITY
15.1 The article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations hereunder
shall be made by any party without the written consent of the other
parties. Except as provided in the following sentence, nothing herein
expressed or implied is intended or shall be construed to confer upon
or give any person, firm or corporation, other than the parties hereto
and their respective successors and assigns, any rights or remedies
under or by reason of this Agreement. A shareholder of Quest Portfolio
who becomes a shareholder of Oppenheimer Fund on the Closing Date and
continues to be a shareholder of Oppenheimer Fund, shall be entitled to
the benefits and may enforce the provisions of paragraph 4.9 hereof
except insofar as paragraph 4.9 relates to the election of trustees;
and the persons designated in paragraphs 13.1 and 13.2 hereof shall be
entitled to the benefits and may enforce the provisions of section 13
hereof.
15.5 The obligations and liabilities of Oppenheimer Trust, on
behalf of Oppenheimer Fund, hereunder are solely those of Oppenheimer
Fund and not of any other series of Oppenheimer Trust. It is expressly
agreed that shareholders, trustees, nominees, officers, agents or
employees of Oppenheimer Trust and Oppenheimer Fund shall not be
personally liable hereunder. Quest For Value and Quest Advisors
acknowledge that each has notice of the provisions of Oppenheimer
Trust's Declaration of Trust disclaiming shareholder and trustee
liability for acts and obligations of the Oppenheimer Trust. The
execution and delivery of this Agreement have been authorized by the
trustees of Oppenheimer Trust and signed by the officers of Oppenheimer
Trust acting as such, and neither such authorization by such trustees
nor such execution and delivery by such officers shall be deemed to
have been made by any of the, individually or to impose any liability
on any of them personally.
15.6 The obligations and liabilities of the Quest For Value on
behalf of Quest Portfolio hereunder are solely those of the Quest
Portfolio and not of any other series of Quest For Value. It is
expressly agreed that shareholders, trustees, nominees, officers,
agents, or employees of Quest For Value and Quest Portfolio shall not
be personally liable hereunder. Oppenheimer Trust acknowledges that it
has notice of the provisions of Quest For Value's Declaration of Trust
disclaiming shareholder and trustee liability for acts and obligations
of Quest For Value. The execution and delivery of this Agreement have
been authorized by the trustees of Quest For Value and signed by
officers of Quest For Value acting as such, and neither such
authorization by such trustees nor such execution and delivery by such
officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officer.
OPPENHEIMER INTEGRITY FUNDS
By: /s/ Andrew J. Donohue
Andrew J. Donohue
Vice President
QUEST FOR VALUE FAMILY OF FUNDS
By: /s/ Bernard H. Garil
Bernard H. Garil
Vice President
QUEST FOR VALUE ADVISORS
By: /s/ Bernard H. Garil
Bernard H. Garil
President
<PAGE>
EXHIBIT B
The aggregate purchase price for the Purchased Assets will be an amount
equal to the sum of (i) the Initial Purchase Payment (as hereinafter
defined) payable in cash at the Acquisition Closing, (ii) the aggregate
amount of all unamortized prepaid commissions as of the business day
immediately preceding the Acquisition Closing which relate to the
Acquired Funds (excluding those with respect to Citibank, N.A.) payable
in cash at the Acquisition Closing, (iii) the amount payable by OMC in
respect of the right, title and interest of Citibank, N.A. to certain
commissions, and (iv) the Deferred Purchase Payment (as hereinafter
defined).
The "Initial Purchase Payment" shall be an amount equal to the sum of
(x) 225% of the Annualized Fee Amount (as hereinafter defined) of each
Reorganized Fund and (y) 270% of the Annualized Fee Amount of each
Continuing Fund (excluding the Quest for Value Officers Fund). The
"Annualized Fee Amount" of an Acquired Fund shall equal the product of
(i) such Acquired Fund's Closing Net Assets (as hereinafter defined)
and (ii) the annual advisory fee payable to QVA by such Acquired Fund
at the rate indicated in the most recent prospectus for such Acquired
Fund at the Acquisition Closing (plus any applicable annual
administrative fee). "Closing Net Assets" for an Acquired Fund shall
mean the aggregate net asset value of such Acquired Fund as of the
close of business on the last business date preceding the Acquisition
Closing.
The "Deferred Purchase Payment" shall be an amount equal to the
aggregate amounts determined for all Reorganized Funds pursuant to the
following formula: the Closing Payment (as hereinafter defined) times
the Applicable Percentage (as hereinafter defined). The "Closing
Payment" shall be the aggregate amount calculated for all Reorganized
Funds pursuant to clause (x) of the Initial Purchase Payment formula.
The "Applicable Percentage" shall be 100% if the Continuing Net Asset
Percentage (as hereinafter defined) is 75% or more, 0% if the
Continuing Net Asset Percentage is 50% or less and the percentage
determined in accordance with the following formula if the Continuing
Net Asset Percentage is between 75% and 50%: 100% - (4) (75% -
Continuing Net Asset Percentage). The "Continuing Net Asset
Percentage" shall equal the percentage obtained by dividing the
Anniversary Net Assets (as hereinafter defined) by the Closing Net
Assets. The "Anniversary Net Assets" shall mean the most recently
determined aggregate net asset values of all Reorganized Funds as of
8:00 p.m. on the first anniversary of the Acquisition Closing of each
account of the Reorganized Funds which are eligible to be included in
Anniversary Net Assets in accordance with the principles set forth in
the Acquisition Agreement.
<PAGE>
QUEST FOR VALUE FAMILY OF FUNDS
INVESTMENT QUALITY INCOME FUND - CLASS A SHARES
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD November 16, 1995
The undersigned shareholder of Investment Quality Income Fund (the
"Fund"), a series of Quest for Value Family of Funds (the "Trust"),
does hereby appoint Thomas E. Duggan and Maria Camacho, and each of
them, as attorneys-in-fact and proxies of the undersigned, with full
power of substitution, to attend the Special Meeting of Shareholders of
the Fund to be held on November 16, 1995, at One World Financial
Center, New York, New York 10281 on the 40th Floor at 9:00 A.M., New
York time, and at all adjournments thereof, and to vote the shares held
in the name of the undersigned on the record date for said meeting on
the Proposal specified on the reverse side. Said attorneys-in-fact
shall vote in accordance with their best judgment as to any other
matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHO RECOMMENDS A
VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization dated as of
September 26, 1995 by and among Oppenheimer Integrity Funds, on
behalf of Oppenheimer Bond Fund, the Trust, on behalf of the Fund,
and Quest for Value Advisors, and the transactions contemplated
thereby, including the transfer of substantially all the assets of
the Fund in exchange for Class A, Class B and Class C shares of
Oppenheimer Bond Fund and the assumption by Oppenheimer Bond Fund
of certain liabilities of the Fund, the distribution of such
shares to the shareholders of the Fund in liquidation of the Fund
and the cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give his or her title.
QUEST FOR VALUE FAMILY OF FUNDS
INVESTMENT QUALITY INCOME FUND - CLASS B SHARES
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD November 16, 1995
The undersigned shareholder of Investment Quality Income Fund (the
"Fund"), a series of Quest for Value Family of Funds (the "Trust"),
does hereby appoint Thomas E. Duggan and Maria Camacho, and each of
them, as attorneys-in-fact and proxies of the undersigned, with full
power of substitution, to attend the Special Meeting of Shareholders of
the Fund to be held on November 16, 1995, at One World Financial
Center, New York, New York 10281 on the 40th Floor at 9:00 A.M., New
York time, and at all adjournments thereof, and to vote the shares held
in the name of the undersigned on the record date for said meeting on
the Proposal specified on the reverse side. Said attorneys-in-fact
shall vote in accordance with their best judgment as to any other
matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHO RECOMMENDS A
VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization dated as of
September 26, 1995 by and among Oppenheimer Integrity Funds, on
behalf of Oppenheimer Bond Fund, the Trust, on behalf of the Fund,
and Quest for Value Advisors, and the transactions contemplated
thereby, including the transfer of substantially all the assets of
the Fund in exchange for Class A, Class B and Class C shares of
Oppenheimer Bond Fund and the assumption by Oppenheimer Bond Fund
of certain liabilities of the Fund, the distribution of such
shares to the shareholders of the Fund in liquidation of the Fund
and the cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give his or her title.
QUEST FOR VALUE FAMILY OF FUNDS
INVESTMENT QUALITY INCOME FUND - CLASS C SHARES
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD November 16, 1995
The undersigned shareholder of Investment Quality Income Fund (the
"Fund"), a series of Quest for Value Family of Funds (the "Trust"),
does hereby appoint Thomas E. Duggan and Maria Camacho, and each of
them, as attorneys-in-fact and proxies of the undersigned, with full
power of substitution, to attend the Special Meeting of Shareholders of
the Fund to be held on November 16, 1995, at One World Financial
Center, New York, New York 10281 on the 40th Floor at 9:00 A.M., New
York time, and at all adjournments thereof, and to vote the shares held
in the name of the undersigned on the record date for said meeting on
the Proposal specified on the reverse side. Said attorneys-in-fact
shall vote in accordance with their best judgment as to any other
matter.
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES, WHO RECOMMENDS A
VOTE FOR THE PROPOSAL ON THE REVERSE SIDE. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS INDICATED ON THE REVERSE SIDE OR FOR IF NO
CHOICE IS INDICATED.
Please mark your proxy, date and sign it on the reverse side and return
it promptly in the accompanying envelope, which requires no postage if
mailed in the United States.
The Proposal:
To approve an Agreement and Plan of Reorganization dated as of
September 26, 1995 by and among Oppenheimer Integrity Funds, on
behalf of Oppenheimer Bond Fund, the Trust, on behalf of the Fund,
and Quest for Value Advisors, and the transactions contemplated
thereby, including the transfer of substantially all the assets of
the Fund in exchange for Class A, Class B and Class C shares of
Oppenheimer Bond Fund and the assumption by Oppenheimer Bond Fund
of certain liabilities of the Fund, the distribution of such
shares to the shareholders of the Fund in liquidation of the Fund
and the cancellation of the outstanding shares of the Fund.
FOR____ AGAINST____ ABSTAIN____
Dated:________________________, 1995
(Month) (Day)
______________________________
Signature(s)
______________________________
Signature(s)
Please read both sides of this ballot.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing
as custodian, attorney, executor, administrator, trustee, etc., please
give your full title as such. All joint owners should sign this proxy.
If the account is registered in the name of a corporation, partnership
or other entity, a duly authorized individual must sign on its behalf
and give his or her title.
